Despite a backdrop of inflation and rising living costs, new research reveals a reassuringly strong performance in the gift card and voucher industry through the second half of 2022, with UK sales growing* by 11.8% on a rolling year basis and experiencing 7.2% like-for-like growth.
The latest analysis by the Gift Card and Voucher Association (GCVA) and KPMG UK found that retail continues to dominate the market (accounting for 90%), with GCVA retail members experiencing a median 10.4% increase in sales.
Grocery was the highest retail growth area with 11.8% like-for-like growth overall – potentially the impact of consumers seeking discounts through gift cards to help combat the cost of living. In contrast, fashion appeared to be a tightening market for discretionary spend, seeing a 7.8% like-for-like decline.
However, it was the leisure market that led the way for the third period running, experiencing like-for-like growth of 7.6% and showing a continued appetite for experience-led gifting, as Brits prioritise leisure and entertainment activities when money is tight. Leisure gift card sales grew by 28% in 2022, compared to the previous year, as the nation continued to pull away from the effects of pandemic restrictions.
The findings demonstrate robust consumer confidence despite the economic climate, with B2C sales growing by 13% through 2022. Sales increased across every channel, with in-store accounting for over 58%, and gift card malls experiencing 20.5% like-for-like growth, showing the continued strong role of the high street in driving the gift card and voucher market.
Within B2B, rewards and incentives grew by 44.6%, reflecting a shift in how businesses are using gift cards to reward their staff. Employee benefits retained the biggest market share (55%) but showed a small decline from the previous period as the pandemic-induced staff benefit boost begins to moderate.
Digital products have contributed significantly, showing 19.3% growth on the previous year. The shift away from physical cards and paper voucher continues as people look to digital as a quick, easy and more sustainable method to purchase.
Gail Cohen, director general at the Gift Card and Voucher Association, said: “The strong performance and growth of the gift card sector, despite ongoing economic challenges, is testament to the industry’s resilience and versatility. Not only do they remain a crucial pillar for choice-centric gifting, but they continue to evolve and offer much-needed solutions for both consumers and businesses with rewards, incentives and discounts.
“Gift cards are enabling people to treat themselves when they otherwise don’t have the means to. The continued growth in leisure, especially, shows that many Brits are prioritising experiences and activities they can enjoy with others as a form of enjoyment and escapism through difficult times.
“Meanwhile, retail has proved its resilience in tough trading conditions and continues to dominate the market. While the continued growth in digital is unsurprising, it’s positive to see the crucial role also played by point of sale, gift card malls and the physical store in the gift card ecosystem, showing that consumers still deeply value and rely upon the high street.”
Commenting on the latest figures, Don Williams, retail partner at KPMG UK, added: “Against a backdrop of retail sales which have generally faced difficulties with rising prices of essentials squeezing the pockets of the nation, the gift card market has surpassed expectations.
“It’s positive to see the investment in digital offerings translating into sales. Yet, gift card providers will need to allocate further investment to this area to keep up with changing consumer needs and desires, such as ‘reloadable’ digital gift cards, for example.
“With costs continuing to rise, the economic outlook once again looks set to challenge retailers. Investment in attracting and retaining customers will be on the agenda for most if not all consumer facing businesses. Meanwhile, with employee benefit schemes maintaining their dominance in the B2B market, gift card providers have renewed opportunity to work with employers in supporting their staff through this challenging economic environment.”
*Excluding Open Loop sales. The fall in Open Loop sales is a sign of increased consumer confidence compared to pandemic times when Open Loop sales were artificially boosted due to worries about when and whether specific gift card and voucher products could be redeemed.