UK gift card and voucher sales grow during challenging times

The UK’s gift card and voucher market grew by 7.2% year-on-year, according to research from the UK Gift Card & Voucher Association and KPMG UK.

This looked at the first half of 2019 compared to the same period the year before and also flagged up a 15.6% growth in business-to-business (B2B) sales, which includes gift cards issued via an employer’s reward programme. While sales direct to consumers contracted by 9%, likely due to low retail sales growth in recent months, they remain the main driver of business-to-consumer (B2C) gift card sales, accounting for two-thirds of the market.

Retail remains the most important sector within the gift card industry, with sales making up 67% of the overall market, but there was also strong improvement in the leisure industry, with the sector having grown by 13% year-on-year. Although a preference for physical gift cards continues – taking 72.5% of the market share – digital and e-vouchers are proving increasingly popular, now accounting for 26.9% of sales (up from 12% in the first half of 2018).

Meanwhile, gift card malls (the selection of gift cards stocked by third-party businesses) grew by 3.6% on a like-for-like basis, highlighting the growing importance consumers place on convenience and choice in the gift card market.

Paul Martin, UK Head of Retail at KPMG, comments: “Placed against a backdrop of lacklustre sales in retail in recent months, it’s perhaps easy to have overlooked the significant role gift cards and vouchers play in obtaining additional revenue and encouraging customer loyalty. This is arguably even more important during tough times, like those currently being faced by retail and consumer business more broadly.”

“Businesses need to think carefully about the interplay between physical and online offerings, as well as their partnerships with other businesses. Relationships with other reward partners, or business-to-business sales, may well provide a welcome boost of consumer interest. It is certainly a channel many players must now consider, and just like their product sales more broadly, there is a vital need to offer flexibility where purchase and redemption is concerned.”