Gift cards have become one of the most popular gift options in recent years. According to market research, the total value of gift cards sold each year in the United States is over $150 billion. This article explores the rise in popularity of gift cards and how some retailers are innovating in this lucrative market.
Convenience and Flexibility
One of the main reasons gift cards have risen in popularity is due to their convenience and flexibility for both givers and receivers. For givers, gift cards remove the hassle of figuring out the perfect gift idea or size. Gift cards can be purchased online or in-store quickly and easily. For receivers, gift cards allow flexibility to choose exactly what they want from a retailer rather than receiving a specific item they may not want or need. This flexibility has resonated well with consumers on both sides of the gift transaction.
Universal Appeal
Another reason for the rise of Gift Card is their mass appeal. Just about everyone has retailers they shop at regularly, whether it’s for clothing, home goods, electronics or other items. Gift cards allow givers to gift an experience at a store the receiver is sure to find value in browsing, even if they don’t necessarily need anything specific. Retailers with broad product offerings like Amazon, Target, Walmart and Starbucks have seen some of the biggest growth in gift card sales as their brands appeal to such a wide consumer base. Gift cards for these mega retailers are a nearly foolproof gifting option.
New Technologies Driving Innovation
The gift card market has also benefited from innovations in payment technologies. New payment platforms have enabled features like reloading existing cards with additional funds, combining multiple cards onto one smartphone wallet, and using cards anywhere via smartphone instead of physical plastic cards. These innovations in gift card technology have made the overall gifting experience much more seamless and up-to-date with contemporary preferences among digital natives.
For example, Starbucks was an early pioneer with their mobile payment app that essentially turns a smartphone into a digital Starbucks gift card. Users can reload their balances and pay for items in-store or via the app easily. Other large retailers have since adopted similar approaches. Technologies like Apple Cash and Venmo also allow sending gift funds directly to recipients’ digital wallets, skipping physical cards entirely. These tech-enabled options are driving further adoption.
New Customization Options
As gift cards have grown into big business, retailers are exploring more customized options to tap further potential. Some allow personalizing cards with names or custom images. Others enable breaking up balances onto multiple smaller denomination cards or combining balances from multiple people onto one large card. These types of customizations make gift cards more personalized for recipients while still retaining the overall convenience that shoppers value.
Experiential Retail Trends
Customization is also being taken a step further through partnerships with experience-based retailers. For example, companies allow people to purchase gift cards redeemable for tickets to concerts, shows, amusement parks and other outings. During COVID, digital-first versions of "experiential" gift cards became popular and helped innovative retailers stay afloat. Major retailers are integrating these experience options into their own brands, like a Target gift card that could also cover part of a family's tickets to a local theme park or zoos. These trends point to experiential retail being a new potential frontier of gift card innovation and appeal.
Security Concerns and Protections
Of course, along with innovations come new risks as well. Chief among worries for gift card users is security - from risks of card info being stolen to balance funds disappearing due to fraud or retailer insolvency. However, regulations and consumer protections have also been evolving. The CARD Act expanded federal protections for unused gift card balances aside from any service fees. Most U.S. states now have laws limiting expiration dates and fees. Many national retail chains offer toll-free numbers for balance checks and replacements. Overall security and protecting users’ funds will be an ongoing priority as gift cards continue innovating.
The Future of Gift Cards
With over $150 billion in annual sales, gift cards have established themselves a dominant gifting force. Though not nearly as flashy as the latest smartphone or game console, their convenience continues resonating well. As technology and customization efforts progress, gift cards’ future looks bright. The rise of digital and experience-based options signal they can stay innovative while retaining mass appeal. With ongoing focus on safeguarding users and expanding protections, gift cards seem poised to retain their position as an essential part of consumers' gift-giving repertoire for years to come.
