Gift cards are a perennial favorite during the holidays, with the months of November and December accounting for nearly 40% of gift card activations. An uptick in gift card sales during the first half of 2010 bodes well for this year’s holiday season. First Data, a provider of e-commerce and payment solutions, forecasts that sales of merchant-branded gift cards will increase by 1% to 5% for 2010, with the potential for upside.
There are many new trends popping up in the space that are expected to hit the mainstream this season, most notably around virtual gift cards. Such cards allow recipients to receive a gift code either via e-mail or on their mobile device that can be redeemed online or in stores.
“Although digital gift cards have been around for a while, the adoption of smartphones and iPads has primed them for big growth,” said Michael Hursta, VP gift cards for First Data, Atlanta. “Many of the large retail players are gearing up to create a much more rich environment this year for virtual gift cards that includes videos, photography and fun graphics around it to enrich that experience for the recipient. This will make the demand for virtual gift cards even higher.”
In time, Hursta predicts that virtual gift cards are going to become equally important and dynamic as traditional plastic gift cards in the future.
“Plastic gift cards won’t go away though, especially since many prefer giving a physical gift for the holidays,” Hursta said. “However, traditional gift cards will likely show slower growth as virtual options take off.”
To keep the plastic gift card experience engaging, many retailers will give shoppers the opportunity to personalize the cards by designing, decorating and adding messages to them. Others will offer packaging for free or a small fee that dresses it up for the holidays.
Another major trend on the rise is using gift cards as incentive devices.
“Shoppers love a reward for making a purchase—giving them a free gift card will not only get them into the stores, but it will keep them as a loyal customer,” Hursta said. “We saw this concept last year and predict it to grow about 10% to 20% this year.”
To give traditional cards the most play this season, retailers should make sure they are placed in an area that is highly visible in stores.
“Put gift cards near products that might