Report: Gift cards have big upside for retailers

Retailers stand to benefit from gift card sales beyond the initial purchase.

That's according to a study by FirstData, which found that the average consumer spent $38 more than the value on their gift card, up $10 from 2016. What's more, 44% of consumers visit a store they would not have visited otherwise because of a gift card.

The 2017 Prepaid Consumer Insights Study also found that 53% of consumers are likely to visit a store more often as the result of receiving a gift card.

There is a tremendous opportunity for businesses to drive sales and build brand loyalty by implementing gift card strategies and solutions,” said Dom Morea, senior VP, head of gift solutions at First Data. “From employee rewards and customer service programs to social media promotions and marketing campaigns, gift cards are their own form of currency, offering convenient solutions for gift card purchasers and receivers alike.”

The study found that consumers purchased an average of 6.5 physical gift cards on an annual basis, up from 5.9 in 2016, 5.5 in 2015, and 4.7 in 2014. While physical gift cards still dominate, digital gift card popularity is on the rise. In the three prior years, the average number of digital gift cards purchased stayed at approximately four per consumer. This year, that number surged, and consumers purchased an average of 6.1 digital gift cards per person.

Also, this year, among all consumers who were aware of mobile gift card apps, 52% had used one. Millennials outpaced total respondents with 65% having used an app to purchase a gift card.

In other findings:

• This year, 47% of consumers purchased a gift card at a gift card “mall” (i.e., places that sell many different types of gift cards for a number of different stores), surpassing purchases made in a physical retail stores for the first time (44%).

• Across all ages, 42% of respondents said their preferred incentive for purchasing a gift card was a discount dollar amount. With value top of mind, the next preferred incentive was a bonus gift card with the purchase of card (31%), followed by a free item with purchase (12%), and then a bonus amount added to the card (8%).