Despite a backdrop of inflation and rising living costs, new research reveals a reassuringly strong performance in the gift cards and voucher industry through the second half of 2022. UK sales have grown* 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%). 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.
Here are some other statistics
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. This shows 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:
Further, he claimed that 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. Often, 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:
Further, he claims:
“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. For example, ‘reloadable’ digital gift cards.
“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. Especially, 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. Back, Open Loop sales were artificially boosted due to worries about when/whether specific gift card and voucher products are redeemed.
The Gift Card & Voucher Association (GCVA) and KPMG UK analysed six months of gift and voucher sales data from 28 members of the GCVA. KPMG UK then aggregated and analysed the data, sorting by market (business-to-consumer or business-to-business), by sector (leisure or retail), by product (physical card, digital card or paper voucher), by channel (direct, online, gift card malls or via third party), and also by method of redemption (closed loop, multi-choice or open loop).
About the GCVA
The Gift Card & Voucher Association (www.gcva.co.uk) is the body representing the key players in what is today an over £7 billion gift card and stored value solutions market. With 90 members representing key retailers, issuers and suppliers the GCVA provides an information and reference point for the Gift Card & Voucher industry and is at the forefront of the issues affecting the industry.
Its main objective is to provide a platform and infrastructure for the industry. Also, it aim is to raise the profile and use of gift cards and vouchers within the UK. This way, promoting the industry to consumers, businesses, government and other interested parties.
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 15,300 partners and staff. The UK firm recorded a revenue of £2.43 billion in the year ended 30 September 2021.
KPMG is a global organization of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 145 countries and territories with more than 236,000 partners and employees around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.