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

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  • A First Data White Paper

    Holiday Gift Card Trends 2014: Lessons Learned and How to Drive Sales in 2015 and BeyondFirst Datas 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.

  • firstdata.com 2015 First Data Corporation. All rights reserved. 2

    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 todays most innovative retailers are achieving demonstrable results. Thats 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.

  • firstdata.com 2015 First Data Corporation. All rights reserved. 3

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

    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 cant 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. Thats 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%

  • firstdata.com 2015 First Data Corporation. All rights reserved. 4

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

    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 brands 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.

    Tip 1

    Tip 2

    Tip 3

    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 SalesPlastic 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 companys 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

    Christmas Winter/ Birthday Thank You Wedding Other Seasonal

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

    Grocery / Pharmacy

    Christmas Winter/ Birthday Thank You Wedding Other Seasonal

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

  • firstdata.com 2015 First Data Corporation. All rights reserved. 5

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

    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

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