REPORT: Gift Card Sales Forecasted to Increase 19%
Holiday gift card sales are forecasted to increase 19% over 2019 buoyed by a surge in digital gifting as consumers shift shopping and gifting habits in response to COVID-19, according a report from Blackhawk Network.
Consumers are shopping earlier, buying more gift cards and leaning on digital gifting this holiday season. These are among the findings of the 2020 BrandedPay Holiday Shopping Preview report released from the branded payments provider.
Based on consumer research and Blackhawk's own U.S. sales data, the report also revealed that many shoppers surveyed have already bought more gift cards since COVID-19 hit the U.S., and many expect to continue, anticipating they will purchase double the amount of gift cards they bought last year.
"As many consumers shift their shopping habits as a result of the pandemic, the 2020 holiday shopping season looks to be a bit of a moving target for retailers—much like the rest of the year. However, one thing that looks to remain consistent is consumers' love of gift cards. Year after year, gift cards have been a highly requested holiday gift, and our research shows consumers will look to give gift cards more than ever before this season," said Theresa McEndree, vice president of marketing at Blackhawk Network. "We also found that the shift to digital and surge in digital wallet adoption has pushed demand for digital gifting to an all-time high. As consumers are increasing online shopping, limiting travel and looking for socially distanced gifting options, egifts are proving to be a preferred contactless option for those looking to spread some much-needed holiday cheer."
The report identified the following trends:
Consumers are starting holiday shopping earlier this year
Twenty-eight percent of surveyed consumers are starting their holiday shopping earlier this year, with many pointing to the pandemic as their reasoning. The top three reasons respondents report they are shopping earlier are: they are worried COVID will impact their ability to shop (46%); they want to avoid crowds and long lines (41%); and they are trying to budget holiday spending (40%). Retailers are also encouraging shoppers to start their holiday shopping early this year. Many brick-and-mortar stores have announced they will be closed on Thanksgiving as retailers plan for a shift away from Black Friday and offer deals and promotions earlier in the season to avoid over-crowding in their stores.
Holiday shoppers are turning to gift cards more than ever before
More than half of consumers (52%) report that they are more likely to buy more gift cards this holiday season than in previous years. Respondents expect to purchase 10 gift cards this year on average—double what they reported last year. Additionally, surveyed consumers expect to spend 40% of their holiday gifting budget, or $313 on average, on gift cards this year. That's a 19% increase from the $262 consumers reported spending on gift cards in 2019.
- Shoppers plan to use unused gift cards purchased or received during stay-at-home orders for holiday shopping. Sixty-six percent of surveyed shoppers that have an unused gift card report they purchased or received them during the pandemic. Of those with unused gift cards, 72% plan to use them for holiday shopping (56% for self-use and 28% for gifting). This is good news for retailers as previous Blackhawk research2 has shown that nearly 60% of surveyed consumers spend more than the value of their gift card.
- Gift cards are also the preferred holiday gift among employees, along with cash and holiday bonuses. Eighty-two percent of employees surveyed would like to receive a gift card from their employer as a holiday gift. Of those respondents, gift cards are a preferred gift because they: allow them to choose what they want (76%), can be delivered physically or digitally (46%); and they can re-gift them (29%).
Demand for digital gifting reaches all-time high
Nearly half of respondents (49%) plan to do more of their holiday shopping online, and consumers on average plan to do about 60% of their holiday shopping online this year. Three-quarters of surveyed consumers report that gift cards are a good gifting option because they can be purchased digitally. eGifts have also experienced enormous growth this year; sales data from Blackhawk's partners shows that sales of egifts sold on merchants' websites are up 74% over 2019. Recent research3 from Visa also found that 33% of surveyed Americans plan on giving more digital gift cards during the 2020 holiday season than they have in previous years.
- eCommerce gift card sales poised to continue rapid growth. Last holiday shopping season, eCommerce gift card sales were up more than 12%. That growth is poised to continue this season with a 21% increase in eCommerce gift card sales already this year. Some of the gift card categories seeing a notable lift in eCommerce sales are also among the most popular gift card categories for holiday, including:
- 71% increase in home goods
- 29% increase in restaurant
- 18% increase in fashion
COVID-19 is changing gifting habits this year
Of shoppers surveyed, 57% report that they are likely to change their gifting habits this holiday season because of COVID-19. More than two-thirds of surveyed shoppers are likely to focus holiday spending on what others need versus what they want this year. Sixty-one percent of surveyed consumers are also likely to send a gift to family or friends because they have experienced hardship this year. Many consumers are also reporting they will travel less, which will also impact their gifting habits. Sixty-three percent of surveyed consumers are likely to travel less this holiday season to visit family and friends due to COVID-19, and instead buy gift cards for those they cannot see. Overall, 6-in-10 surveyed shoppers are likely to buy more gifts online this holiday season due to COVID-19.
Blackhawk Network works with more than 1,000 brands and card partners and is in more than 200,000 retail locations.