Inventory Shortages Could Make Holiday 2021 The Year of the Gift Card
It’s a week before Black Friday, and sales of prepaid gift cards have already started to surge.
There are the usual reasons: Nearly 40% of people will be disappointed with at least some of the gifts they get for the holidays this year, resigning themselves to either stuff the items into the back of the closet, regift or head to the store to make a return. And nobody wants to be the person giving that sort of gift.
But there are also other factors at work this season: As continuing supply chain snags and looming inflation threaten to make hot-ticket gift items — and even food staples for a festive holiday table — tougher to come by and more expensive, consumers are hedging their bets. They are turning to cards as a way to give something meaningful, hoping to spread a bit of joy by sparing themselves — and the recipients — a bit of hassle in a year that’s been too full of hassles already.
“That entire process is going to be a drag, and it’s not going to be fun for consumers,” said Brett Narlinger, VP of global commerce at Blackhawk Network. “And that’s a really good reason that we’re seeing so many with this intent toward gift cards, so they have choice.”
In an interview with PYMNTS, Narlinger said Blackhawk has already started to see a dramatic increase in gift card purchases for the holidays this year, in large part because of supply bottlenecks that have consumers worried about getting items in time — and partly because consumers’ digital shopping patterns have stuck around even as the pandemic has waned.
Consumers surveyed by Blackhawk have said they’ll be doing as much as 41% of their holiday shopping via gift cards, and the average consumer will purchase 15 prepaid cards this year — a 50% increase over last year and a 200% increase over 2019.
Contrary to some stereotypes, though, shoppers don’t usually pull a gift card thoughtlessly off the shelf. Narlinger described a “spectrum of intimacy” that consumers look for when choosing a prepaid card. A spouse, for example, might enjoy a jewelry store gift card, while a son may like a card related to video games, and a neighbor might want something that supports a charity such as Habitat for Humanity or Wounded Warrior.
“Consumers are really focused on, ‘I want to give a gift, but I want it to mean something,’” Narlinger said. “I either want it to be fun or want it to be something that gives back.”
Earlier this month, Blackhawk introduced personalized gift card bundles, allowing shoppers to select two complementary cards and add on others to create “experiential” bundles. This also allows retailers to pick their own partners from participants in the Blackhawk Network to create their own bundles.
Read more: Blackhawk Network Gift Card Bundles Create Flexible Holiday Gifts
Narlinger said Blackhawk is also developing new ways of reaching customers through contextual commerce, putting QR codes for prepaid cards in the greeting card aisle or other areas that might have a natural tie-in — think energy drinks for gamers.
“This concept of QR codes … across the board inside of retail is going to be a big one,” Narlinger said. “And we are seeing retailers across the spectrum embrace that and QR codes – not just for purchasing gift cards, but also QR codes to be able to make a purchase at the point of sale.”
Up Against Inflation
Inflation is also a concern this holiday season, with prices rising by over 6% in October, the highest level since November 1990. And as prices rise, so does average gift card value.
Read more: US Inflation Rate Surges Past 6%, Highest Since 1990
“We’re starting to see that people are recognizing the need to give a bigger gift,” Narlinger said, noting that Blackhawk has seen a 15% to 20% increase overall, with purchase prices rising in every sector.
And receiving a gift card in the next few weeks might put shoppers in a better position to spend come January. “We think it’ll go further, especially as we start to see that dollar go further with a gift card as people are utilizing and redeeming those in the first quarter,” Narlinger predicted.
Meeting Consumers Through Innovation
Narlinger said Blackhawk is focused on “finding that consumer where they are” and catering to their specific needs and preferences, whether that’s making it easier to find the right gift card or simplifying the way people buy Roblox’s Robux.
Early next year, Blackhawk is also preparing to launch a crypto gift card, allowing people to buy cryptocurrency for others.
“A lot of what we’re working on right now is just, ‘How do we pivot to having a really fun gifting experience where people want to give a gift?’” Narlinger said. “Also, ‘how do we make that part of branded payments at the point of sale and be able to really proliferate … having their brand inside the digital wallet?’”
And with over a dozen gift cards to buy on average this holiday season, Narlinger said Blackhawk has seen increased interest in using buy now, pay later (BNPL) to complete purchases. As many as 10% of consumers have told the company they want to be able to use BNPL to pay for gift card purchases in installments.
Related news: Zip Teams With Blackhawk Network to Drive BNPL
“We want to be where the consumer wants us to be, period,” Narlinger said. “And that’s the support we’re giving to our retailers.”
Many of the companies that Blackhawk works with have adopted an omnichannel mindset and are already issuing digital gift cards, such as Starbucks and Roblox. Narlinger added, though, that some retailers haven’t invested enough in technology to meet consumer expectations. This season, more than 87% of consumers plan to shop online compared to 77% who did so last year, PYMNTS researchers have found.
Read more: Nearly 90% of US Consumers Plan Online Holiday Purchases in 2021 — 13% More Than in 2020
“The ones that are going to win are those that have truly embraced the mobile phone, the desktop and the retail (store), and have created that seamless environment,” Narlinger said.