The Evolution of Gift Cards and Digital Rewards, Marketing & Advertising News, ET BrandEquity

Representative image (iStock)

By Mayank Chawla

Gift cards have existed in the Indian market for more than two decades, but gifts have focused on tradition in the form of money and commodities. In recent years, however, the focus on convenience, convenience, and the power of choice has driven the gift card market to grow exponentially.

Additionally, gift cards in their digital avatar have reinvented personal gifts and consumer rewards in an unprecedented way. This has led to a significant increase in the use of gift cards with mobile-first audiences, not just in subways, but across the country, percent across all age groups and in all cities. Today, you can give your parents an all-expenses-paid vacation in the form of a gift card they can redeem at their convenience, or an online course for a friend or sibling where they choose. what they need and when they need it.

Until a few years ago, gift cards were a largely urban phenomenon, however, there has been a substantial shift in the market. The rapid adoption of technology and e-commerce has digitized gift cards and given them wide reach across socio-economic geographic levels of the country. Plus, they’ve grown from a mere giveaway tool to a shopping, rewards, and value-buying experience.

Today gift cards are not just for giving, they are used by brands to reward their loyal customers, companies use them to inspire and reward their employees, entice their channel partners and by individuals to use for both necessities and indulgences. The gift card growth data offers a much deeper perspective and some interesting insights.

Our to research shows that the share of gift cards in the gift space was around 11% in 2020 and is expected to grow another 40% by 2025. And it’s not just more people buying gift cards than ever, the average spend per gift card has also increased. Average spend per gift card is estimated to increase more than twice in 2025 compared to 2020. For digital gift cards, it is estimated to increase more than three times over the same period, reaching five billion USD in 2025.

The rapid rise of digital money wallets and the widespread acceptance of digital payment methods have also contributed to the adoption of digital gift cards. This means that digital gift cards have been a game changer in the consumer industry. For brands, this means assured purchases and a loyal customer. BFSI is an industry that has seen significant disruption in recent years due to rapid technological transformation and increasing levels of disposable income. They have been one of the biggest adopters of percent rewards digital gift cards with the primary goal of breaking free from their old image and setting new benchmarks in customer service.

A biased perception is that gift cards and digital rewards are a metro concept only, but that’s far from the truth. Our research also shows that in 2020, 63% of all gift cards were purchased in Tier 1 cities, but by 2025 the share is estimated to drop by 6 percentage points to be taken over by Tier 2/3 cities. .

The share of gift card buyers from Tier 2/3 cities is growing rapidly. While growth in Tier 1 cities will be three times by 2025 for Tier 2/3 cities, it will be almost six times. This is a notable statistic, which explicitly indicates the speed of technology adoption in lower-middle-class, non-urban non-urban households.

Beyond the geographic divide, the research also highlights some interesting trends on the demographic divide. While Millennials and Gen Z parents and grandparents still prefer to give money as gifts, 60% of gift card buyers or users are millennials.

But here’s an extremely interesting point – in terms of income levels, it’s the 25% of income strata that are most likely to buy a gift card for their friends and family. Only 6% of the top 25% earners buy a gift card, but 42% of the bottom 25% choose it over other gifts.

For organizations, the growth of gift cards is also revolutionizing brands and the brand ecosystem. This pushes brands to continue raising standards of service and customer satisfaction. Businesses from all walks of life are waking up to the growing needs of consumers – that means gift cards and rewards are no longer limited to a few large organizations and a handful of service-percent product categories. All consumer-focused brands, including those with a limited regional presence, have caught on.

More customers are looking to get gift cards for regional brands in electronics, jewelry, fashion, travel, and more. There is a growing local voice looking for local brands that understand deep consumer needs, rather than national brands that are percent global. These small brands from small towns are leveraging digital and successfully playing the gift card game to break up the clutter. These brands are quick to recognize that small-town audiences are extremely value-conscious; they get bang for every dollar they spend.

While companies will continue to deliver value to their customers through gift cards, companies have also increased the use of gift cards for employee engagement and incentivization. For eons, bonuses have made employees happy, but today companies are using gift cards to motivate employees throughout the year and celebrate their special percent days.

They are also used to reward their channel partners for meeting and exceeding their revenue goals. Research shows that there will be a double growth in the purchase of corporate gift cards from 2020 to 2025. Additionally, the average spend per gift card will increase by more than 100% over the same period.

Today, more than half of all gift cards sold are for festivals, special days and celebrations, however, a growing segment is self-use. By 2025, one in four gift cards purchased will be for personal use. So it’s fair to say that gift cards are here to stay and with the convenience and convenience of digital gift cards, they will become one of the main ways to shop and give gifts in the future. .

(Mayank Shawla is the COO of Accent India. All opinions expressed are his own.)

Michael N. Clark