June 12, 2024
Gift Cards

Gifting Convenience: The Evolution and Impact of Gift Cards in Modern Retail

Gift cards have become one of the most popular gift ideas over the past decade. With people constantly on the go and busy schedules, gift cards provide convenience for both the giver and receiver.

The Convenience Factor

Gift cards offer a level of convenience that traditional gifts cannot match. For the gift giver, a gift card means no need to wrap presents or worry about size, color or taste preferences. It allows people to give a gift without actually having to shop for one.

Recipients also appreciate the flexibility of a Gift Card. Rather than being stuck with an item they may not want or need, a gift card lets the recipient choose exactly what they’d like from a wide selection. They can shop for the perfect item at their leisure without time constraints.

For people with busy schedules or last-minute gift-giving situations, a gift card is easy to grab from just about any retailer. No need to rush to the mall for panic shopping if you realize its someone’s birthday coming up. Gift cards truly have become the gift that keeps on giving in terms of convenience for all parties involved.

Rise in Digital Gift Cards

While traditional plastic or paper gift cards dominated the market for years, digital gift cards are growing rapidly in popularity. Plastic cards can get lost or forgotten, but digital cards sent via email make it easy to access funds anytime, anywhere.

Digital cards are even more convenient than traditional cards since there is no physical card to handle. Recipients can redeem digital gift cards straight from their phone, avoiding the hassle of carrying around yet another card in their wallet.

Retailers also see benefits to digital gift cards. There are no production or shipping costs associated with physical cards. Digital cards also eliminate the Problem of cards going unused if lost by the recipient. Overall, digital delivery is more environmentally friendly and cost effective for both businesses and consumers.

The Growing Secondary Market

Another sign of the gift card trend’s rise is the emergence of secondary markets where unused cards can be resold. Sites like CardCash and Raise allow people to sell unwanted gift cards for cash, often at a discounted rate than the full value. This provides at least some financial benefit to the original recipient.

On the flip side, these secondary markets offer an inexpensive way for others to shop with funds from purchased discounted gift cards. According to industry sources, the secondary gift card market was estimated at over $5 billion in 2019 and continues growing 10-15% each year. As more cards go unused, this profitable channel continues expanding to tap into unused value on cards.

Retailers Benefit from Upping Sales

The main driving factor behind Gift Card growing in popularity is how they directly benefit retailers. When someone receives a $25 gift card to their favorite coffee shop, odds are they will spend additional cash when using that card, rather than just the $25 amount. Retailers count on this “upselling” effect to boost overall sales figures.

Gift cards also attract new customers who may discover a retailer for the first time through a gift card. Many recipients end up becoming loyal returning customers even after using up their initial gift card amount. Retail chains have come to rely on the sales generated each year around major gift-giving holidays partly due to the rise of gift cards.

Are Gift Cards the New Cash?

The ubiquitous presence of gift cards in our lives raises the question – have they essentially replaced cash gifts? For special occasions like holidays, birthdays or retirement parties, gift cards seem to be preferred over cold hard cash more often than not.

Certain generational factors play a role in this changing dynamic. Younger generations that came of age in the digital era may feel physical cash is outdated or inconvenient to handle. But boomers and older generations still show preference for cash gifts on occasion as well.

Surveys show the average American owns around 5 unused gift cards at any given time, with a total value of over $200. This speaks volumes about how deeply engrained gift cards are in our gifting culture. Rather than fade away, the gift card trend shows no signs of slowing and remains a gifting staple. Their rise has truly transformed consumer behaviors around present-giving in the modern age.

Gift cards have revolutionized gifting over the past 20 years, becoming the default present for billions of exchanges each season. Their convenience for givers and flexible usage for recipients cemented their status as a gifting necessity. Digital adoption pushes the trend further, making cards even more accessible anytime, anywhere through online and mobile platforms.

While retailers maximize sales from consumers upselling beyond card values, secondary market resales provide additional utility. The permanence of gift cards in our lives raises questions about fully replacing cash gifts long term. Regardless, few could deny their unparalleled prevalence and staying power in shaping new norms around gift-giving traditions globally. Going forward, gift cards will likely remain a staple of retail and consumer holiday seasons for years to come.

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it