OPERATIONS

Report: Gift cards have big upside for retailers

BY Marianne Wilson

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%).

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Online giant to expand its presence in Maryland

BY Deena M. Amato-McCoy

Amazon is once again bolstering its distribution fleet in the Old Line state.

The online giant is opening an 855,000-sq.-ft. facility in Baltimore’s Sparrow Point district. This will be Amazon’s fourth fulfillment facility in the state.

The new building will create more than 1,500 full-time positions. These employees will augment more than 5,000 associates that work at Amazon’s sortation center, which is co-located with its Prime Now hub, and a fulfillment center in Baltimore, and another fulfillment center in North East, Maryland. When the new facility opens, all four buildings will comprise a total of 3.3 million total sq. ft.

The new distribution center is expected to open in 2019, according to The Baltimore Sun.

Over the past two years, Amazon has invested millions of dollars into its local fulfillment center infrastructure and through compensation to thousands of employees in the state. Between 2014 and 2016, Amazon’s investments in Maryland contributed an additional $100 million into the state’s economy, the online retailer said.

These existing buildings are also energy efficient, as more than 11,500 solar panels are installed on the rooftops of the Baltimore fulfillment facilities, a move that generates more than 3.5MW of combined peak power. Amazon’s rooftop solar projects typically reduce the amount of electricity the site draws from the utility each year by 30%, according to the company.

Amazon did not reveal if the new building will also feature solar panels.

“We’re excited to open a new, state-of-the-art fulfillment center in historic Sparrows Point and to continue innovating in a state committed to providing great opportunities for jobs and customer experience,” said Sanjay Shah, Amazon’s VP of North America Customer Fulfillment.

Baltimore is also among the more than 200 bids that Amazon received from cities and regions in 54 states, provinces, districts and territories across North America, all eager for the opportunity to be considered to host the online giant’s second North American headquarters. The online giant is referring to this new headquarters as “HQ2.”

Amazon will announce its decision next year.

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Home furnishings retailer strengthens distribution network

BY Deena M. Amato-McCoy

Ikea is bolstering its fleet of customer fulfillment centers with two new buildings.

The retailer leased two facilities in Baytown, Texas and American Canyon, California. The warehouses will focus on delivering items to customers who order products online or purchase larger items at a store.

The 1 million-sq.-ft. space in Baytown is comprised of two buildings located 30 miles east of downtown Houston. The building, which opened earlier this year, is the fourth Ikea location in Texas, in addition to three stores. Three more Texas stores are currently being constructed, according to Ikea.

In American Canyon, the 646,000-sq.-ft. facility is part of Napa Logistics Park developed by DivcoWest and Orchard Partners — a property located 34 miles north of the Port of Oakland. The location, which will open in early 2018, is the tenth Ikea location in California, augmenting eight stores and a regional distribution center.

Each building will create approximately 200 jobs, according to Ikea.

“As we expand across the country and grow our online presence, we want to ensure we have sufficient warehouse capacity to support the efficient and timely delivery and shipment of products to our customers,” said Lars Petersson, Ikea U.S. president. “Our goal is to increase accessibility to the Ikea product selection, and these two fulfillment centers will help us meet the home furnishing needs of many American customers.”

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