Holiday Gift Card Trends 2014: Lessons Learned … · A First Data White Paper Holiday Gift Card...

A First Data White Paper

Holiday Gift Card Trends 2014: Lessons Learned and How to Drive Sales in 2015 and BeyondFirst Data’s 2014 U.S. Gift Card Holiday Mystery Shopping Study sent mystery shoppers into approximately 658 stores across 63 retailers nationwide. Discover the latest gift card trends and notable consumer behaviors set to drive customer loyalty and gift cards sales in the year ahead and beyond.

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2014 U.S. Gift Card Holiday Mystery Shopping Study

Each mystery shopper that participated in the survey completed a customer questionnaire that was aligned with the 7 vertical industries included in the study: specialty retail, department, discount, grocery/pharmacy, quick service, casual dining and petroleum/convenience.

Mystery shoppers participating in the survey also provided feedback on the following categories for each in-store gift card program they experienced, which included: signage, gift card displays, card and carrier designs and gift card promotions.

A First Data White Paper Holiday 2014 Gift Card Trends: Lessons Learned and How to Drive Sales in 2015 and Beyond

IntroductionFor the sixteenth year straight, First Data has commissioned a nationwide gift card mystery shopping study conducted over the 2014 holiday season. Completed by Marketforce International, the study sent shoppers into approximately 658 stores across 63 retailers nationwide. The qualitative research provides unique insight into national in-store gift card programs across the United States as well as the latest trends currently shaping consumers’ gift card purchasing experiences. The results will not only help you assess the effectiveness of your own gift card program and gain a better understanding of your direct competitors’ programs, but also help ensure that you are consistently implementing the right processes to drive loyalty and sales of your mobile and plastic cards.

However, the results presented below are only helpful if you are able to gain traction with the right internal partners across your organization. We encourage you to use the results in this white paper to provide feedback that is as actionable as possible to ensure future success. Contact your First Data Relationship Manager to discuss strategies and solutions to maximize your gift card sales.

The Gift Card Renaissance

In recent years gift card sales have thrived with innovations from e-gifting to a diverse range of mobile options, all of which have greatly contributed to the expansion of sales. Gone are the days when your gift card program was relegated to a spot behind your counter, only to be dusted off for the holiday season when your consumers purchased them as a last resort. Today, as you look for new and dynamic ways to build brand awareness, create customer loyalty, incentivize your customers, and drive foot traffic into your brick and mortar locations, gift cards are revolutionizing the way today’s most innovative retailers are achieving demonstrable results. That’s because a strong gift card program provides a measurable financial impact to your business in both the short and long term by delivering increased revenues, margins, potential and future sales and a decrease in returned merchandise. However, a cohesive, thoughtful strategy is becoming a necessity in an increasingly fragmented and complicated marketplace.



Plastic Is Still King

Recent research from Mercator Advisory Group1 notes that while sales of virtual and mobile cards are increasing, plastic is still the dominant form factor in the marketplace, making up 98% of all gift cards sold in the U.S. in 2013. Obviously, plastic is still an integral part of any successful program. However, key best practices must be maintained in order to achieve continued success. This year the study showed retailers achieved varying degrees of success in managing the basics of having and stocking gift card displays across the 7 vertical industries included in the study.

Point-of-Purchase Display Best Practices

Display cards in multiple locations throughout the store. When shoppers can’t find the right gift they often turn to gift cards. Having displays in key locations throughout the store can prevent customers from leaving empty handed.

Organize your card display so that it is easy for shoppers to browse your selection and find the occasion card they need.

In Lane. First Data research reveals that most shoppers expect to find gift cards in the check-out lane. Be sure to keep a large stock in-lane but also think about where else to put displays.

The Right Assortment Drives Sales

When it comes to your merchandise, shoppers are always looking for fresh alternatives and new options. Providing new assortments of cards throughout the year is a key to program success. It is also important to develop a card assortment strategy that aligns with key selling seasons. Consumers generally receive gift cards on special occasions, and the piece of plastic they purchase they associated with the occasion they are celebrating. The stronger the association is, the greater the perceived value for the consumer. That’s why holiday is the perfect time to roll out new graphic treatments and designs that generate excitement and ignite the desire to purchase.

