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Digital gift card sales soar by almost 50% during lockdown, the GCVA and KPMG finds

Digital gift card sales soar by almost 50%

The shift towards digital offerings picked-up pace, with Digital and eVoucher sales growing by 48.7% on a rolling year basis.

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Also on home.kpmg

  • Gift card and voucher sales dropped by just 5.4% on a like-for-like basis in the first half of 2020 due to the pandemic, with leisure sales significantly impacted
  • Business-to-business sales remain resilient though, up 9.3% on a like-for-like basis 

Echoing the trends witnessed across consumer industries more broadly, lockdown resulted in an added focus on digital channels and offerings across the gift card sector in the first half of 2020.

According to the latest analysis by the Gift Card & Voucher Association (GCVA) and KPMG UK, digital and eVoucher sales grew by 49.7% on a rolling year basis, while sales of physical gift cards continued to retreat. Indeed, the market share for digital products increased to 30.2% in the first half of 2020, up from 17.1% in the same period last year. 

More broadly, UK gift card and voucher sales fell by just 5.4% on a like-for-like basis in the face of the COVID-19 pandemic, amidst an extremely challenging period for the high street. The data also reveals that the leisure sector was hit harder than retail (LFL decline in sales of -30.6% versus -4.2% respectively), mirroring the social distancing restrictions in place during the period.

While business-to-consumer (B2C) sales fell significantly when compared to the same period in 2019 (-32.2%), business-to-business (B2B) sales – like those used by employers to reward staff – actually grew by 8.2%, clearly highlighting the significance and resilience of that growing market, which now holds 75.8% market share, compared with 66.3% in the first six months of 2019.

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

“There is no doubt that impact of COVID-19 has been profound for all industries, with gift card and voucher sales far from immune in this climate. However, what is clear from our latest analysis is that this £7bn UK industry presents a real opportunity for retail and leisure businesses, as well as the wider economy, to grow.

“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 as the furlough scheme starts to unwind – rewarding 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, Don Williams, Retail Partner at KPMG UK, added: 

“The pain felt by UK retailers has been clear to see this year, albeit we know that not all businesses have been impacted equally. A closer look at the performance of retailers in the latest analysis shows a great deal of disparity where sales of retail gift cards and vouchers are concerned. Some have realised growth of 185%, whilst others have faced declines of 58%.

“For the businesses that can remain firmly on the radar of consumers, prospects still remain promising despite the overall contraction in growth. However, bucking the trend will require exploration of alternative channels like businesses-to-business sales, as well as upping digital capabilities and offerings in order to truly adapt to the changing consumer landscape.”

Additional key findings from the latest UK Gift Card and Voucher Sales Analysis and Outlook: H1 2020:

  • Retail B2C sales of gift cards and vouchers shifted from in-store (-43.7%) to online (+51.2%), as consumers avoided physical stores during the pandemic in H1 2020.
  • Consumers favoured flexibility in the first half of 2020, with Open Loop sales growing 14.6% on a like-for-like basis
  • The Leisure sector’s growth retreated to 4.8% in the first half of 2020, compared to the 11.5% recorded in the second half of 2019. 

Notes to Editors

  1. The previous GCVA & KPMG report can be viewed: here
  2. Definitions:
    1. Like-for-like: Growth of this period vs the same period 12 months ago i.e. H1 2020 vs. H1 2019
    2. Rolling-year: Growth of the most recent 12 months vs the previous 12 months i.e. H2 2019 + H1 2020 vs. H2 2018 + 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

 

For additional details, please contact:

Simon Wilson, KPMG Corporate Communications:

T: 0207 311 6651 / 07785 373397

E: simon.wilson@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, retail or agent), 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 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.

© 2020 KPMG LLP a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.

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