The switch to online shopping during the coronavirus lockdown saw sales of digital gift cards and eVouchers ‘soar’ to over £866m, according to the latest analysis by the Gift Card & Voucher Association (GCVA) and KPMG UK.
Year on year sales were up 117 per cent in the second half of 2020 – with over £600m spent in that six months alone. During that time, the overall market share for digital products doubled to 32.5 per cent.
With trading restrictions making shopping ‘more difficult’ for consumers – and businesses alike –they’ve turned to virtual gifting in droves. As direct sales declined, sales via online channels for both B2C and B2B went up. The retail sector enjoyed growth of 14.4 per cent like-for-like in 2020, and online B2B gift cards and vouchers, often purchased by employers to reward and incentivise staff, rose 34 per cent.
The research also found that store specific gift cards have continued to increase in popularity, with a sizable 60.4 per cent of market share. While the largest like-for-like growth (19.5 per cent) came from sales of open loop cards, which are very flexible as they can be used almost anywhere, their closed loop counterparts remain the most popular by value (£1.1bn). Sales for the latter also grew, 15.1 per cent over the year.
Notably, customer redemption rates remain high. The latest GCVA figures show that more than half of shoppers redeem their gift cards within one month, and 98.6 per cent within a year of receipt.
Paul Martin, UK head of Retail at KPMG, said: “Performance in the gift card and vouchers market very much mirrors the activity that we have seen on the high street over the last year, with sales of physical cards bought in store falling as digital gifting saw impressive growth.
‘’There has been a change in the status of gift cards, which have re-purposed themselves, particularly with Generation Z consumers with their passion for technology and gaming. With Covid restrictions in place for at least the next few months, gift card and vouchers will continue to provide consumers with a viable alternative to physical gift buying.”
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