Digital gift cards now account for over half (52%) of the UK gift card market share in what is being called a “pivotal shift” in the industry.
In the first half of the year, digital gift card sales increased by 17.1%, according to a report from the Gift Card & Voucher Association (GCVA). Over the past five years, this figure has grown by 30% as UK companies have increasingly incorporated digital gift cards into their loyalty and rewards programs.
“The surge in digital gifting in the UK is impressive and it is ahead of the pace in the U.S.,” said Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research. “Javelin firmly believes that the U.S. will reach a 50/50 split between physical and digital gift cards by the end of the decade. That is driven by similar features of loyalty and rewards that link easily to consumers’ apps and stored value accounts.”
Getting Creative
The leisure and entertainment sector outperformed the retail sector in the UK gift card market, with sales of entertainment-oriented cards increasing by 15.5% year-over-year. However, digital gift card sales in the retail sector still saw a 23.2% year-over-year growth, with grocery stores being the most popular choice among consumers.
Retailers have continued to find creative ways to drive gift card sales. This includes offering a bonus gift card with a purchase or rewarding extra loyalty points to customers who make purchases using their stored value accounts.
A Landmark Moment
Digital gift cards can be a strong component of a loyalty program, driving both engagement with a company’s app and fueling greater spending—consumers typically spend more than the gift card’s value.
“The rise of digital gift cards is a landmark moment for our industry, highlighting the shifting preferences of both consumers and businesses,” said Hannah Shimko, Managing Director of the GCVA in a prepared statement. “This trend underscores the innovation and flexibility inherent in the gift card market, which continues to adapt and grow despite economic headwinds. As we approach the crucial Christmas period, it will be intriguing to see how these trends evolve and shape the future of the market.”