Did you know that January 16, 2021, is National Use Your Gift Card Day? Yes! This is a special day organized by the Retail Gift Card Association (RGCA) to remind consumers to utilize their unspent gift cards. With the peculiar year that just ended, this form of gift was popular more than ever this holiday season. With habitual traditions disrupted and gift exchanging modified to reflect current events, this type of commodity came in extra handy. It’s estimated that over half of consumers received a gift card last month (in fact, they account for 55% of the average shopper’s entire annual gift budget). That’s to add to people’s usual inventory of cards stashed somewhere in wallets, drawers and even forgotten in email inboxes in their digital form. Contrary to popular belief, retailers want gift cards fully used for several good reasons, and that’s why they’re promoting this national day.
Gift Card Spending — A Retailer’s Perspective
From a fiscal standpoint, businesses must keep outstanding gift card balances on their books, which is something they try hard to avoid. Because they could be redeemed at some point in the distant future, any unused gift card balances are earmarked as liabilities. While more than 70% are redeemed within 6 months of purchase, 10% to 19% of balances remain unredeemed at any given time. Since most provincial laws do not allow for expiration dates on gift cards, these liabilities can sometimes extend many years, even decades! It’s obvious why they want to stimulate their use!
Gift Card Spending — The Metrics
Additionally, retailers know that 75% of people end up spending more than the value on their cards and are 2.5x more likely to pay full price for an item. Also, they prompt shoppers to visit stores they otherwise wouldn’t frequent (good to gain new customers) and since they usually aren’t completely redeemed in one outing, it encourages multiple trips (great for foot and e-commerce traffic). It’s no wonder why retailers promote this tool!
If you or your employees have unspent gift cards and don’t plan on splurging, consider donating them to a local charity or someone you know—the retailers will appreciate it, as will the recipients! Should you have technical questions about gift cards, we’re always happy to help. Simply drop us a line and we’ll do our best to guide you!