It’s been said many times, but continues to ring true: the 2020 holiday season will be unlike any before. COVID-19 has elongated the shopping season, shifted consumers to digital channels, and changed what gifts people are buying and who they’re buying for.
To paint a clearer picture of what this shopping season will look like, Blackhawk Network surveyed 1,500 consumers on what their plans are for shopping and gifting this year. It then combined that survey data with an in-depth analysis of sales data across 50,000 U.S. merchant locations, publishing its findings in the Blackhawk BrandedPay Holiday 2020 Report.
To learn more about what shopping and gifting will look like this holiday season and gain further insight into Blackhawk’s key findings, PaymentsJournal sat down with Theresa McEndree, VP of Marketing at Blackhawk Network, and Ted Iacobuzio, VP and Managing Director of Research at Mercator Advisory Group.
COVID-19 changed consumer shopping habits well before the holiday season
COVID-19 has already resulted in a decline in credit card use, and it’s likely that the decline will continue during the holiday buying season. “There are a number of reasons for that,” explained Iacobuzio. “People remember 2008 and know that it’s easy to get in over their head with debt.” Meanwhile, debit and prepaid are on the rise, which is expected to continue.
While no one can say for sure whether the modification in consumer spending and gifting is a permanent, it is likely that at least some of these changes are here to stay.
Holiday shopping began earlier this year
BrandedPay survey results revealed that the holiday season will be longer than usual this year. In fact, it has already begun. Instead of pushing a single day or weekend-long Black Friday sale, merchants are leaning into ongoing promotional strategies that last the duration of the holiday season. In McEndree’s words, the goal for these merchants is to “drive not mountains, but peaks.”
Consumers are embracing the elongated shopping season, with 20% of survey respondents saying they’re thinking about the holidays earlier this year. The top three reasons they listed for shopping earlier are having concerns that COVID-19 will impact their ability to shop, wanting to avoid crowds and long lines, and trying to budget holiday spending.
Gift cards are gaining prominence
Another noteworthy difference about this holiday season is that shoppers are turning to gift cards more than ever before. Over half (52%) of surveyed consumers said that they are more likely to buy more gift cards this holiday season than in previous years. Further, surveyed consumers expect to spend an average of $313 on gift cards this year, which is a 19% increase from the average of $262 spent last year.
“When it comes to gift cards, you’re going to see them come into their own this holiday selling season,” noted Iacobuzio. “Consumers may turn toward closed loop gift cards if they know a recipient is a fan of a certain retailer or class of goods, or open loop gift cards if they perhaps don’t have a gift in mind, but still want to express goodwill.”
“The holiday will be really great for gift cards overall because they’re filling a lot of different consumer needs, both in the product selection as well as accessibility from a purchase standpoint and the mediums in which they’re delivered and redeemed,” added McEndree.
The versatility of gift cards make them a top choice for shoppers
There are a number of reasons consumers are turning to gift cards more this year. First, many families are reducing travel and opting out of in-person holiday gatherings due to COVID-19. Gift cards are a convenient way to buy a gift for those that they can’t see.
In times of economic stress, like the current economic climate, people are more conscientious of picking practical gifts and gifts that enable the recipient to treat themselves. Gift cards offer people the choice, personalization, and practicality many need.
COVID-19 has also brought new people into the gifting circle. “Who we put into that circle of gifting has changed because our lives, what matters, and how we engage with the world have changed,” said McEndree. For example, delivery people, teachers, and essential workers have taken an even more recognized place in our lives as people to purchase a gift for.
Additionally, gift cards are among employees’ favorite holiday gifts to receive from their employers, with 82% saying they would like to receive a gift card from their employer as a holiday gift. They appreciate the gift of choice, the ability to re-gift, and the fact that they can be delivered physically or virtually. Digital gift cards are a particularly seamless way for employers to express appreciation for their workers.
Demand for digital gifting is skyrocketing
There’s also a big move to digital engagement, as demand for digital gifting soars to all-time highs. In fact, Blackhawk sales data indicates that sales of eGifts sold on merchant websites are already up 74% from 2019.
“What this means for gift cards is we’ve seen a large migration to e-commerce, but also to digital gift cards,” said McEndree. “And that’s really important this holiday season because consumers are focused on connection and creating shared experiences, and gift cards are a great way to do that.”
Similarly, a recent Visa survey found that 33% of Americans plan on giving more digital gift cards during the 2020 holiday season than in years past. As a result, “gift cards are becoming an especially important channel for [merchants] to increase revenue this time of year,” noted Iacobuzio.
The takeaway
Gift cards have already been enjoying a more than decade-long reign as the most requested holiday gift. This year, they will take an even more prominent role in holiday gifting.
Gift cards are preferred by consumers to receive as gifts and to give as gifts because of the personalization, choice, and flexibility they offer. Digital gifting, in particular, is seeing a sharp increase in adoption as consumers change their holiday shopping behavior to reflect the realities of the COVID-19 world.
To meet customer demand and stay competitive in what, for many retailers, is a make-or-break holiday shopping season, merchants must have an optimized eCommerce gift card program. “We’re excited to share the research, and we’re excited to see what the holiday has to hold,” concluded McEndree.
Access Blackhawk Network’s 2020 Multinational BrandedPay™ Report.
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