Retailers, want some positive news? While the UK retail and leisure sectors continue to navigate economic uncertainty, one area is bucking the trend: gift cards.
According to the latest GCVA 2024 H2 Report, gift card and voucher sales saw double-digit growth – a rare bright spot in an otherwise tough trading landscape. So, what’s driving this growth, and more importantly, how can retailers make the most of it? Let’s dive in.
Gift cards are outperforming retail
Despite sluggish consumer spending and a cautious retail environment, gift card sales grew by 11.39% like-for-like in H2 2024, with rolling year growth reaching 10.64%.
The key driver? B2B sales. Companies are increasingly using gift cards for employee benefits, rewards, and incentives – a trend that saw B2B gift card sales rise 13.7% like-for-like. With the cost-of-living crisis still front of mind, businesses are turning to gift cards as a practical way to support employees and drive engagement. Meanwhile, B2C sales also saw a respectable 7.9% uplift, proving that consumers continue to embrace gift cards for gifting and self-use.
Digital takes the lead, but physical still plays a role
For the first time, digital gift cards claimed the majority market share over the rolling year (50.3%). The shift to digital is no surprise, with consumers seeking instant, convenient options. However, physical cards still held their ground, especially over the festive period, reinforcing their importance in the gifting market.
The grocery sector is driving growth
When it comes to retail categories, grocers were the clear winners. Gift card sales in the grocery sector soared 20.48% year-on-year, with B2B purchases accounting for over 80% of that growth. Why? Because employers are recognising the power of grocery gift cards as an employee benefit, helping staff stretch their budgets on essential purchases. Food will always be a priority, and as the cost of living squeezes budgets, saving on areas like grocery can free up extra cash for fun stuff.
In contrast, fashion struggled, with like-for-like growth at a meagre 0.71%. The rise of second-hand marketplaces and sustainability-conscious shopping habits may be playing a role here, but one thing is clear: fashion retailers need to innovate their gift card strategies to stay relevant.
How retailers can maximise gift card success in 2025
Gift cards are proving to be a resilient and lucrative revenue stream – so how can retailers take full advantage?
- Prioritise digital gift cards – Digital is now the dominant format, and the gap will only widen. Ensure your eCommerce platform makes purchasing and redeeming gift cards seamless.
- Tap into the B2B market – With businesses driving the majority of gift card sales, retailers should look at how they can better position their gift card offerings for corporate rewards, incentives, and employee benefits.
- Expand omnichannel distribution – While online sales are growing, in-store still accounts for over 50% of B2C gift card sales. Offering gift cards across multiple channels – including third-party marketplaces and gift card malls – will help maximise reach.
- Enhance personalisation – From customisable digital gift cards to branded experiences, retailers who offer a more engaging and personalised approach will win consumer loyalty.
- Leverage seasonal trends – The festive period remains a peak time for gift cards, but don’t overlook other key retail moments like Mother’s Day, back-to-school season, and summer sales.
The bottom line
Gift cards aren’t just a steady revenue stream – they’re a growth driver in an otherwise challenging retail market. Whether it’s through B2B sales, digital innovation, or omnichannel expansion, retailers that invest in their gift card programs now will be the ones reaping the rewards in 2025 and beyond.
Looking to elevate your gift card strategy? At Jigsaw, we help retailers launch, manage, and grow best-in-class gift card programs that drive sales and customer engagement. Get in touch to find out how we can help you make the most of this booming market. 🚀
