A gift card is also referred to as gift vouchers that enable the users to receive services or products from malls, shopping center, showroom etc. These coupons are basically provided by merchant establishment, banks, and big organization of a particular product or service in the form of a festival offer. This card makes modes of transaction easy for the user and also reduce the cost of printing bills. Gift card service makes the system more secure and traceable as compared to cash payment, for instance, gift cards consist of the PIN for transaction and even if it is misplaced, it will not be an issue because it can be blocked.
The global gift card market is projected to reach around US$ 900 billion by the end of 2027, in terms of revenue, growing at CAGR of 10% during the forecast period (2019-2027).
Increasing penetration of smartphones coupled with the affordable data plans has increased the adoption of m-Commerce is projected to foster the market growth of gift cards. Consumers are rapidly downloading mobile apps such as Flipkart, Amazon, and eBay for online shopping as it offers the ability to browse more quickly and easily make purchases on-the-go is resulting in a growing number of consumers using online purchases. This factor is expected to propel the market growth of gift cards over the forecast period.
The growing popularity of e-commerce that enables the user to use gift cards easily and exploring more products with easy purchases is projected to foster the market growth of gift cards. Moreover, online payment offer consumers to choose between digital and physical gift cards during online purchases. Furthermore, easy purchasing option for gift card online is another major factor attracting consumer to use online purchase thus fueling demand for gift cards which in turn driving the market growth.
Regionally, North America dominated the global gift card market in 2018, accounting for around 34% share in terms of value, followed by Europe and Asia-pacific, respectively
Figure 1. Global Gift Card Market, Revenue Share (%), By Region, 2018
Some gift cards have an expiry date and the recipient must use that card within the mentioned expiry date on the card which is projected to hinder the market growth of the gift card. Some gifts cards are difficult to use for the person who is not aware of the benefits of gift cards and it also has few terms and conditions which is further anticipated to curb the market growth of the gift card over the forecast timeframe.
Many gift cards are not used or half amount remains unredeemed, and this is termed as spillage or breakage of gift cards. This is happen because people losing or forgetting about their cards and are not aware of how and where to use these cards. The outstanding amount on these gift cards remained unearned revenue liability on balance sheet of company’s until customers redeem the cards and that are not redeemed go unclaimed property under the country’s respective state government under laws. This factor is expected to restrict the market growth of the gift cards.
The growing popularity of digital gift cards which is attracting customers is projected to foster the market growth of gift cards. Digital gift cards offer companies to track a consumer’s buying behavior and use of redeem gift cards by the customer, which provide accurate information. Therefore, the digital gift card provides marketers to record data of the user as well as the receiver which can be used in personalize future promotions. This factor is estimated to augment the market growth of digital gift cards.
Increasing penetration of innovative gift cards is gaining popularity among consumer is expected to augment the market growth of gift cards. Nowadays gift cards can be used more than once due to partial redeeming option, and the remaining balance can be carried forwards for future use. However, paper-based gift vouchers do not allow partial redemption. According to the Coherent Market Insights, companies such as Amazon also offer top-up gift cards. Therefore, the growing popularity of gift cards is accelerating the market growth.
Figure 2. Global Gift Card Market – Opportunity Analysis
The growing trend of using closed-loop gift cards as it has a prepaid amount is fueling the market growth of gift cards. Despite the easy availability of universal or open-loop gift cards, consumers still prefer closed-loop specialty gift cards as it is a convenient option during heavy sales shopping months and also allow consumer for personal use. Closed-loop gifts cards offer specialty gift cards, which enable users to plan their spending budget in a particular store. This factor is expected to foster the market growth of gift cards.
Increasing the focus of players to introduce lottery cards is expected to propel the market growth of gift cards. For instance, in October 2015, Incomm, which is a prepaid card and payment solution provider, entered into a five-year contract with Scientific Games International, Inc., which is a technology-based product developer, to offer lottery gift cards in North America. However, these cards can only be redeemed by a person aged 18 years or older.
Figure 3. Global Gift Card Market, Revenue Share (%), By Type, in 2018
On the basis of type, in 2018, restaurant closed loop segment accounted the largest market share of 29% in terms of value, followed by retail closed loop and miscellaneous closed loop respectively.
Figure 4. Global Gift Card Market – Value Chain Analysis
Key players operating in global gift card market are Apple Inc., Amazon.com Inc., Best Buy Co., Inc., Starbucks Corporation, Target Corporation and Wal-Mart Stores, Inc.
Few Recent Developments
Blackhawk Network Holdings, Inc.
A gift card is a prepaid stored-value money card. This can be classified into open loop and closed loop cards and are usually issued by retailer or bank. Gift cards are also given out by employers or organizations as rewards or gifts. Owing to this, corporate sectors are encouraging the usage of gift cards in order to provide the employees with rewards and incentives
The gift card market has witnessed significant growth in recent past years, owing to the rise in adoption of gift card across the corporate sector for offering incentives to recognizing employees achievement is expected to fuel the demand for gift cards. On the basis of gift card type, the restaurant closed loop, is estimated to drive the growth in the market share, owing to the adoption of gift cards among customers as a form of rewards.
E-commerce websites such as Amazon, Flipkart, Alibaba, eBay and others offer customers gift cards, which is augmenting the growth of the global gift card market. Moreover, the growing penetration of internet and smartphones is making the access the e-commerce websites much easier as well as provide customers with a wide range of product range.
North America was the dominant region in the global gift card market in 2018, owing to the growing number of media platforms such as Facebook, Instagram and Pinterest, where the users can sell products directly to the users through their social media account. Moreover, this scenario is estimated to foster the growth of global gift card market during the forecast period.
Key features of the study:
“*” marked represents similar segmentation in other categories in the respective section