2011 Analysis on Gift Card Performance Shows Emerging Strategies and Demand Drove Surge in Sales
ATLANTA, Mar. 15, 2012 – First Data Corporation, a global leader in electronic commerce and payment processing, today released the “2011 Year-End Prepaid Gift Card Market Analysis,” one of a series of research analyses from First Data Advisors, the custom analytics and consulting unit of First Data Global Information and Analytics Solutions.
The new research analysis, which is based on the proprietary SpendTrend® Solutions database, provides industry benchmarks against which merchants can measure the growth of their gift card activations through the last six months of 2011. The analysis covers major gift card categories including all Closed Loop, Specialty Retail, Quick Service Restaurant and Casual Dining. It also completes the story of the growth in cards originally described in our mid-year performance update by focusing on prepaid market trends in the last half of 2011.
“The state of the economy in the U.S. led to a significant increase in the average consumer’s usage of prepaid cards,” said Silvio Tavares, SVP and division manager of First Data Global Information and Analytics Solutions. “Consumers were more willing to reload gift cards in order to earn discounts and rewards in everyday spending categories of grocery, discount, and gasoline.”
For some merchants, these changes created a clear path of transition, allowing them to build a unified experience that created value for both the retailer and the customer. The cornerstone for this payment and loyalty strategy was the prepaid gift card.
Following are key insights from the analysis:
- Easing Macroeconomic Headwinds Boost Gift Card Sales. The average gift card dollar volume growth on a year-over-year basis increased 10 percent during the last six months of 2011. Consumers shopped earlier in the holiday season for prepaid cards and added more value to their purchases than in 2010.
- Reloads and Redemptions Boast Growth Rates as Fuel Rewards Programs Catch Fire. Grocery, discount, and gasoline retailers aligned their prepaid strategy to respond to the painful reality of higher fuel prices on the every-day spending needs of families. According to industry reports, the typical U.S. household spent a record $4,155 on gasoline in 2011—about $1,300 more than the ten-year average. By leveraging prepaid reloadable cards in new and existing fuel rewards programs, best-in-class retailers gained a greater share of consumer spending, more repeat visits, and improved customer loyalty.
- The Evolution of the Gift Card Strategy Will Link Payments and Loyalty in a Unified Retail Experience. The dramatic impact of the omni-channel shopper (i.e., a shopper who uses mobile, eCommerce, social media, and physical stores to make better purchasing decisions) during the 2011 holiday season requires retailers to reevaluate their gift card strategy. A deep discounting approach that many national retailers deployed to attract shoppers is not a sustainable response. A new generation of gift cards that act as spending cards will help link payments and loyalty within a unified retail experience–whether those engagements are digital or in-store.
The full research analysis is currently available for purchase from First Data Advisors. For more information, please contact Customer Care at 1-800-430-0169 or visit www.firstdata.com/infoanalytics.
To participate in the SpendTrend conversation, please follow First Data at http://twitter.com/FirstData and join us at http://on.fb.me/spendtrend. First Data SpendTrend® is now available through Bloomberg, beginning with the January 2012 edition. From your Bloomberg terminal, type STFD to access SpendTrend content.
Around the world, every second of every day, First Data makes payment transactions secure, fast and easy for merchants, financial institutions and their customers. First Data leverages its vast product portfolio and expertise to drive customer revenue and profitability. Whether the choice of payment is by debit or credit card, gift card, check or mobile phone, online or at the checkout counter, First Data takes every opportunity to go beyond the transaction.
Kwiyoung Baumgarten, First Data