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Why Are Gift Cards So Popular? The Rise of Modern Giving

Gift cards continue to rise in popularity every year. These presents can be digital or physical and, unlike many other gifts, are useful for several years. But why are they so popular?

Gift cards are popular because they give the recipient the freedom to purchase whatever they want. These handy cards eliminate the guessing from gift-giving. Moreover, the rise in e-commerce has boosted the demand for shopping incentives, and gift cards are ideal for satisfying that desire.

This article will discuss the incredible growth of the gift card industry in the last five years. We will also touch on the factors that influence their popularity.

Studio shot of four attractive girls holding a sign that says gift card

They Are the Perfect Present for Birthdays

In 2018, the Black Hawk Network discovered that 55% of shoppers are interested in either receiving or purchasing a gift card that can be added to some kind of mobile-type application. On average, buyers in the US spend $213.49 every year on gift cards as birthday presents.

Birthdays are the most popular gift-giving occasion. People that can’t decide how to show appreciation have been turning to gift cards for over a decade. Actually, 68% of the gifts given on birthdays every year come with a prepaid gift card.

Ironically enough, gift cards weren’t always the first choice that came to mind when searching for gift ideas. Some key factors contributed to their boost in popularity, which began in 2016.

  • In 2016, gift cards were the most requested birthday gift.
  • During the year 2017, open-loop gift cards catapulted in popularity and became the second most desired gift.
  • Retailers introduced modern-day digital gift cards to pair with e-commerce. In 2018, 55% of consumers were interested in eGift cards to use on their mobile apps.
  • The 2020 Covid-19 pandemic required shoppers to get unique with their gifts. Gift card purchases doubled when shoppers could not visit stores in person or when employers were planning on gifts for employees working from home.

Increased demand, a shift in shopping habits, and advancements in online shopping have also contributed to gift cards’ rise to fame.

They Are Secured and Convenient

The US outlawed gift cards that expire within five years in 2009. For this reason, consumers felt more confident buying gift cards because of the promise that they would last. Also, prepaid gift cards are a convenient way of storing personal funds.

When buyers lose their cash or credit cards, they can opt to use a gift card with no issues at all. This is the number one reason why 75% of shoppers prefer physical gift cards. They are often used to build up missing funds to complete in-store purchases.

Despite the digital age consuming our lives, eGift cards are only used by 25% of e-commerce customers per year. Physical gift cards have always been a favorite. Researchers expect this trend to continue.

Marketers and Store-Owners Use Gift Cards as an Incentive

Companies advertise loyalty programs, discounts, and other rewards when you purchase their brand’s gift cards. With enticing offers such as these, people became more susceptible to purchasing gift cards for themselves and others.

Manufacturers present gift cards as a benefit to consumers. They appreciate the offered rewards and respond accordingly by purchasing even more gift cards. When store motivations, like discounts, were at their peak in 2019, shoppers spent 35% of their holiday budgets on gift cards.

Shoppers Love Branded Currency

A case study by Yotpo revealed that more than 60% of consumers consider themselves loyal to their favorite brands. Brand loyalty means:

  • The consumer has purchased five products or more from the same company. These products include gift cards.
  • The shopper values preference over price. On average, US customers spend approximately $45 on gift cards from their favorite store despite having cheaper options.
  • The buyer is usually satisfied with their purchase no matter what it is.

Research from the Mercator Advisory Group said that people turn to gift cards as a form of branded currency. Loyal consumers purchase more gift cards as a means of supporting their preferred brands. This proves to be a huge reason why gift cards and eGift cards had a surge in popularity in the last few years.

Additionally, buyers will purchase a brand’s gift card even if they have no intentions of using it. Committed shoppers spend more and more on gift cards to show their support. As a matter of fact, 49% of gift cards are bought directly from the retail brand for this exact reason.

They Are Mostly Used for Fun

In contrast to what many expect, gift cards are typically purchased for leisure and services, not shopping. The majority of people prefer to receive “gifts of experience” over anything else.

Different types of gift cards are purchased every year with the most money being spent on:

  • Restaurant gift cards
  • Visa or Mastercard gift cards
  • Department store gift cards
  • Coffee shop gift cards
  • Entertainment gift cards
  • Salon/Spa gift cards
  • Bookstore gift cards
  • Home improvement gift cards

This list is in order, starting with the top purchases. Evidently, people prefer to get presents that involve enjoying a meal or a cup of coffee over being given electronics and clothing.

Are Gift Cards Expected To Remain the Top Picks for Gifts?

Gift cards have an impressive track record for being the most wanted present for 15 years in a row. This trend will most likely continue.

In 2019, 59% of people favored gift cards over any other present. The gift card industry will triple in value by the year 2027. These projections imply that gift cards are the past, present, and future of gift-giving.

Some reasons for the lasting appreciation of gift cards include:

  • Gift cards are easy to use.
  • People value experiences over the material. Gift cards are the only way to provide an experience without physically being there.
  • Retailers offer incredible benefits, like discounts, with every gift card purchase.
  • They are great presents for picky friends and family.
  • Purchasing a gift card is simple.
  • Special types of gift cards are universal.
  • E-gift cards arrive instantly. Consumers are tired of long shipping delays on their presents.

How To Choose the Perfect Gift Card

It is hard to go wrong when picking out gift cards, but there are six things you should consider before purchasing a gift card for a friend:

  • Delivery method: Do you want the gift card sealed in an envelope or sent by email? Think about which form the recipient would prefer.
  • Brand loyalty: Use the stores they frequent as a guide for where to buy the card.
  • Gift card fees: After about a year, some companies charge service fees for their gift cards. Get familiar with the card’s rules before you purchase.
  • Cost: Gift cards are worth how much you pay for them, so ensure that you present your loved one a usable amount.
  • Restrictions: Some gift cards can only be used on specific products/services, while others can be valid for use inside the entire store. Know which one you’re getting.
  • Convenience: Consider whether the recipient will have an opportunity to make use of the card.

Final Thoughts

Gift cards have revolutionized the act of gifting. Modern shoppers have the valuable opportunity to give others the power of decision. These cards are more thoughtful than traditional presents where the recipient has no choice in what they receive.

The Deal Finding Diva shares her secrets to getting free gift cards that you can share with your friends. Use the tips in this video to save money this holiday season when picking your loved ones’ gift cards:

Plenty of Gift Ideas!

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