Three years ago the headline story on DecisionMarketing was “£4bn gift card market faces crisis”. Since then the gift card industry hasn’t just turned its fortunes around, it is now one of the most innovative spaces across both the retail and marketing sectors.
So, just how did a dinosaur of retail reinvent itself and has it been able to shake off its old reputation as ultimately detrimental to brand prestige?
In recent years, with an increasingly data driven approach, retailers are now seeing full redemption as vital in driving both incremental revenues and customer loyalty. Luckily, technology is creating new consumer behaviours, removing the inefficiency of ‘breakage’ and allowing gift-cards to play a pivotal role in a retailer’s sales funnel.
Enter the reselling marketplace, which offers a solution to the problem of unused gift cards. This enables users to sell the gift cards they know they won’t use before they expire, but it could also provide an interesting route to market for smart retailers.
By trading slightly discounted gift cards under the umbrella of the consumer resale market, retail brands are able to reach price savvy customers. This would be a welcome alternative to wholesale discounting in store, avoiding the damage to brand perception whilst still attracting previously priced-out consumers. The potential retailer benefits for acquisition, footfall and brand loyalty are obvious.
The rise in the gift card marketplace hasn’t just been a UK trend. Across the pond, trusted brands such as Hotels.com and Sears have also seen an uplift in the exchange market. This is partly thanks to technological developments in pre-paid and POS systems but also newly emerging trends in consumer habits.
With traceability and redemption easier and cheaper for both retailers and consumers, gift cards are taking up a new position as a branded currency, motivated by a broad range of reasons, including gifting, convenience and household budgeting.
Today, the UK gift card and voucher market is seeing a resurgence in growth and can amount to up to 10% of a UK retailer’s turnover – something like £5bn a year.
New habits mean consumers want gift-cards on tap, just as they have come to expect with taxis and takeaways. The re-selling market is breathing new life into the industry and as awareness of these new platforms grows globally, there are huge new opportunities for retailers to exploit.
David Wall is UK vice-president of business development at Zeek
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