Question: Of stores that had gift card displays, rate the fullness of inventory levels of the giftcard displays.

1. Mercator Advisory Group. 11th Annual US Prepaid Cards Market Forecast. November 2014

Tip 1

Tip 2

Tip 3

Grocery - Pharmacy

0%

Not Very FullCompletely Full

67% 33%

Moderately Full

Petroleum Convenience Stores

Completely Full

29%

Moderately Full

48%

Not Very Full

23%

Casual Dining

Completely Full

50%

Not Very Full

26%

Moderately Full

24%



Design and Packaging Best Practices:

Right Assortment. Ensure you have the right assortment of cards for any occasion to drive sales and foot traffic.

Be Brand and Customer Aware. Ensure your designs align with your brand’s look and feel, yet offer design options to meet local store differences, including demographics and ethnic traditions.

Expand with Multipacks. Multipacks are one way to encourage consumers to increase the average number of cards purchased. Packaging all occasion or holiday cards is especially popular and makes purchasing cards easier and more convenient for your customers.

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Question:Of stores having STORE BRANDED gift card designs for specific occasions, which occasions were there gift card designs?

Why Design and Assortment Matters

Starbucks: How 100 Gift Card Designs Can Drive $1B in Sales

Plastic gift cards were never more abundant or in more assortment during the 2014 Holiday season than they were at Starbucks and for a good reason, according to an article in Bloomberg Business Week titled, “Starbucks Tries to Save Christmas with 100 Gift Cards & Mug Designs.” Starbucks noticed a worrisome trend during the 2013 holiday season: Online purchases cut into the foot traffic at retail stores, and that meant fewer latte breaks for harried shoppers. As a result same-store sales growth slowed. So for 2014, Starbucks created an alternative strategy to drive traffic, becoming a holiday shopping destination in its own right by launching 100 different designs for its gift cards in a bid to become more of a source for stocking stuffers instead of just a caffeine pit stop. The net result, Starbucks customers loaded $1.1 billion on the company’s cards in the U.S. and Canada throughout the holiday season. In fact, a whopping 1 in 7 Americans received a Starbucks gift card. 2.5 million gift cards were activated on Christmas Eve alone.

All verticals in our mystery shopping survey had a strong and varied assortment of cards for virtually every occasion, no doubt a contributor to the overall sales growth we saw this holiday season.

Discount Stores

Christmas Winter/ Birthday Thank You Wedding Other Seasonal

90% 83% 85% 63% 60% 25%

Petroleum Convenience Stores


31% 38% 63% 0%25% 6%

Grocery / Pharmacy


83% 50%53%57% 17% 13%



Attributes Are Attractive to Consumers

In a Gift Card Attribute Study completed by First Data in early 2015, consumers noted a card that is visually appealing is an important feature in selecting a card. Moreover, they stated a card with attributes had a higher perceived value and was therefore more appealing as a gift and increased the likehood of purchase. In addition, a number of merchants noted that multiple card designs and attributes increased their gift card sales. As significant competition exists in the gift card space for consumer dollars, especially when your cards are located in gift card malls with multiple competing brands, branded cards with special features are one way to make your cards stand out. The best gift card and carrier designs tend to be:

1. An attractive design

2. Consistent with the merchant’s brand

3. Representative of the occasion for which they are given

4. Unique in some way(s).

Positioning Best Practices:

Increase the perceived value and personality of your gift cards with packaging, attributes and carriers. Carriers, to which cards are affixed, and attractive packaging can make the experience of giving and receiving cards more personal for your customers.

Know Your Audience: Depending on your consumer base, you may need to stay away from scripts and complex fonts. Consumers prefer denominations on the card itself, rather than the carrier to ensure friends and family members know the amount on the card.

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Why In-Store Signage Matters

As gift cards become a key component in driving loyalty and building brand awareness, retailers need to ensure they communicate the value of their gift card programs effectively using in-store signage, in as many places as possible.

We know from mystery shopping research that there are a variety of factors that make signs memorable including color, size and placement. Gift card signage needs to be clear, concise and large to be impactful. This year retailers’ in store signage was large scale, highlighting assortment, benefits, e-gifting, rewards and special offers. The majority of signage was placed at eye level or below, where shoppers are most likely to take note.

