The gift card industry is huge. Almost all major retailers and restaurants offer some kind of gift card program, and even smaller businesses are starting to take advantage of the many benefits that gift cards have to offer.
Whether you’re a retailer or a consumer, one thing is for sure – gift cards are here to stay. Given the numerous benefits of gift cards, sales are unlikely to slow down anytime soon.
Because of this, it’s critical that retailers keep a close eye on the gift card market, and analyze the trends that can help drive business and increase sales. However, it can be hard to keep track of the all of the trends, statistics, and information that’s out there about the gift card market. But don’t worry! EJ Gift Cards is here to help.
In this article, we’ll take a deep look at some of the most surprising statistics about gift cards. Whether you run a retail store and are curious about how to market your gift card program, or you’re just a curious consumer, read on!
1. More Than $1 Billion In Gift Cards Go Unspent Each Year
When a gift card is purchased, the full value of the sale goes directly to the retailer – regardless of whether or not the gift card is ever redeemed.
This is the cause of a phenomenon known as “breakage”. Consumers never actually have to spend their gift cards – and if they don’t, retailers keep the profits from each sale. It’s estimated that each American has around $100 in unspent gift cards that are kept in wallets, junk drawers, and other places where they sit around until they expire.
However, this phenomenon has recently been dramatically reduced by law changes like the Credit CARD Act of 2009. This law made a variety of changes to how consumers sell gift cards – inactivity fees were eliminated, and gift cards must have a minimum expiration date of 5 years from the date of purchase.
The changes have been dramatic. In 2007, gift card breakage was estimated at nearly $8 billion dollars, meaning that the value of about 10% of the $80 billion in gift cards sold went unused.
Today, gift card breakage has been reduced to around $1 billion per year, meaning that only about 0.7% of the gift cards purchased go unused, which is certainly a dramatic improvement for consumers and retailers.
2. 93% Of All Consumers Will Buy Or Receive A Gift Card This Year
In 2015, 93% of American consumers said that they would either give or receive a gift card this year, and the vast majority of consumers said that they anticipated giving or receiving up to 7 gift cards per year.
This is truly a staggering statistic when you consider how new, gift cards are. The first gift card was introduced in 1995 by Mobil – so in just a little over 20 years, gift cards have risen to the absolute top of the gifting marketplace.
There is no other product as successful as gift cards – so it’s no wonder that companies are still scrambling to sell gift cards more effectively, and take advantage of the popularity of gift cards!
3. Gift Cards Are The #1 Most Requested Present During The Holidays
The popularity of gift cards doesn’t slow down during the holidays. Gift cards have been the #1 most requested item on holiday wish lists for 9 years in a row – and approximately 60% of surveyed consumers said that they would prefer to receive a gift card instead of items such as electronics, clothing, and DVDs or other entertainment media.
Because gift cards are flexible, easy to buy and use, their popularity as a gift continues to increase – and there’s no sign that retailers are going to sell fewer gift cards during the holidays any time soon!
4. 72% Of Customers Spend More Than The Value Of Their Gift Card
This is one of the main reasons that retailers love gift cards. Because the value of an individual gift card is often not enough to make a high-dollar purchase, consumers are likely to augment the value of a gift card with their own cash. Approximately 72% of consumers will spend more than the total value of their gift card when making a purchase.
And, on average, these customers spend at least 20% more than the face value of the card. This means that retailers who sell gift cards can benefit both from the initial purchase, and from customers who spend more than the total value of their card!
5. More Than $100 Billion Is Spent On Gift Cards Every Year
In 2016, total gift card sales reached an astronomical $140 billion. Driven by innovations like digital gift card, e-gift cards, and aftermarket gift card sales platforms, the gift card industry has never been stronger.
The future forecast for gift cards is even stronger. The market is estimated to continue to grow at a rate of 5-6%, and CEB has estimated that the total money spent on gift cards will reach $180 billion by 2018.
There is no way to tell whether gift cards will continue to grow like this forever, but consumer behavior certainly suggests that it’s possible.
As gift cards continue to become more popular and retailers sell gift cards that are usable online, in-person, and digitally, it’s likely that we will continue to see the gift card market grow at a rapid pace.
6. 90% Of Gift Cards Are Used Within 60 Days Of Purchase
The vast majority of gift cards that are purchased are spent relatively quickly. 90% of gift cards are spent within 60 days of their purchase.
This is a very good thing. When gift cards are spent quickly by consumers, quite a few issues can be avoided. If consumers don’t keep track of their gift cards and don’t spend them quickly, they can easily run into issues like gift card fraud, or even risk losing their gift cards altogether.
