Following the busiest time of the year for gift card gifting, experts at the Gift Card and Voucher Association (GCVA) estimate that UK adults will spend as much as *£122m from gift cards in January to combat seasonal blues and boost the economy.
Whilst retailers reported a rebound in sales in December, the forecast for the new year is less optimistic, with sales anticipated to decline 17% in the year to January. Consumer spending is also set to be hit by high inflation and the post-Christmas lull as many look to save, not spend.
However, with Global Data research finding that 54% of the adult population have a gift card to spend each year, and the number of gift cards in wallets peaking in January, getting customers through the door to spend their gift cards could be essential to increasing footfall and revenue in quieter periods. Furthermore, for cash conscious shoppers looking to limit spending, they can still treat themselves by making use of their gift cards.
Gift cards can play a key role in supporting small businesses in January, and research shows that gift card holders are keen to support their local high street. In the 2022 State of the Nation research, 28.8% of monthly gift card purchasers said that supporting local businesses was a motivation for buying gift cards and 26.4% said they will continue to purchase gift cards as a means to support local companies.
Businesses can also benefit from increased brand awareness and loyalty if customers are encouraged to spend their gift cards. Over half of those who have received a gift card over the past three years have been introduced to a new brand or organisation via this format, a figure that rises to 67.3% of Gen Z consumers. In addition, over half of those who are introduced to a new brand become regular customers.
Gail Cohen, director general of the GCVA, said: “GCVA data shows that 90.3% of customers will spend their gift cards within six months, with 98% typically spending them within a year. However, businesses should look to encourage consumers to spend as soon as possible. Gift cards are not a present for the top drawer and provide a valuable means to increase brand loyalty, introduce new customers to the business and boost January revenue.
“With a large number of consumers receiving a gift card over the Christmas period, be it from friends and family, an employer or as a loyalty reward from a business, there is huge potential to increase post-Christmas sales. Customers can be encouraged to treat themselves, online or in-store, to an uplifting gift to combat the January Blues, whilst supporting businesses at the same time.
“There are a number of ways that businesses could encourage consumers to spend their gift cards in January, for example, offering an extra reward or incentive to shoppers who spend in the first month of the year, such as a referral code or an additional voucher to encourage shoppers to return, build brand loyalty and increase brand awareness. In addition, businesses should increase in-store and online marketing to give consumers that feeling of elation when they remember that they have a gift card to spend.”
*£122m figure is based on number of adults receiving cards each year, the seasonal distribution of these cards being received, and an average value per card of £20.