With every holiday season comes a handful of must-have items for kids (remember Tickle Me Elmo?) and adults alike. There is one item that continues to get hotter every year: the gift card.
Holiday gift card sales are expected to reach $29.8B, up $1B from holiday 2012, according to the National Retail Federation (Tweet Stat!). Often times the mental image associated with gift cards is the procrastinating shopper in a physical retail store on December 24th who resorts to plastic in fear of showing up to Christmas without a gift for a loved one.
New research conducted by Millward Brown Digital suggests that online retailers are making it even easier for shoppers to procrastinate when it comes to gift cards. Millward Brown Digital leveraged its online panel to understand when and where consumers shop for gift cards.
Analysis was conducted across the fifteen largest online retailers during last holiday season and the first part of this holiday season. For the purposes of this analysis, gift card demand is defined as anyone who views at least one gift card page at any of the fifteen retailers. Shoppers could be shopping for a gift card to that retailer or any other gift cards sold by that retailer.
Early results suggest that this holiday season will be strong for online gift card sales. The number of consumers considering a gift card during Black Friday week is up 24% compared to the same week last holiday season. Some of the early demand this year could be tied to the early Hanukkah holiday which coincided with Thanksgiving this year.
Retailers have continued to evolve the concept of a card. Amazon allows consumers the ability to send electronic gift cards through email, Facebook or even print gift cards from home. This additional flexibility not only makes online ordering more appealing. For those still wishing to order a physical gift card, Amazon has been visibly promoting one-day free gift card shipping.
These increasingly convenient options can be appealing to last-minute shoppers. Last holiday season, the number of shoppers that considered an online gift season peaked during the week before Christmas. 4.1 million shoppers visited one of the top 15 online retailers to consider a gift card in the final days leading up to the holiday.
Last holiday season, Amazon was responsible for 35% of all online gift card shopping sessions. Although this analysis did not specifically look at gift card purchase activity, these trends are concerning for traditional retailers (although the story would look differently with the offline picture included). Strong gift card sales can translate into continued strong traffic into the New Year. In January 2013, Amazon had a 20% YOY increase in unique visitors.
The continued climb in gift card sales means that the holiday season will continue to get stretched. Retailer creep emerged last year with the emergence of countless “Black Friday” sales in October to try and get the shopper in a holiday mindset earlier than ever. Retailers will increasingly look to the month of January when consumers cash in those gift cards. For online retailers, there are a few important questions to try and answer:
- What impact does online gift card redemption have on a consumer’s preference to shop online or offline in subsequent shopping trips?
- To what degree does Amazon attract new customers as a result of online gift card sales? What is the longer term impact – do shoppers abandon traditional retailers like Target or Walmart?