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February 21, 2020

UK gift card sales remain resilient despite tough trading conditions

By Douglas Blakey

UK gift card and voucher sales are up 1.7% on a rolling year basis in the second half of 2019. This is despite widely publicised challenges facing many consumer businesses, including shoppers delaying purchases in light of ongoing Brexit uncertainty.

The UK gift card sales figures are released by trade body the UK Gift Card and Voucher Association and KPMG. UKGCVA reports that leisure continues to challenge the dominance of traditional retail by increasing market share. Specifically, shoppers increasingly favour experience over product ownership.

UK gift cards sales and vouchers are again dominated by traditional retail, still accounting for 62.8% of the overall market.

However, the latest data sees leisure-related sales grow by 24% on a rolling year basis. Moreover, leisure now accounts for 11.5% of the overall market. This is a gain of 2.5% if comparing the second half of 2018 to the second half of 2019.

UK gift card sales: other key H2 findings

The business-to-business market is up by 12.7% year-on-year. Meantime, there is a 13.7% like-for-like increase in sales of gift cards and vouchers to consumers online. This reflects the preferences of younger generations who prefer to shop online. Furthermore, this is being driven by the increased interest in leisure.

‘Open loop’ options are gaining popularity with market share growing from 3.6% last year to 5.6% this year. At the same time, digital products market share rises by 5%, taking this from physical and paper alternatives. While convenience contributes to this shift, the consumer demand for more environmentally-friendly options is also contributing.

Paul Martin, head of retail at KPMG says: “In a landscape where winning and maintaining customer loyalty is often the line between success and failure, retailers can’t afford to overlook the key role gift cards and vouchers play.

“That’s especially true given that growth of gift card sales remains so resilient, despite such volatile trading more broadly. Leisure is winning some more market share. But many retail players are actually recording double-digit growth of their gift card and voucher sales.

Gail Cohen, director general at the UK Gift Card and Voucher Association, adds: “The challenges being faced by all consumer businesses have been painfully clear in recent months. Whether it is record low retail sales figures or the latest business casualties. However, the clear resilience of gift card and voucher sales is testament to the importance of this avenue in generating additional revenue and boosting customer loyalty.

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