Gift cards are certainly not going out of style. At least, this is what a recent study conducted by the Wharton School’s Baker Retailing Center and The NPD Group has confirmed. As reported by Dr. Denise Dahlhoff, who is the Research Director of the Wharton School’s Baker Retailing Center, on RetailingToday.com, gift cards are exceedingly popular with millennials. The study, which confirms this, took a look at generational shopping behaviour.
As part of the study, customer receipts were examined, making it noticeable that there is widespread use of gift cards by millennials. “Their share of wallet of gift cards is higher than that of other age groups at mass merchants, convenience stores, and warehouse clubs,” reports Dr. Dahlhoff. She goes on to note that with millennials being one third of the U.S. population, they are the largest shopper generation – an important fact that business owners should make note of.
This is because the sales of gift cards have increased in recent years and the pattern seems to indicate that they will only continue to rise. “Sales in the U.S. have grown gradually over the past several years, reaching record sales of an estimated $130 billion last year, an increase of more than six percent from 2014, according to an annual study by CEB,” writes Dr. Dahlhoff, who also points out that gift cards continue to be the most requested gifts during the holidays.
In another survey, conducted by the National Retail Federation (NRF), it was found that nearly three-quarters of respondents were planning to buy at least one gift card each holiday season. Starbucks is listed as one of the most popular businesses to buy gift cards from. “One in six Americans received a Starbucks gift card during the 2015 holiday, an increase from one in seven in 2014,” says Dr. Dahlhoff.
Why are gift cards so popular with millennials? They are both convenient and easy to purchase. They help save time when shopping. And they provide instant gratification. These are all factors that are important to our younger generation, notes Dr. Dahlhoff. “In fact, the NRF survey found that notably more Millennials than other age groups stated that gift cards are easier and faster to buy than traditional gifts as a reason for buying them,” she writes.
Millennials don’t just like buying gift cards, they like receiving them as well. Dr. Dahlhoff points to a Blackhawk Network study that found that 89 percent of millennials enjoy getting gift cards as they allow for large purchases to be made that usually would be considered unaffordable. As well, millennials aren’t fans of returning items. 76 percent of respondents to the study conveyed that they prefer gift cards because they eliminate the need for returning unwanted gifts.
The gift card is also the gift for the financially-aware individual, says Dr. Dahlhoff. “The recession has made people more conscientious about money, resulting in more cautious consumption and greater focus on value, savings, and minimizing wasteful spending,” she informs, “Millennials experienced the recession in their teenage years and early to mid-twenties. Thus, they grew up around a greater sense of financial carefulness.”
Evidently, business owners have the ability to encourage more shopping from millennials simply by offering gift cards as a purchase option. At Canadian POS Corporation, our experience has proven to us that the gift cards we provide our clients to sell in their stores helps them to encourage repeat business, attract new customers and boost sales all year long!