How the Enduring Power of Gift Cards Can Help Retailers Prepare for Holiday

By Brett Narlinger, Head of Global Commerce, Blackhawk Network (BHN)

Over the last few years, the retail industry has drastically changed, with new trends and technologies popping up seemingly overnight. Amid these shifts, one often-overlooked tool has remained resilient: the gift card. Having evolved beyond its reputation as a go-to gifting option, gift cards have adapted to the modern consumer to become dynamic tools for driving customer acquisition, loyalty, and sales.

Gift cards offer flexibility and choice, allowing recipients to explore or discover a brand or merchant on their own terms. They are convenient, facilitating easy online or mobile gifting and redemption. And, with the increasing demand for omnichannel experiences, gift cards have become a seamless way to integrate online and digital platforms—something retailers should keep in mind as they begin to face crunch time for holiday preparations.

But simply offering gift cards isn’t enough for retailers to thrive. To truly unlock their potential and leverage their enduring power, merchants need to take a strategic approach. Here are some key areas to consider when looking at ways to optimize your gift card programs ahead of the holiday shopping season.

Gift cards are one of the most popular gifts at holiday, but they are increasingly also the preferred option for big and small occasions throughout the year. The latest consumer research from Blackhawk Network (BHN) found that 70% of surveyed consumers purchased a gift card in 2023, and 81% plan to purchase a gift card this year. Additionally, the research found that nearly 9 in 10 consumers surveyed paired a gift card with another gift, like a card or sweets. 

Over the years, gift card recipients have consistently spent more than the amount of their gift card. While the amount of overspend varies, BHN Global Gifting Research found that recipients of every denomination of gift card are willing to spend more than the value of the gift card. For many recipients, gift cards can assist in budgeting for wants or needs, function like a discount, or provide a helping hand toward a larger purchase. For retailers, this trend demonstrates the value of gift cards in attracting new customers—which often are shoppers spending because they have a gift card.

Omnicommerce is important to reaching consumers who have come to expect flexibility, convenience, and seamless shopping experiences. They favor brands that offer experiences that effortlessly blend online, mobile, and physical, which means meeting customers wherever they are: in-store, online, on mobile, or on social media. Your gift card program needs to be ready for all of these channels. But as the line between online and offline continues to blur, rather than thinking about your program in separate channels, build it as though it is one unified and seamless experience. For example, consider bringing eGifts into your store displays using QR code distribution technology. And with smartphones now making up 60% of all eCommerce sales globally, it’s crucial to also ensure your gift card purchasing and redemption experience works seamlessly on all mobile devices. 

BHN Global Gifting Research found that 14% of U.S. shoppers surveyed exchanged loyalty points for gift cards—a trend that continues to grow in popularity. Inflation remains a concern for consumers, making them particularly motivated by deals and the ability to get extra value from their purchases. You can cater to consumers’ desire for added value while also making meaningful, lasting connections through gift cards. Loyalty programs can be entirely powered with gift cards, and offering loyalty programs can deepen customer relationships. If you already have a loyalty program, a gift card promotion is a powerful way to continue to grow it. 

Every aspect of life is getting more digital and more environmentally conscious—often at the same time—particularly for younger generations. For gift cards, this is reflected in the growth of digital gift cards, also known as eGift cards, and paper-based, recyclable gift cards. Digital options are especially appealing to younger shoppers who want to be able to send eGifts to friends directly within messaging apps. Digital gift cards are most often sent by email, but other options are also becoming increasingly popular. BHN Global Gifting Research found that when compared to older shoppers, younger shoppers surveyed are twice as likely to deliver eGifts by text or social media. Integrating these options into your gift card program demonstrates your understanding of your target audience and caters to their evolving preferences.

By implementing these best practices and staying attuned to evolving consumer trends as you prepare for holiday, you can ensure your gift card program remains a valuable asset in your overall marketing and sales strategy. Remember: gift cards are more than a gift; they are a powerful tool for building relationships, driving sales, and creating lasting customer connections.