The holidays are beginning early in 2020. This year, more shoppers than ever are expected to purchase gift cards for friends and family, and retailers are taking every advantage they can find to ensure successful holiday campaigns, including Black Fridays in October. Big names such as Amazon and Walmart have announced plans for major discounts on multiple dates through the holiday shopping season.
Gift cards continue to gain in popularity among consumers and retailers. A report issued by Research and Markets forecasts that the U.S. gift card market will realize a compound annual growth rate (CAGR) of 9.2 percent between 2020 and 2024. This growth builds on the CAGR of 11.7 percent recorded by gift cards between 2015 and 2019. Total value of U.S. gift card sales is expected to reach $221 billion a year by 2024, according to the report.
As people adapt their holiday plans to accommodate public-safety restrictions, gift cards provide a safe and convenient way for shoppers to check off all the names on their lists. Retail gift card point of sale offers a range of benefits for customers and shop owners alike.
How Gift Cards Benefit Retailers
Financial services firm FIS Global lists seven ways that retailers benefit by offering their customers gift cards:
- Build brand awareness.
- Increase the store’s holiday sales.
- Engage customers (those buying the cards and those receiving them).
- Collect valuable customer data.
- Make giving safe and convenient for customers and retail workers alike.
- Easy distribution without taking up much display space.
- Generate revenue for the store before it actually provides any product or service.
Gift cards create more revenue for retailers than their face value; a survey by First Data determined that consumers spend an average of $59 more than the original value of the gift cards they receive. For supermarket gift cards, the average increased spending is 94 percent.
The cards also serve to extend the holiday season for retailers, allowing them to increase foot traffic in their stores well into the new year. The Hustle reports that customers are 2.5 times more likely to pay full price for items when they use gift cards to purchase them.
How Retailers Can Maximize the Benefits of Gift Cards
The gift cards sold by retailers are referred to as “closed-loop” cards because they can only be purchased and used at that business. By contrast, open-loop gift cards, such as those offered to vendors by Visa or MasterCard, can be used at multiple locations.
Two gift card options are most popular among retailers:
- Online e-gift cards can be used to purchase items in the store or website or app; the POS system treats it the same as any other transaction.
- Physical cards feature a magnetic strip or barcode and are available from the retailer’s POS provider, a merchant bank, or a third-party vendor.
For example, talech supports three types of gift cards:
- Fanfare for Elavon customers in the U.S.
- Synergy for non-Elavon customers in the U.S.
- talech for non-Elavon customers in the U.S. and EU/UK
Instructions for ordering and printing physical talech gift cards explain the steps of the process, including how to add the company’s brand or otherwise customize the cards. talech gift cards can also be accepted for online orders. Customers are able to reuse gift cards, and gift cards can be combined with loyalty cards to create a stronger bond with the customer.
Tips for Marketing and Tracking Gift Cards
One of the first steps when implementing gift cards for a retail business is establishing gift card policies and making sure employees are aware of and abide by the policies. Store clerks need to know how the gift cards work and any limitations that may be placed on them, such as a cap on the number of cards that can be purchased at once, and never allowing gift cards to be used to buy other gift cards. Federal rules restrict gift card fees and expiration dates and states place their own regulations on gift card fees, expiration dates, and redemption of unused portions of the card balance.
Software Advice highlights three ways retailers can promote their gift cards:
- Display gift cards where customers are most likely to view them, such as checkouts and kiosks. In places that aren’t suitable for showing the cards themselves, add signs that remind customers of the availability of the store’s gift cards. The promotions should extend to all marketing channels, including online and traditional media.
- Offer customers a reward for purchasing a gift card, such as receiving a free gift card when purchasing one of a certain value. An example is a spa that gives clients a $20 voucher for every $100 gift card they purchase.
- Create specialty gift cards for special occasions, and there’s no occasion more special than the holidays. This holiday season in particular will benefit from all avenues available for spreading our wishes of joy and peace.
Offering custom gift cards is one of the ways retailers can give their customers options that make their shopping experience more pleasurable. The cards serve as ambassadors for your store’s brand, and they deliver benefits beyond their face value. Retail stores need to take advantage of all the avenues available for generating revenue, and gift cards promise to be a growing source of that revenue, this holiday season and beyond.
A point of sale partner like talech can help you implement retail gift cards for the holidays this year. We work with you to apply an innovative POS solution that levels the playing field. Reach out to us today to learn more about how talech can be your valued POS partner.