For retailers, 2020 was a year when best-laid plans went astray. The pandemic forced executives to re-scope strategies on the fly. Some saw the crisis as a chance to reinvent their business completely. Others accelerated digital transformation efforts as commerce moved inexorably online. Everyone looked for the best ways to serve customers in an unprecedented time, with stalwart favorites like gift cards receiving new focus.
In 2021, retailers are being challenged to maintain strong customer relationships and are increasingly looking to payment interactions as opportunities to promote their brand while maximizing engagement. Here’s where the gift card will continue to prove its worth. Today’s leading retailers are using gift cards – their own unique merchant-issued branded currency – as a means of engaging customers, driving sales and positively impacting the bottom line.
It’s clear that gift cards will merit increased attention as retailers grapple with the pandemic and try to move beyond it in 2021. Here are 3 reasons why there is growing demand and a well-executed gift card program can succeed.
Contactless Payments Will Remain a Staple
The use of closed-loop gift cards is growing due to the accelerated adoption of contactless payments and the launch of digital incentives by retailers. While capitalizing on the contactless payment trend, retailers are developing broader marketing promotions.
For example, a leading QSR responded to a decline in sales and foot traffic by revamping its digital gift card strategy. By putting a deeper focus on stored value within its digital environment, the company can offer consumers a convenient digital buying experience while creating new sales and revenue for the business. In just one month, it experienced a 1,703% YOY increase in closed-loop gift card sales.
Promotions Commencing Year-Round
As the digital-first economy continues to evolve, promotions that were once used to drive foot traffic in store for a day, or a holiday weekend, are being extended across longer time periods. During the most recent 2020 holiday season, stores began Black Friday and Cyber Monday sales as early as Nov. 1. And even ecommerce giants such as Amazon and Walmart extended their promotional efforts, with Prime Day stretching 48 hours and Walmart’s Big Save event spanning nearly a week in October.
As competing retailers extend digital promotions across longer time frames in 2021, astute customers will expect a deal any day of the year.
As retailers change the traditional practice of carefully selecting certain times of year to run promotions that accelerate gift card usage, they must begin addressing customer appetite for continuous, year-round promotions.
Enabling More Digital Convenience
The pandemic has increased customers’ desire for digital convenience in a contactless payment world. Retailers have taken note and are revising their strategy accordingly. They’re tweaking existing mobile applications and digital storefronts to promote greater use of gift cards – for example, by creating a seamless reload experience.
The results have been remarkable. Through its mobile application, one of the country’s largest global brands has the ability to convert change from a customer’s physical transaction into digital currency, making the funds readily available for the next purchase through its mobile app. Creating these kinds of experiences increases loyalty, driving customer frequency and spend while building market share and improving speed of service and operational processes.
Retailers have long used the gift card to enhance the retail purchase experience, but the extension of the traditional gift card’s utility across the multiple channels a retailer manages is creating a renaissance for merchant-issued currency. Savvy marketers are demonstrating that creative and forward-thinking gift strategies can accelerate sales across all channels.
Growing amid a pandemic, this new way of thinking of stored value will certainly last as retailers make the gift card a more strategic, lucrative and efficient component of their operations in 2021.
Tom Niedbalski is VP of Gift Solutions for Fiserv