Digital gift card sales soar by almost 50% during lockdown, the GCVA and KPMG finds

FacebooktwitterredditpinterestlinkedinmailFacebooktwitterredditpinterestlinkedinmail

Echoing the trends witnessed across consumer industries more broadly, lockdown resulted in an added focus on digital channels and offerings across the gift card sector in the first half of 2020. 

According to the latest analysis by the Gift Card & Voucher Association (GCVA) and KPMG UK, digital and eVoucher sales grew by 49.7% on a rolling year basis, while sales of physical gift cards continued to retreat. Indeed, the market share for digital products increased to 30.2% in the first half of 2020, up from 17.1% in the same period last year.  

More broadly, UK gift card and voucher sales fell by just 5.4% on a like-for-like basis in the face of the COVID-19 pandemic, amidst an extremely challenging period for the high street. The data also reveals that the leisure sector was hit harder than retail (LFL decline in sales of -30.6% versus -4.2% respectively), mirroring the social distancing restrictions in place during the period. 

While business-to-consumer (B2C) sales fell significantly when compared to the same period in 2019 (-32.2%), business-to-business (B2B) sales – like those used by employers to reward staff – actually grew by 8.2%, clearly highlighting the significance and resilience of that growing market, which now holds 75.8% market share, compared with 66.3% in the first six months of 2019. 

Gail Cohen, director general at the Gift Card and Voucher Association, said:  “There is no doubt that impact of COVID-19 has been profound for all industries, with gift card and voucher sales far from immune in this climate. However, what is clear from our latest analysis is that this £7bn UK industry presents a real opportunity for retail and leisure businesses, as well as the wider economy, to grow. 

“The growth and resilience of B2B sales demonstrates that this industry has progressed significantly in recent years and is no longer the outdated consumer-only industry we think we all know. With the retention of employees top of mind for many businesses – especially as the furlough scheme starts to unwind – rewarding staff will only grow in importance. Indeed, the GCVA has recently launched the #giftcard500 initiative, calling for the increase in the tax-free employer gifting allowance from £50 to £500.” 

Commenting on the latest figures from a retail-perspective, Don Williams, Retail Partner at KPMG UK, added: “The pain felt by UK retailers has been clear to see this year, albeit we know that not all businesses have been impacted equally. A closer look at the performance of retailers in the latest analysis shows a great deal of disparity where sales of retail gift cards and vouchers are concerned. Some have realised growth of 185%, whilst others have faced declines of 58%. 

“For the businesses that can remain firmly on the radar of consumers, prospects still remain promising despite the overall contraction in growth. However, bucking the trend will require exploration of alternative channels like businesses-to-business sales, as well as upping digital capabilities and offerings in order to truly adapt to the changing consumer landscape.”