Question:Of stores having STORE BRANDED cards with special features, which special features were incorporated into the cards?

Grocery / Pharmacy

See 3-D/ Unique Unique Customizable Other Through Moving Material Shape

50% 13%63% 63% 63% 0%

Specialty Retail


40% 15%25% 25% 20% 20%

Discount Stores


50% 0%40%30% 10%60%



Tim Hortons: Omni Channel Marketing

Tim Hortons expanded their marketing reach by promoting e-gifting options in “brick and mortar” locations with signage. Consumers had the ability to purchase gift cards by scanning a QR code to go

directly to the retailer’s online site, building customer awareness of their TimmyMe Mobile App.

In addition, new in Spring 2015, Tim Hortons will be test marketing a sticker on their popular TimCard, reminding consumers to “protect” their card and receive special offers by uploading it into their app.

In the mobile app format, gift cards are no longer anonymous, and become rich, powerful marketing tools with the ability to capture customer identities and preferences, purchase behavior and information. They even offer the ability to manage a loyalty program using information collected through the mobile gift card platform.

Signage Placement Best Practices:

Place messaging in multiple locations. Display cards in multiple locations throughout the store. When shoppers can’t find the right gift, they often turn to gift cards.

Make your signage memorable. Place signage at eye level or below where shoppers are most likely to take note. Ensure signage is clear, concise and highlights benefits quickly to the consumer.

Promote e-gifting in store. Build awareness of your online gifting platform in-store through signage and messaging.

Use card messaging to drive an Omni-Channel experience. Create awareness of apps on your plastic cards with messaging to remind consumers to register gift cards in apps.

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Three Is Still A Party

According to First Data’s 2014 US Consumer Insights Survey, gift card malls, where consumers are able to find gift cards from most major retailers all in one place, remain a top choice for consumers to purchase gift cards. These platforms enable you to dramatically increase the number of locations you can sell your gift cards. And, third-party distribution is no longer limited to “brick and mortar” locations with the arrival of digital gift card malls and wallets like Gyft.

Whether a local shop or national chain, the implications of the growth of app-based gift card programs are clear: those who employ a robust, omni-channel mobile strategy today that includes an app-based gift card program will be able to reap the rewards of increased sales of both gift cards and their regular complement of products, draw more foot traffic to brick-and-mortar locations, and grow a diverse, vibrant consumer base as mobile e-gifting continues to grow in popularity.

Distribution Best Practices:

Gift card malls drive sales and brand awareness. Gift card malls including grocery, discount drug and department stores are a great way to promote your brand and reach new customers. Your relationship manager can provide insight into which may be beneficial for your program.

Online distribution channels are key to the success of any program. These channels offer new ways for you to reach millennial consumers and grow sales.

Tip 2

Tip 1

Grocery - Pharmacy

Store Branded

100%

Branded for other stores

or restaurants

100% 98%

98%

Branded as Visa®, MasterCard®, or

American Express®

Specialty Retail

Store Branded

100%


or restaurants

23%


American Express®

12%

Discount Stores

Store Branded

93%


or restaurants

95%


American Express®

Question:What types of gift cards were available at the store?

http://www.firstdata.com/giftcards/consumer-insights/index.html



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Conclusion

Every retailer’s gift card program is at a different stage in its lifecycle. The most important question you need to ask yourself is where your program fits today in relation to the needs of your customers and the market around you. First and foremost, managing your existing gift card program is a key component of success. Although success is never guaranteed, today’s industry-leading merchants are employing many of these best practices within their gift programs. The result? Better top-and bottom-line performance.

There’s no doubt that the widespread adoption of mobile has created a fundamental shift in the way consumers interact with gift cards. If you’re a retailer still contemplating whether or not implementing an e-gifting program is right for your business, 2015 may be the perfect time to consider entering the mobile channel or developing an app of your own.

Finally, First Data provides a number of resources to supplement your knowledge in the marketplace. If you have not received information recently from First Data, please ask your Relationship Manager for the latest research, presentations and webinars, or request a client consultation so that we can help you grow your program.

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Holiday Gift Card Trends 2014: Lessons Learned … · A First Data White Paper Holiday Gift Card...

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