Grocery, Pharmacy Retailers’ E-Commerce Gift Card Programs in Early Days

restaurant gift cards

As part of the 2018 Merchant Gift Card E-Commerce Evaluation, a comprehensive report produced by digital gift card solutions provider CashStar, in partnership with NAPCO Research (NAPCO Research and Total Retail both are brands of parent company NAPCO Media), a cross-platform evaluation was done to assess 100 leading brands on more than 100 unique criteria, including the online consumer purchase and recipient experience of both digital and physical cards (e.g., payment and delivery options, ease of discoverability); business-to-business (B-to-B) e-commerce offerings; personalization options; and the use of gift cards for marketing initiatives. One of the product categories evaluated in the 2018 report, for the first time, was grocery and pharmacy. This article takes a look at the performance of the retailers in this product category, which is one of the fastest-growing e-commerce segments in retail.

Relative to the other product categories assessed in the evaluation — airlines; apparel; consumer electronics; department store; digital entertainment; general merchandise; health and beauty; home goods/furnishings; home improvement; hotels; restaurant — casual; restaurant — quick service; specialty retail; sporting goods/outdoors — grocery/pharmacy was one of the worst performers. The retailers in the category achieved, on average, 28 percent of the total points possible across all criteria, the second lowest among all product categories. Only the brands in the digital entertainment category posted a lower average score (24 percent) than the grocery/pharmacy brands.

The full report, including specifics on mistakes merchants are making and takeaways they should consider, can be downloaded here.

The good news to take from this performance is the opportunity for grocery/pharmacy merchants to quickly improve their gift card programs. The category was a late adopter of e-commerce, but now is one of the fastest-growing online retail categories. Consider that by 2025, it is forecast that 20 percent of grocery sales will be transacted online, up from just 2 percent to 4 percent in 2017.

Overall, even the merchants with the “best” gift card e-commerce programs have plenty of room for improvement. Consider that the overall average for the 100 brands evaluated was only 44 percent. Therefore, it’s not unrealistic to expect grocery/pharmacy brands to make up ground quickly in regards to their e-commerce gift card programs, particularly as digital becomes an even bigger part of their businesses. Key areas for brands in the grocery/pharmacy category to focus on include, but are not limited to, customer experience, data security, fraud protection, B-to-B programs, use of gift cards for promotional purposes, and ease of discoverability.

The top three performers in the grocery/pharmacy category were Food Lion, which received a score of 51 percent, easily outpacing the second- and third-place finishers in the category, CVS Pharmacy (29 percent) and Kroger (26 percent).

Make sure to access the full report, 2018 Merchant Gift Card E-Commerce Evaluation, which includes all of the rankings (including broken down by product category) as well as more valuable trends gleaned from the data (including real-world examples), as well as tips for brands on how to improve their e-commerce gift card programs.