Year-on-year sales of online gift cards and e-vouchers have increased by 117% during the second half of 2020 as Covid restrictions affected consumer trading.
According to the latest analysis by the Gift Card & Voucher Association (GCVA) and KPMG UK, there was strong growth in the online channel for both Business to Consumer (B2C) and Business to Business (B2B) gift cards and vouchers.
B2B saw a growth of 292% year on year. There was also a 34% growth in B2C highlighting the significance and resilience of the B2B growing market.
Additionally, the market share for digital products doubled in the second half of 2020 to 32.5% (from 16.6% H2 2019).
The research 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%.
Store specific gift cards have increased in popularity, now making up 60.4% market share of sales.
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: “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.”
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 repurposed themselves, particularly with Generation Z consumers with their passion for technology and gaming.”