Inflation doesn’t take a break for the holidays as consumers brace for yet another expensive holiday season. According to Fiserv’s Q3 Gift Card Gauge, one-third of consumers will spend more on gifting in 2024, compared to only 14% who anticipate spending less. This marks the third straight year of increased consumer holiday spending, up from 27% in 2023 and 21% in 2022.
For those spending less, inflation is at the heart of their decision. Specifically, 66% of those who plan on spending less say it is because of inflation and higher costs. Meanwhile, all consumers are doing what they can to get more out of their spending in this inflated marketplace – 48% plan to get a head start on shopping and take advantage of promotions/discounts, while 47% are shopping throughout the year to spread-out their purchases.
Using gift cards to extend budgets and to buy necessities
For many consumers, gift cards are for more than gifting. Today’s budget-minded consumers increasingly consider using gift cards to supplement their income. With inflation weighing heavy on their minds, gift cards can help them extend their spending money.
In fact, 49% of consumers agree with the statement, “In today’s market a gift card is more valuable to me than a traditional gift.” Of respondents who “strongly agree” with the statement, one in three prefer gift cards for day-to-day essential items – think milk, bread, soap and other everyday staple items.
The growing reliance on gift cards for everyday spending provides a means for merchants to lure gift card holders in the door. As we move into the holiday shopping season, incentives around gift card spending and reminders about gift card balances are a must to drive additional sales.
Cashing in loyalty points for gift cards is king
Consumers love being rewarded for their loyalty. Merchants, in turn, love showing their gratitude for loyalty by giving consumers perks and incentives through rewards programs. These incentives should be emphasized during the 2024 holiday season to influence consumer spending.
Specifically, more than half (52%) of respondents in loyalty/membership programs use points to buy themselves a gift, while 42% of consumers prefer discounts from their loyalty programs membership.
These findings show consumers will consider the dynamic “gift cards-loyalty programs” duo to bolster their holiday dollars. With approximately four in 10 shoppers incentivized to redeem loyalty points for gift cards, merchants should proactively offer the option before competitors catch-on to this growing trend.
Merchants also can capitalize on this trend by offering gift card incentives. Specifically, consumers would be more likely to purchase gift cards when they are rewarded for their spend with a bonus gift card (50%), when accompanied by free/discounted store merchandise (44%), or when they are given a gift card as a bonus for shopping during a holiday event like Black Friday (39%).
Consumers’ use of digital wallet is growing
With the world becoming increasingly digital, more consumers are using digital wallets to store gift cards and earn rewards points. 83% of consumers say they could be swayed to store gift cards in a digital wallet.
Of this group, 39% would be incentivized to use a digital wallet if they receive a free gift card with each gift card upload. 23% would be incentivized to go digital for additional loyalty points and, 13% would go digital for early access to promotions.
The 2024 holiday season will once again be marked by increased consumer spending despite concerns over inflation. Gift cards are becoming an essential tool for consumers trying to maximize their budgets, not only for gifting but also for essential day-to-day items. The intersection of gift cards, loyalty programs, and digital wallets provide a potent combination for merchants to capitalize on and consumers to benefit from.
Encouraging the use of digital wallets, incentivizing gift card purchases, and creating meaningful loyalty rewards are all promising strategies for sellers during the holiday season. Despite economic uncertainties, innovative consumption and trade practices are proving that both consumers and merchants can find ways to thrive.
Check out more findings from the Q3 2024 Gift Card Gauge, or contact us today to learn how we can help implement loyalty and rewards solutions for your business.
