Market Drivers:
Growing Trends of Gift Giving during Festivals and Special Occasions: Festivals and special occasions have become increasingly important events for exchanging gifts across many societies around the world. As discretionary incomes rise globally, consumer are looking to express care, gratitude and goodwill to friends and family through thoughtful gifts during these celebrations. Gift cards have emerged as a popular gifting option as they allow the recipient flexibility to choose what they want or need. According to United Nations Educational, Scientific and Cultural Organization data from 2022, over 60% of the global population participates in some form of festivals, traditions or religious occasions annually. This widespread cultural significance of festivals and the human need to feel connected through gift exchanges on these days has boosted demand for gift cards.
Gift cards fulfill the dual purpose of being both a tangible token of affection as well as a stand-in for cash. Particularly after the isolation of the COVID-19 pandemic in the past two years, occasions like holidays, birthdays, weddings or religious festivals in 2023 are projected to see even greater emphasis on gift-giving.
Birthday Celebrations & Special Occasions: Birthday celebrations and other special occasions have become increasingly popular ways for people around the world to connect and express care for their loved ones. As their societies have become more mobile and digitally connected, these celebrations help preserve human relationships despite physical distances. The growing preference for experience gifts over material gifts has also elevated the significance of birthday celebrations and occasions as a means to create memorable moments together. This rising focus on experiences and relationships has fuelled robust growth in this market. Gift cards have emerged as a pragmatic, universally appreciated way to support loved ones in commemorating their special days according to their own wishes and interests. Unlike physical goods which may not align perfectly with the recipient's preferences, gift cards allow people to choose experiences that hold personal meaning for them from a wide range of retail and service options.
The convenience and flexibility of gift cards have made them the preferred gifting choice for most celebratory events. Recent 2022 data from the United Nations World Tourism Organization found that the social aspect of experiences has become integral to young consumers' lifestyles globally. An estimated 63% of global youth surveyed in 2022 said sharing experiences with close friends and family is very important to them. This aligns with the uptick in gift card usage for celebrations as it facilitates collective experiences among loved ones. Additionally, celebrations which were often limited to immediate family are now increasingly involving extended networks through digital technologies. This has multiplied the number of gifting exchanges and amplified the impact of gift cards on the overall market.
Market Opportunities:
Growth of E-Commerce Industry: The growing e-commerce industry is offering promising opportunities for this market. As more consumers are shopping online due to increased digitalization and convenience of online platforms, gift cards have emerged as a popular gift-giving option in the virtual world. This trend is particularly predominant among millennial and Gen Z consumers who are adopting digital payments and making significant transactions online. Gift cards fulfill the purpose of gift-giving in the modern digital era by allowing users to shop at major e-commerce websites and apps without physically exchanging cards. E-gift cards are digitally delivered to recipients via email, text messages or messaging apps. They can be used to purchase a wide assortment of products online from fashion and lifestyle brands to travel and hotel bookings to streaming subscriptions. The flexibility and ease of e-gift cards make them an attractive promotional and loyalty tool for online retailers looking to drive sales and customer engagement.
The growth trajectory of this market is poised to rally driven by the booming e-commerce sector. Digital gift cards are expected to gain higher market share with increased innovation.
Multi-Purpose Cards: Multi-Purpose Gift Cards have the potential to be a major growth opportunity in this market. The gift card market has traditionally been fragmented with different types of single-store or branded gift cards that can only be redeemed at certain merchants. However, there is a rising demand for more flexibility and universal acceptance. Multi-Purpose Gift Cards, which can be spent across a wide network of retailers, provide consumers with a convenient option to shop at multiple stores from a single pooled fund.
These open-loop cards are rapidly gaining popularity as they allow the recipient to choose which retailer and products they want, based on their unique needs and preferences. Rather than being locked into a specific store, multi-purpose cards empower the user to select the perfect gift from a variety of options. This enhanced flexibility and customizability addresses a pain point for both gift-givers and receivers. It reduces the hassle of figuring out the right store-specific card each time and minimizes the risk of the recipient being stuck with a gift they may not fully want or need.
