Despite the growth of digital shopping, annual gift cart redemption is so popular that three out of four consumers still redeem loyalty points for physical gift cards. Although this number is down 3% from last year, digital gift cards still only make up 25% of the total volume.
According to a recent survey by the National Gift Card Corp. (NGC), big box stores topped the list for a third year in a row for gift card sales, with 27% of all the total volume of cards. The success of this category is largely due to Amazon, one of eight merchants in this category.
Other retail categories with high gift card sales include entertainment, 17.4%, followed by department stores, 6.8%.
Physical gift or reward cards, which made the survey's top 10, by volume, include Amazon, iTunes, Walmart, Starbucks, Target, Visa, American Express, Subway, The Home Depot and Panera.
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The biggest category increases included entertainment, up 139%, and travel, up 97% between 2015 and 2017.
So why are physical gift cards still so popular?
NGC President Eric Theigs said there are three key reasons why physical cards are still popular:
- The user experience for physical gift cards is well-known by most consumers and almost every Point of Sale system used by any retailer will accept a physical gift card.
- The opposite is true for eGift cards. The experience at point of sale varies greatly based on the retailer.
"Until the retail industry standardizes around one or two executions on the redemption process for eGift cards, updates every POS platform to accept a scan of a mobile gift card (money to be spent by retailers), or follows a retail leader who blazes the trail in best in class consumer experience for eGfit redemption, the end user experience with eGift is not consistent," Theigs said. "And guess what, people don’t like inconsistency, so they will stick with what they know—a physical gift card—until the eGift product and retailers evolve to eliminate these issues.
In addition, physical gift cards are still seen as more personal versus giving an eGift card.
"While the overall consumer research shows the popularity of both giving and receiving a gift card, and yes, there’s some technology around making the gifting experience of receiving an eGift card more interactive, it still comes down to the fact that sending someone an email with an eGift card link may amplify the 'laziness' or 'non-personal' stigma around eGift cards, and for this reason physical gift cards will remain more popular for gifting reasons," he said.
Moving forward, Theigs believes that physical gift cards will continue to be a popular option for consumers and digital cards won't be as popular for at least another 10 to 15 years. While eGift sales will increase for the use of personal shopping, it will not be a strong platform for a gift-giving option.