But while the vast majority of gift cards are spent within 60 days of purchase, there are still some gift cards that go unused. Whether due to forgetfulness or an inability to use the card, it’s quite common to get stuck with a gift card you can’t use.
However, the rise in online gift card marketplaces like EJ Gift Cards has made it easy to sell gift cards that can’t be used – which helps consumers get value out of their gift cards, and allows them increased flexibility.
7. 83% Of Corporations Use Gift Cards As Employee Incentives
Gift cards aren’t just popular as gifts for individuals. Larger corporations have quickly realized the potential for gift cards to be used as employee incentives, in place of cash rewards and other gifts.
The reason for this is simple – gift cards are easy to give as rewards, and provide employees with a flexible way to purchase their own gift. And because gift cards can be given to employees more quickly than other gifts, they’re more immediate, and offer a deeper sense of satisfaction and reward.
8. The Average Value Of A Gift Card Is $45
Surprisingly, the average value of gift cards has hovered around $40-50 for quite a few years. Despite the fact that many consumers purchase high value gift cards during the holiday season, low value gift cards are often quite popular as gifts for teachers, younger children, and during other less important holidays.
There has been a slight upward trend, however. In 2006, the average value spent on a gift card was around $39, and the average value of gift cards peaked in 2014, at $47.90. Since then, the average value of purchased gift cards has been holding steady at around $45.
This is likely not due to any change in customer behavior, but because of inflation. It’s estimated by the CPI inflation calculator that $39 in 2006 has the purchasing power of $48.09 in 2017 – so gift card value has been holding steady for years, and has only changed because of inflation.
It remains to be seen whether future consumers will increase the value of the gift cards they purchase, or if the total average value of gift cards will simply maintain pace with inflation.
9. Digital Gift Cards Are Growing At A Rate Of Nearly 200%
Digital gift cards are quite new, compared to physical gift cards. Usually sold online, digital gift cards do not have any kind of actual, physical “card” associated with them.
They’re purchased by the consumer, and a unique gift card code is emailed to the specified address, eliminating the need for any kind of physical card or code.
These digital gift cards have proven to be very popular, and are growing at a rate of nearly 200%, compared to the 5-6% growth rate of physical gift cards.
There are two major factors contributing to the success of digital gift cards. First, tech-friendly millennials are now contributing to the economy, and they’re much more likely to purchase digital gift cards, as compared to older generations.
Second, the surge in digital technology like smartphones and tablets has made it much easier to redeem digital gift cards. In the past, it was more difficult to keep track of digital gift cards, and they often had to be printed out to be used in stores – which wasn’t exactly convenient.
However, modern gift card applications make it much easier for consumers to purchase, redeem, and use digital gift cards, and are a major contributing factor in their continued market success.
Retailers who are interested in taking advantage of this new growth in digital gift cards should take notice, and begin offering easy-to-use digital gift cards as soon as possible.
10. Nearly 20% of Gift Cards Are Sold During The Winter Holiday Season
In 2016, nearly $26 billion was spent on gift cards during the winter holidays alone. This means that during the winter holiday season – including Christmas, Hanukkah, and Ramadan – retailers sell gift cards at an absolutely unparalleled rate.
And as holiday spending continues to rise – holiday retail sales in America (peaked at over $658.3 billion in 2016) – gift cards are sure to follow suit.
This has a variety of benefits for retailers. First, gift cards allow retailers to benefit from the value of the sold gift card as soon as it’s purchased, which can be very helpful during a slower holiday season.
Gift cards have another hidden benefit, too. Because gift cards allow consumers to pick out their own presents, the total volume of returns is reduced, and retailers don’t have to spend as much time and money processing the after-holidays returns.
All in all, we can continue to expect sales of gift cards to grow during the holiday season, and they show no sign of being knocked off of their #1 spot on holiday wishlists any time soon!
Got Gift Cards You Don’t Need? Sell Them Now With EJ Gift Cards!
In the past, it was difficult to get rid of gift cards that you didn’t’ want. But with the rise of innovative online gift card marketplaces, it’s easier than ever to sell gift cards online – and get paid in cash for your unwanted gift cards! So if you have gift cards that you don’t want or you don’t need, visit EJ Gift Cards today!
At EJ Gift Cards, we pride ourselves on offering competitive rates for hundreds of different gift cards. We make the gift card selling process quick and easy, and we offer you payment directly through PayPal, so your payment is always safe and secure. And if you have any problems at all, our customer support team is always ready to help you!
So don’t let your unwanted gift cards sit around and collect dust. Sell them to EJ Gift Cards for cold, hard cash today!