As cross-border shopping and digitalization continue gaining steam, multi-purpose gift cards have the potential to become the preferred gifting option.
Market Restraints:
Limited Expiry Dates: Limited expiry dates on gift cards is one of the major restraints impacting the growth of this market. When gift cards come with expiry dates, they put pressure on consumers to spend the card value within a stipulated time period. This limits the flexibility and spontaneity of spending for recipients. The looming deadline of an expiry date can act as a deterrent for many recipients who want to use the gift card for their planned purchases later. Additionally, expiry dates often are not clearly communicated to gift card recipients upfront. Many users are unaware of the validity periods and end up losing unused balances when the cards expire. This creates a negative sentiment around gift cards. According to a survey by the UK Consumer Association in 2021, about 25% of gift card recipients had portions of balances go unused due to unawareness of expiry dates. Such experiences diminish the appeal of gift cards for future use. They also discourage givers from opting for gift cards again.
This constrains the repeat usage and recommendation potential of gift cards. It holds back the market from reaching new users and addressable occasions for gifting. Marketers struggle to promote gift cards as a preferred gifting option when the usability is capped by short validity windows. Even for recipients who are aware, the pressure of deadline leads to suboptimal spending decisions just to avoid losing the value. This impacts merchants as well, as such forced purchases may not always align with recipients' true needs or budget.
In recent 2022, some governments and non-profits have pushed retailers to introduce open-ended gift cards without expiry dates. In the US, states like California and Connecticut passed legislation prohibiting expiry dates on gift cards under US$ 100. Similar moves followed in Canada and countries in Western Europe. According to data tracked by Pew Research, the proportion of no-expiry gift cards sold increased from 35% in 2020 to 48% in 2022 across major global markets. While this development has positively impacted consumer sentiment, the market is yet to realize its full growth with many large retailers still relying on limited-date gift cards. Abolishing expiry clauses can unlock unprecedented opportunities for this Market by boosting appeal, repeat rates and addressable spend occasions for gift cards worldwide.
Counterbalance: To overcome this restraint, the key market players need to expand their product expiry date, which might increase this market's growth.
Market Restraints:
Limited Expiry Dates: Limited expiry dates on gift cards is one of the major restraints impacting the growth of this market. When gift cards come with expiry dates, they put pressure on consumers to spend the card value within a stipulated time period. This limits the flexibility and spontaneity of spending for recipients. The looming deadline of an expiry date can act as a deterrent for many recipients who want to use the gift card for their planned purchases later. Additionally, expiry dates often are not clearly communicated to gift card recipients upfront. Many users are unaware of the validity periods and end up losing unused balances when the cards expire. This creates a negative sentiment around gift cards. According to a survey by the UK Consumer Association in 2021, about 25% of gift card recipients had portions of balances go unused due to unawareness of expiry dates. Such experiences diminish the appeal of gift cards for future use. They also discourage givers from opting for gift cards again.
This constrains the repeat usage and recommendation potential of gift cards. It holds back the market from reaching new users and addressable occasions for gifting. Marketers struggle to promote gift cards as a preferred gifting option when the usability is capped by short validity windows. Even for recipients who are aware, the pressure of deadline leads to suboptimal spending decisions just to avoid losing the value. This impacts merchants as well, as such forced purchases may not always align with recipients' true needs or budget.
In recent 2022, some governments and non-profits have pushed retailers to introduce open-ended gift cards without expiry dates. In the US, states like California and Connecticut passed legislation prohibiting expiry dates on gift cards under US$ 100. Similar moves followed in Canada and countries in Western Europe. According to data tracked by Pew Research, the proportion of no-expiry gift cards sold increased from 35% in 2020 to 48% in 2022 across major global markets. While this development has positively impacted consumer sentiment, the market is yet to realize its full growth with many large retailers still relying on limited-date gift cards. Abolishing expiry clauses can unlock unprecedented opportunities for this Market by boosting appeal, repeat rates and addressable spend occasions for gift cards worldwide.
Counterbalance: To overcome this restraint, the key market players need to expand their product expiry date, which might increase this market's growth.
Gift Card Market Report Snapshots
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