Q4 Holiday Trends & Predictions
November 29, 2018
The Q4 holiday season is quickly approaching, or is already here, depending on who you ask. In looking at data from the 2017 holiday season, it’s clear that ecommerce continues on its upward trajectory, supported by mobile. The 2017 holidays saw $107.4 billion in sales, with a 17.8% growth in ecommerce sales. According to ChannelAdvisor internal research, mobile share of traffic for the “Cyber Five” (the top five holiday ecommerce shopping days, including Veteran’s Day, day before Thanksgiving, Thanksgiving, Black Friday, Small Business Saturday, and Cyber Monday) has experienced 40% growth since 2013 and could experience up to 80% growth this year.
These “big picture” ecommerce insights are important in planning gift card strategy for the holidays. The Q4 shopping window is expanding; peak shopping season is steadily rolling backward towards back-to-school and, as far as gift cards are concerned, marching ahead towards Valentine’s Day. Both high-level insights and gift card-specific trends will be important to eye in the 2018 holiday shopping season to maximize sales. As we inch into to this holiday season, there are several key gift card trends for merchants to keep in mind.
Demand for Gift Cards is—and Will Remain—High
Holiday season is always prime time for gift cards; demand is typically high and experts agree that 2018 will be no different. The National Retail Federation (NRF) reported that gift cards were the most requested gift—a title gift cards have held for the past 11 years. We predict the trend will continue during the 2018 Q4 holiday, especially given the high number of consumers who report purchasing gift cards. According to a recent Blackhawk Network survey, 91% of consumers have purchased a gift card and 87% of those consumers have purchased a gift card for someone else.
Where merchants need to be concerned is with how consumers are purchasing these holiday gift cards. The Blackhawk Network survey reported that 74% of consumers have purchased a gift card from a third-party in-store display, highlighting the importance of effective B2B gift card programs and merchandising operations. Seventy-four percent of consumers also reported that they prefer purchasing all of the gift cards they need in one store and 64% find it frustrating when they aren’t able to.
Another thing to note is the type of gift cards in which consumers have interest. As of 2017, internet users purchased an average of 13 gift cards, with 6.5 of those being physical gift cards. While digital gift cards made up almost half of gift card purchases by Internet Users last year, it’s worth noting that this number rose sharply. Digital gift card purchases had remained flat at four purchases per Internet User from 2014 through 2016, marking a 52.5% increase last year. With that trend expected to continue, merchants should stay on top of their digital gift card offerings.
‘Tis the Season for Promotions
Consumers are on-the-hunt for gift card promotions, especially during the Q4 holidays. Eight-in-ten consumers consider promotions involving physical gift cards more influential on purchase decisions than other options like bonus dollars, coupons and digital gift cards. Three quarters of surveyed consumers report three specific scenarios would make them more likely to make a gift card purchase:
- Receive a discount on a gift card (e.g. buy a gift card worth $100 for $80).
- Get a second gift card when you buy one (e.g. buy a $100 gift card, get a $20 gift card).
- Spend a certain amount, get a gift card (e.g. Spend $100 and get a $20 gift card).
Season’s Personalized Greetings
Personalization options are important to consumers, with more than half (66%) reporting that they would be interested in gift cards personalized for a specific holiday. It’s the most popular type of personalization, followed closely by the option to include a personal message in a greeting card (62%) and a gift card personalized with their own message (62%).
Personalization options also impact how much consumers spend on gift cards and how many gift cards they buy. Between 30% and 40% of consumers reported that personalization would encourage them to spend more on the gift card than they typically spend. When it comes to gift cards personalized for a specific holiday, 37% consumers reported they would be encouraged to spend more. Fifty-one percent agree that holiday-specific gift cards would get them to purchase more gift cards.
Holiday Incentives Bring Good Cheer
Most surveyed consumers (82 percent) would prefer receiving a gift card or prepaid card over other incentive options like discounts, checks or merchandise. This good cheer surrounding gift cards translates to employee rewards as well. Consumers surveyed reported that gift card rewards from employers are comparable in popularity to cash rewards. Sixty-nine percent of employees would like to receive a gift card as a reward from an employer, compared to the 73 percent that would prefer a cash incentive. Recipients that received gift cards as employee rewards, rewards for purchases or rebates are likely to use them for themselves.
Post-Holiday: Gift Card Use and Returns
Merchants should also consider the post-holiday ramifications of gift card sales. Blackhawk Network research shows that 42% of recipients use gift cards they receive right away and 59% often spend more than the amount on the gift card, with 15% doing so every time, especially men and younger generations.
After the post-holiday sales rush comes the influx of returns. The good news for merchants is that 63% show interest in receiving a gift card in exchange for a returned retail item. This is especially true for those primarily responsible for household purchases, those who’ve purchased a gift card before, and younger respondents.
More than half (53%) of respondents expressed interest in receiving a personalized gift product, where a giver selects a product to be sent via a digital gift card and the recipient is able to choose product details or get a gift card instead. This is an appealing option for merchants as it can cut down on returns. For consumers, it adds a touch of personalization to digital gift cards and allows for thoughtful giving without overreaching on product details.
As consumer preference for gift cards holds strong, merchants have a promising Q4 holiday season ahead. Physical gift cards seem to be able to supplant the struggles of brick-and-mortar retail and digital gift cards continue to rise in desirability. They key will be serving consumer demands in the areas of mobile, personalization options, promotions, incentives, and seamless return options.