• Digital product sales up 117% year on year
• Market share for digital products doubles to 32.5% in second half 2020
• 2020 retail sector saw growth of 14.4% like-for-like, but sales declined by 47.8% in the leisure sector

According to the latest analysis by the Gift Card & Voucher Association (GCVA) and KPMG UK, sales via online channels grew strongly across both Business to Consumer (B2C) and Business to Business (B2B).  Whilst online B2B gift cards and vouchers saw 34% growth year on year, online B2B saw growth of 292% year on year highlighting the resilience of the growing market.   Overall the market share for digital products doubled in the second half of 2020 to 32.5% (from 16.6% H2 2019).

The reseach found that sales across all other channels declined in 2020, reflecting the switch to online shopping during the pandemic. Direct sales declined significantly for both retailers and leisure operators. However, leisure operators took the biggest hit with B2B direct sales declining by 74% - significantly higher than the retailers B2B decline of 14.3%.

Store specific gift cards have increased in popularity, now making up 60.4% market share of sales. Whilst sales of open loop cards makes up the largest like-for-like growth in 2020 (19.5%) for redemption types, closed loop purchases remain the most popular by value (£1.1bn) and has grown by 15.1% over the year.

According to the most recent GCVA figures customer redemption rates remain high, with more than half of shoppers redeeming their gift cards within one month, and 98.6% within a year of receipt.

Gail Cohen, director general at the Gift Card and Voucher Association, said:

“There is no doubt that gift cards and vouchers have grown in stature over the last 12 months, with digital vouchers coming to the rescue of consumers looking to purchase that special something for loved ones in a challenging time.

‘’We have seen an impressive growth story in the gift card and voucher market over the last 4-5 years, and this £7bn UK industry presents a real opportunity for retail and leisure businesses, as well as the wider economy, to grow. They also had a key part to play in delivering free school meal programmes across the country.

 “The growth and resilience of B2B sales demonstrates that this industry has progressed significantly in recent years and is no longer the outdated consumer-only industry we think we all know. With the retention of employees top of mind for many businesses – especially with the furlough scheme continuing – finding innovative ways to reward staff will only grow in importance. Indeed, the GCVA has recently launched the #giftcard500 initiative, calling for the increase in the tax-free employer gifting allowance from £50 to £500.”

Commenting on the latest figures from a retail-perspective, Paul Martin, UK head of Retail at at KPMG, added: 

“Performance in the gift card and vouchers market very much mirrors the activity that we have seen on the high street over the last year, with sales of physical cards bought in store falling as digital gifting saw impressive growth.

‘’There has been a change in the status of gift cards which have re-purposed themselves, particularly with Generation Z consumers with their passion for technology and gaming. With Covid restrictions in place for at least the next few months, gift card and vouchers will continue to provide consumers with a viable alternative to physical gift buying. Retailers also have an opportunity to build a direct relationship with their consumer and adapt their offering to changing consumer behaviours.  Smaller independent retailers have been proactive in offering gift cards seizing on the consumer desire to support their local businesses, and this is a great opportunity to reach new customers and build a stronger client base in time for when the shops re-open later in the year.”

 

Additional key findings from the latest UK Gift Card and Voucher Sales Analysis and Outlook: H2 2020:

• The retail sector saw growth of 14.4% like-for-like sales during 2020, compared to leisure sector's decline of 47.8%, reflecting the impact of Covid on the leisure industry.
• Overall there was growth of 10.8% in like-for-like volumes for the half year across all sectors, channels and product types, showing signs of recovery since the COVID crisis.
• Echoing the trends witnessed across consumer industries in 2020, restrictions and lockdowns across the UK resulted in more than £866m was spent on digital and eVouchers in 2020, with £600m spent in the last six months of 2020 alone
• Business-to-business (B2B) sales – such as those used by employers to reward staff – were up 36.3% in the last half of 2020 alone, when compared to the same period in 2019
• Sales of physical gift cards declined by 9.8% as the stores selling them were mostly closed in key Christmas shopping months.

Notes to Editors

 

Summary of the findings can be found  HERE

1. Definitions:

1. Like-for-like: Growth of this period vs the same period 12 months ago i.e. H2 2020 vs. H2 2019
2.  Rolling-year: Growth of the most recent 12 months vs the previous 12 months i.e. H2 2020 + H1 2020 vs. H2 2019 + H1 2019
3.  B2C: Business to consumer. Consumer vouchers and cards sold to consumers or individuals for personal use or gifting
4. B2B: Business-to-business. Sales made to other businesses or organisations
5. Open-loop: Gift cards that require the use of a network such as Visa or MasterCard and are accepted at any outlet displaying the network logo
6. Retailers make up 97% of the market share for GCVA

 

 

For additional details, please contact:

Emma Murray, KPMG Corporate Communications:

T: 0207 694 6506 / 07920 870 623

E: emma.murray@kpmg.co.uk

KPMG’s Press Office: +44 (0)207 694 8773

Tom Opper-Cunnane at PR Agency One

T: 0161 871 9140

E: tom.opper@pragencyone.co.uk

 

Methodology:

The Gift Card & Voucher Association (GCVA) and KPMG UK analysed six months of gift and voucher sales data from 29 members of the GCVA. KPMG UK then aggregated and analysed the data, sorting by market (business-to-consumer or business-to-business), by sector (leisure or retail), by product (physical card, paper voucher, digital or e-voucher), by channel (direct, online, gift card malls or via third party), and also by method of redemption (closed loop, multi-choice or open loop).

About KPMG in the UK:

KPMG LLP, a UK limited liability partnership, operates from 21 offices across the UK with approximately 17,600 partners and staff.  The UK firm recorded a revenue of £2.40 billion in the year ended 30 September 2019. KPMG is a global network of professional firms providing Audit, Tax, Legal and Advisory services. It operates in 154 countries and has 200,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

About GCVA:

The Gift Card & Voucher Association (www.gcva.co.uk) was established as a trade body to represent the key players in what is today a c£6.9 billion gift card and stored value solutions market. With 90 members representing key retailers, issuers and suppliers the GCVA provides an information and reference point for the Gift Card & Voucher industry and is at the forefront of the issues affecting the industry.

Its main objective is to provide a platform and infrastructure for the industry and to raise the profile and use of gift cards and vouchers within the UK, promoting the industry to consumers, businesses, government and other interested parties.

The GCVA is the key industry organisation to share new ideas, innovate and promote best practice with the UK gift card and voucher industry. It runs a programme of events, meetings, research projects and updates throughout the year, including its flagship conference, a key date in the industry calendar. The conference, which runs over two days, brings together all stakeholders in the sector to learn, debate, network and focus on the industry.

The latest industry data is received from GCVA participating data members and the data and report are produced by KPMG UK.

* The data in the report is provided by GCVA participating retailers & issuers, representing the key industry players in the market.