Gift card & voucher sales grow despite tough trading conditions

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Gift card & voucher sales grow despite tough trading conditions
Although a preference for physical gift cards continues, digital and e-vouchers are proving increasingly popular.
//  The UK’s gift card and voucher market grew 7.2% year-on-year
// Retail sales make up 67% of the overall market

The UK’s gift card and voucher market has enjoyed growth during the first half of the year, underlying its increasing importance as a revenue and loyalty generation tool amid a tough trading climate.

According to data from UK Gift Card & Voucher Association and KPMG, the market grew by 7.2 per cent year-on-year.

The analysis – looking at sales performance in the first half of 2019 compared to the same period the year before – recorded 15.6 per cent growth in business-to-business sales, which includes gift cards issued via an employer’s reward programme.

While sales direct to consumers contracted by nine per cent – likely due to low retail sales growth in recent months – they remain the main driver of business-to-consumer gift card sales, accounting for two-thirds of the market.

Retail remains the most important sector within the gift card industry, with retail sales making up 67 per cent of the overall market.

However, there was also strong improvement in the leisure industry, with the sector having grown by 13 per cent year-on-year.

Although a preference for physical gift cards continues – taking 72.5 per cent of the market share – digital and e-vouchers are proving increasingly popular, now accounting for 26.9 per cent of sales

This is up from 12 per cent in the first half of 2018.

Meanwhile, gift card malls – the selection of gift cards stocked by third party businesses – grew by 3.6 per cent on a like-for-like basis, highlighting the growing importance consumers place on convenience and choice.

“The continued growth of the market only underlines gift cards’ increasing importance as a revenue and loyalty generation tool,” UK Gift Card & Voucher Association director general Gail Cohen said.

“It’s particularly encouraging to record this growth in the first half of the year, which tends to be slower compared with the months leading up to Christmas.

“The growth of gift card malls is also noteworthy, pointing not only to the consumer’s calls for added convenience and choice, but also how consumer businesses are forming alliances and partnerships to generate additional revenue and loyalty.”

KPMG head of retail Paul Martin said: “Placed against a backdrop of lacklustre sales in retail in recent months, it’s perhaps easy to have overlooked the significant role gift cards and vouchers play in obtaining additional revenue and encouraging customer loyalty.

“This is arguably even more important during tough times, like those currently being faced by retail and consumer business more broadly.

“As is evident in the latest analysis, businesses need to think carefully about the interplay between physical and online offerings, as well as their partnerships with other businesses.

“Relationships with other reward partners, or business-to-business sales, may well provide a welcome boost of consumer interest.

“It is certainly a channel many players must now consider, and just like their product sales more broadly, there is a vital need to offer flexibility where purchase and redemption is concerned.”

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