6 Compelling Reasons to Sell Gift Cards

Selling gift cards will put retailers one step ahead of shoppers this season. For the past ten years, gift cards have been the most requested holiday gift item. It’s projected that the $100 billion-a-year industry will continue to grow and diversify due to increasing demand. Gift cards are a great sales opportunity for home improvement retailers who want to generate instant cash flow. Operating a gift card mall can be a win-win for everyone involved. Stores increase foot traffic, the gift card brands get more shelf space, and third-party brokers profit from negotiating the deal. 

Blackhawk Networks and InComm are the two companies that manage the set-up and distribution of gift cards. “We get the cards, produce the cards, process the cards, develop racks that are easy to shop, and merchandise those racks, says Teri Llach, chief marketing officer at Blackhawk. “We’ll take care of everything, and we’ll get this category up and running for you, so it’s a nice value-added for your customer.”

Gift cards are also popular with purchasers because they eliminate the hassle of giving a gift the recipient doesn’t want to receive. Most of us know something about our family and friends’ favorite restaurants, hobbies, music, and interests. Gift cards are a way to give something meaningful that reflects the recipients’ tastes. Statistics show that nearly 40 percent of people get one or more gifts they don’t want, so gift cards are an ideal solution.

Pandemic and Shortages Cause Sells to Increase
Although life is gradually getting back to normal, consumers’ attitude about returning to the past holidays’ hustle and bustle activities is still lagging. Shoppers are also aware that many popular items are in short supply and are selling at premium prices. This situation makes gift cards even more attractive. Here are a few of the findings from a recent Blackhawk consumer survey.

  • Respondents plan to do 41 percent of their holiday shopping via gift cards
  • The typical consumer will buy 15 gift cards in 2021
  • Gift card sales in 2021 are 50 percent higher than 2020 and 200 percent higher than in 2019

Selling Gift Cards is Good Business
Offering gift cards is a simple way for home improvement retailers to generate add-on sales in a limited amount of space without investing a lot of time and effort. Consider them to be a service to your customers who may have gone elsewhere to purchase gift cards. However, when you’re in business, it’s also essential to make a profit. Brands pay Blackhawk and InComm to be included in the gift card mall. These third-party companies then pay retailers a percentage of the money to host the display. 

Since many retailers who are members of a co-op or buying group already sell branded gift cards, incorporating a gift card mall into the mix is a natural fit. Here are six things to consider when determining if this store-within-a-store concept is right for your business.

  • Seventy-two percent of shoppers redeeming gift cards spend 20 – 50 percent more than the value of the card
  • The typical holiday shopper spends more than $200 on gift cardsGift cards are the most requested holiday gift (Christmas, Mother’s Day, and birthdays rank highest on the list)
  • The majority of gift cards are redeemed in January—extending the shopping season into the 1st quarter of the new year
  • Nearly 94 percent of people in the U.S. have given or received a gift card
  • Over 50 percent of recipients make more than one trip to redeem the total value of their card

In an interview with PYMNTS.com, an interactive platform, Brett Narlinger, VP of Global Commerce for Blackhawk Network, says consumers use a “spectrum of intimacy” when selecting prepaid cards. “Consumers are really focused on, “I want a gift, but I want it to mean something. I either want it to be fun or want it to be something that gives back.”

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