Quick Wins for Retailers to Optimize Gift Cards for Year End Holiday Season

Gift cards are an important part of loyalty, digital and omnichannel programs; be sure they get the attention they deserve

Despite concerns about rising prices, one-third of consumers plan to spend more on holiday gifts this year, according to the Q3 2024 Gift Card Gauge from Fiserv. What’s more, shoppers increasingly see gift cards as a key tool for fulfilling their holiday buying needs.

Some 42% of consumers plan to purchase gift cards to supplement the presents they buy, while 33% will use gift cards to purchase gifts. Another 21% plan to purchase high-value valued gift cards as the main present. From the recipient’s perspective, 49% of consumers agree with the statement, “In today’s market, a gift card is more valuable to me than a traditional gift.”

Gift cards are an important lever to engage buyers, especially during the holiday shopping season. This article covers five areas that retailers can evaluate as they assess their gift-card programs, along with suggestions for quick-win actions that can still be taken before holiday shopping kicks into high gear.

Retailers should ask themselves how well they’re:

1.  Aligning with current consumer shopping behaviors

Persistent inflation and uncertain consumer confidence have prompted many people to shop more strategically. As of June 2024, 40% of shoppers had already started their holiday shopping, with 48% of them doing so to take advantage of promotions and discounts.

For retailers, there’s still time to: Motivate shoppers with gift-card-based incentives. For example, 50% of shoppers would be interested in a bonus gift card awarded with a gift-card purchase; 44% would respond to free/discounted merchandise with a gift-card purchase; and 39% would be motivated by a bonus gift card for shopping during a holiday event.

2.  Using gift cards to drive loyalty and engagement

The Q3 2024 Gift Card Gauge found that loyalty programs greatly influence where consumers will do their holiday shopping, with more than 40% of shoppers saying they will choose retailers where they are members of a loyalty rewards program. Savvy merchants are integrating gift cards into their loyalty experience by incentivizing gift-card usage.

For retailers, there’s still time to: Motivate frequent shoppers with exclusive benefits, private shopping events and discounts for loyalty members. For instance, 42% of shoppers would like to use loyalty points to buy gift cards for the holidays, while 46% would like to maximize savings by using points or rewards.

3.  Offering options for personalization while also offering privacy choices

Many faiths celebrate during the fourth quarter, and it’s critical for retailers to cater to the diversity of their customer bases, whether it’s Christmas, Hanukkah or Kwanzaa. Outside of faith, language is another important factor to consider in sourcing and producing gift cards. When it comes to eCommerce, retailers can now offer their customers the ability to personalize online gift cards before sending them. For example, customers can add personal photos, written notes and even voice messages to gift cards.

For retailers, there’s still time to: Strike the right balance between optional and required data shared by gift-card recipients. When recipients use gift cards, it’s an opportunity for retailers to attract a repeat customer. That said, some recipients will prefer to use their gift cards anonymously, whether it’s a physical or digital card. Retailers can use the remaining holiday shopping period to explore messaging that makes clear to potential new customers that it’s up to them how much – or little – they share during the redemption process and then back that messaging up with a user-friendly experience.

4.  Placing gift cards for maximum impact, both in-store and digital

According to Fiserv’s 21st Annual Prepaid Consumer Insights Survey, consumers remain split 50/50 on whether they prefer physical or digital gift cards. Merchants must be mindful of consumers’ preferences and continue to cater to their needs for both the speed and flexibility of online gift cards as well as the tangibility of physical ones.

For retailers, there’s still time to: Ensure tactically sound placement of both physical and digital cards. When it comes to physical cards in brick-and-mortar locations, place cards in multiple locations, especially areas where popular items might sell out. That way, shoppers are more likely to notice the gift-card option, which enables the recipient to purchase items when back in stock. Retailers should also be sure digital gift-card options are featured prominently across their online properties, from websites to banner ads to promotional emails. Fiserv can help retailers get digital cards set up and operational within a few days. They’re a great option for merchants to offer their last-minute holiday shoppers.

5.  Mitigating fraud with staff training and in-store card placement

Fraudsters have targeted gift cards, notably through so-called gift-card draining. That’s when scammers steal a physical gift card from a retailer, copy the card number and security code and then reseal the card and place it back on the rack. When a shopper activates the card at purchase, the fraudster then drains the money from the card.

For retailers, there’s still time to: Train staff to watch for shoppers removing gift cards without purchasing them and/or placing gift cards on racks. When associates understand how gift-card draining works, it’s more likely they’ll monitor racks more closely. In terms of placement, retailers can ensure gift cards are placed in sight of associates, whether that’s checkout staff or associates assisting customers throughout the store.

Gift cards help consumers and retailers get beyond the holidays

For most retailers, the Q4 2024 holiday season won’t be the first or last opportunity to become gift card ready. As gift-card programs increasingly mesh with retailers’ omnichannel and digital strategies, however, the remaining weeks of the holiday season represent a valuable opportunity to evaluate and, where possible, optimize the gift-card experience for shoppers.