Blog Article

How Gift Cards Are Changing the Holiday Shopping Season for Small Businesses

Author: Paystone

2020 has been a year of change and uncertainty for many businesses. COVID-19 restrictions paired with the dramatic shift in how consumers spend have forced many establishments to completely adapt how they do business or close indefinitely. 

These changes and fears of a second wave have cast a shadow of uncertainty over the holiday season and left many businesses wondering how they can prepare for what is normally an extremely profitable three months.

Based on the most recent surveys and trends, one of the key answers is gift cards. 

While selling gift cards provided many businesses with a source of income during the COVID-19 shutdowns, they are also emerging as a dual solution to:

    1. Satisfy shoppers’ desire for convenience
    2. Help businesses make up for lost sales and regain some financial stability moving into 2020 


The gifting trends below provide some important takeaways for businesses as they prepare for the holiday shopping season. 

How gift cards are driving holiday shopping: 
  • 77% of Candian shoppers will buy at least one gift card this holiday season
  • The average shopper planned to spend approximately $213.49 on gift cards in 2019, and it’s expected to go up more this 10% this year.
  • 70% of Canadians still buy their gift cards in-store, despite the rise in online shopping
  • 15% say they this year, they will buy gift cards instead of what they were originally planning to purchase


The case for small businesses: 

The low investment and high returns of stocking and selling gift cards make them one of the most effective marketing tools and revenue generators for small businesses. 

  • 74% of shoppers said they regularly buy gift cards from small businesses
  • 90% of people who receive a gift card from a small business they have never visited said they would shop at that business and return there in the future
  • 65% of people surveyed spend more than the card’s value, making them a great profit booster for any business who’s sales are down this year 
  • The average person spends $59 more than the value of their card. Considering how many gift cards a business could sell, there’s a lot of profit to be made


The gift cards people want most:

Although retail and restaurant businesses took the hardest hit this year, they also stand to profit the most from gift card sales. Below are the most popular small business gift cards from 2019

    1. Restaurant gift cards not to mention, 80% of people who receive a restaurant gift card spend more than the             card’s value
    2. Coffee shop gift cards
    3. Specialty services and retail  


The top reasons shoppers buy gift cards:
  • They’re one of the most popular items on wish lists, requested by 61% of people
  • 24% of people say they purchase gift cards because they’re less hassle than regular holiday shopping
  • 64% of people buy gift cards for themselves
  • They’re perfect for procrastinators. In fact, gift card sales rise drastically within the few days leading up to Dec 25th


Thinking beyond the holidays 

According to a 2018 survey, the winter holidays are only the second most popular occasion for gift card giving. The giving trends below, prove that gift cards are an effective sales booster throughout the year. 

  • Birthdays - Gift cards make up 68% birthday presents, followed by the holidays 
  • Mother’s Day or Father’s Day – 38% of gifts for Mom and Dad were in the form of a gift card
  • Valentine’s Day – Over 27% of Valentine’s day gifts were in the form of a gift card
  • Baby Showers / Births – 32% of these gifts were in the form of a gift card
  • Weddings – Almost 50% of people gave gift cards to newlyweds, making them the most popular wedding gift


Effective gift card selling strategies: 

Many small to mid-sized businesses successfully compete against big brands using these simple techniques to encourage gift card sales:

  • Discounting gift cards or promo cards to bring customers back after the holiday season — Get a 15% discount card for ever $50 in gift cards purchase
  • Issuing low-value gift cards with purchases to attract customers — Free $10 bonus card for ever $75 in gift cards purchase. Whoever comes in to use the $10 card will probably spend the more than the card’s balance
  • Selling custom gift cards for the busiest holiday seasons. For example, if you know Valentine’s day is big for your business, prepare specialized Valentine’s gift cards and promote them leading up to the holiday


What small businesses value in a gift card provider:
  • Ability to activate, redeem, and sell on a point of sale system  
  • Ease of implementation such as quick set up and card ordering


When it comes to choosing a gift card provider, small business owners want convenience, which is why our gift card program offers the following: 

  • Set up within 10 business days 
  • Activation and redemption on our payment terminals
  • Ability to import cards from a previous gift card provider
  • No gift card transaction fees


 Learn more about how your business can benefit from a flat monthly rate instead of paying gift card transaction fees