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The chances are that you’ve purchased a gift card at some point in your life. They’re quick and convenient for last-minute thank-yous, they’re easy to personalize, and they take the indecision out of trying to find the perfect present for everyone from your employees to your friends and tough-to-shop-for mother-in-law.
For all of these reasons, it’s no wonder that the global gift card market is projected to reach $4.2 trillion by 2032 (with a compounded annual growth rate of over 17% from 2023). So if your retail store doesn’t already stock gift cards, now is the time to get on board.
From amplifying brand awareness to building customer loyalty, selling gift cards has a host of benefits that reverberate beyond your bottom line. Below, we’ll dive deeper into why gift cards are such a valuable resource for retail shops and how yours can get started today.
Good for customers and for you: The benefits of offering gift cards
Gift cards are good for cash flow. As soon as your store sells one, the full value of the card goes right into your account. And even after a gift card is sold, it can still generate revenue, as 79% of consumers say they typically spend more than the balance.
If you have a busy fourth quarter, but January and February often feel slow, gift cards can keep customers coming through the doors after the holidays have ended. What’s more, gift cards are evergreen—they can be purchased at any time for any occasion, making them a consistent financial win you can rely on. (According to Fiserv’s 21st Annual Prepaid Consumer Insights Survey, top milestones for gift card purchases are birthdays, winter holidays, congratulations, weddings, and housewarmings.)
They build brand awareness: Consumers love sharing the virtues of their favorite stores, and gift cards are a popular way of doing so. Most gift cards are purchased as, well, gifts, which can win you new shoppers with the potential to build long-term loyalty.
They make customers happy: For indecisive shoppers, gift cards make gift-giving less stressful and time-consuming. The convenience factor is big too: In 2023, about half of consumers in the United States said they planned to buy gift cards due to how convenient they are. For the recipients, they get to choose exactly what they want, as opposed to something impersonal or just plain not their style.
They make returns less disappointing. If a customer is returning an item but doesn’t have a receipt, offer a gift card in lieu of a refund to keep their money in your business. You can also offer a gift card to customers who may want to return an item after the return-by date. Instead of telling them that you simply can’t take the return back, which is always upsetting to hear, they get to buy something new with a gift card, and you don’t miss out on any revenue. (It’s a win-win for you both.)
They’re a useful incentive: Have a specific product you’re having trouble moving? Perhaps something extra expensive? Create a limited-time incentive where shoppers will get a gift card if they purchase the item. For example, get a $75 gift card if you purchase a $500 designer bag. This will not only help you move the more expensive item but also give the shopper another reason to come back and keep spending.
How to get started with gift cards
Whether or not your retail shop has an online store, we recommend focusing on both digital and physical gift cards to satisfy customers who want to wrap and give a physical card (and perhaps who aren’t as tech savvy) and those who just want to quickly send a gift card over email or text. Here’s how it all works:
Technical set-up:
- If you take credit and debit card payments at your shop, then you’re already set up to accept gift cards. With a point-of-sale (POS) system that has gift card functionality in place, you should be able to create, send, track, and even promote your cards. If your POS system doesn’t have a gift card functionality, you can find other third-party gift card apps to help you process transactions.
Know the facts:
- Do your research to see if any regional regulations apply to your gift cards and speak with a tax or legal consultant to see what fine print you may need regarding expiration dates and potential tax collection.
Create the cards:
- For physical gift cards, work with a designer to make sure the style is consistent with your store’s aesthetic. Stock little matching envelopes and blank cards for notes to make them feel more thoughtful. Remember, the more eye-catching the card is, the more likely it’ll be shared.
- For digital gift cards, provide shoppers with ways to customize their look and add a gift message to make them more personal.
Go to market and get marketing:
- Once you have your physical cards, show them off! Keep a stack by the register with a few sample envelopes so customers can get that point-of-purchase inspiration.
- Celebrate the launch of your cards with a special promotion. For example, shoppers can spend a certain amount and get a gift card to use toward their next purchase.
- Use social media and email marketing to get the word out. If you’re able, tie the timing to upcoming holidays (to remind customers it’s time to shop).
- If you don’t yet have a store loyalty program, now’s the time to create one: Incentive programs are the reason 55% of consumers buy gift cards for themselves. Reward shoppers with points for every purchase, and when they reach a certain threshold, award them with a gift card. This will create excitement around every purchase and help you build customer loyalty in the process.
Stats you should monitor
Like with any aspect of your business, it’s important to keep track of the numbers to measure progress, success, and room for improvement. Here are some we recommend:
- How many gift cards have been purchased? This simple stat will help you figure out if your marketing efforts are paying off.
- When are gift cards being redeemed? This can help you determine future promotional programs.
- Are people spending above or below the gift card rate? If people are spending below the rate, perhaps you should have a few more small accessories at the front of your store to help get them over the threshold.
- How many gift cards have expired? This is a loss for you and the customer. If you’re able, reach out occasionally over email to remind customers of their gift card balance. This will incentivize them to come in and spend it, especially if it’s during a special promotional period.
If you’ve ever felt the rush of receiving a gift card and getting excited about what you’ll purchase, then you understand its magic. While gift cards may feel like free money to shoppers, they’re a useful tool for increasing your cash flow (during both busy and slow times) and increasing brand awareness.
To learn more about ways to generate excitement at your retail shop, check out our guides for throwing in-store events and hosting product demos.
