Will Gift Cards Be a Shopper's Delight This Holiday Season?

Are gift cards poised to play a far bigger role in this year's holiday season? Possibly, according to a recent Return Path study of 25,000 consumer purchases over the past 18 months. The study found gift cards are emerging as an increasingly popular option during all gift-giving occasions across all merchandise categories, including apparel.

By the end of Q2-2015 gift card sales were up 40 percent year-over-year. If consumers continue to buy 40 percent more gift cards than they did last year, December 2015 gift card sales could be nearly eight times higher than their Q1-2015 monthly average.  We found that gift card buyers averaged 1.25 gift card purchases per month, spending around $50 for each.  Why do consumers like the gift card option and what's the opportunity for apparel merchants?

Last-second shoppers replacing last-minute shoppers?
One obvious benefit of gift cards is their availability as last-minute purchases. "Last second" purchasing is a 2015 trend that could significantly affect the December holiday season. Apparel merchants have already seen holiday season surges in gift card purchases, which — in this group of consumers — shot up by more than 500 percent in December 2014 compared to the rest of the year. More gift card orders were placed on Dec. 24 than on any other day of the year. Christmas Day, Dec. 25, placed in the 2014 Top 10, too. So did Dec. 22 and 23. Of the top 20 days for gift card orders in 2014, 19 fell in December. How did we discover this?

Our original intent was to explore trends in St. Valentine's Day, Mother's Day, and Father's Day gift purchasing, with the hypothesis that gift cards were more likely given to dads than to moms or sweethearts. In fact, in 2014 this group of consumers ordered more gift cards during the week before Mother's Day than during the week before Father's Day — perhaps unsurprising, considering the generally bigger economic impact of Mother's Day gift giving.

The pattern changed this year, though. The week leading up to Father's Day represented the highest gift card orders in the first half of 2015, exceeding Mother's Day and Valentine's orders. On a year-over-year basis, the weeks ahead of Mother's Day and Valentine's saw 33 percent increases in gift card orders, but Father's Day gift card orders were up by more than 50 percent. The single biggest day for gift card orders in 2015 was Sunday, June 21 — Father's Day. The second-biggest day? Sunday, May 10 — Mother's Day.

Reasons to welcome the rise of gift cards
If shoppers substitute more gift cards for merchandise purchases in December 2015, they could make the season easier on retailers. Shipping and fulfillment costs would be reduced, of course, but so would some of the stress caused by "last day of guaranteed delivery" deadlines. Last-second buyers might even make Christmas Day 2015 the biggest gift card day of the year, ordering items with virtually no fulfillment cost, and building stronger relationships with merchants that offer them an easy, inexpensive way to recover from forgetting to buy a present for people on their lists.

Moreover, significant percentages of those gift card recipients are likely not to be on brands' current customer rolls. The biggest opportunity created by surging gift card purchases may not be cost savings; it may be the chance to acquire new customers through the implicit recommendation of friends or family members — at almost no cost. Gift card buyers may represent a formidable marketing force, actively recruiting customers whose demographic profiles, lifestyles, and interests closely resemble merchants' existing customer bases. Recipients of last-second holiday gift cards could become valuable buyers, contributing to 2016 revenue growth and recruiting even more new customers with every gift buying occasion throughout the year.

Smart marketers can take advantage of the rising gift card trend by actively promoting them in Q4-2015, especially in conjunction with order deadlines for holiday delivery. If American consumers do indeed make Dec. 25 the biggest gift card order day of the year, it could be a boon — and the perfect holiday gift — for apparel merchants.

About the author and study
Eric Weinberg is president of field operations for Return Path, a data solutions provider using proprietary email data to analyze and strengthen marketing performance, security, and consumer insight for large brands, including many of the world's biggest apparel retailers. This study was conducted using the company's consumer network of more than 2 million email accounts. Return Path has access to these accounts' commercial contents for aggregated, anonymous trend analysis in exchange for consumers' use of mailbox productivity and organization apps. This study examined gift card receipts from 25,815 US consumers who were active members of the consumer network during the entire span from January 2014 through June 2015, and purchased at least one gift card within that timeframe.

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