The Gift Card Centre Market Report

Monday, 27 September 2010  |  Admin

Continuing the Upward Curve

Prepaid Gifting Trends Snapshot

by Andrew Johnson, Director, The Gift Card Centre

With impressive sales gains of 22% in the second quarter of 2010 the UK gift card and gift voucher market continues to defy general retailing trends. According to the UK Gift Card & Voucher Association, of which The Gift Card Centre is a member, figures show the biggest growth gains since the trade association begin collating data in 2003.

Increases were reflected across all sectors of the market from incentive agents to over the counter sales in stores with the most impressive leap coming from the relatively new sales channel Gift Card Centres where sales jumped by 70% compared to the same period in 2009.

The big question is how will this quarterly increase be reflected in the rest of 2010, particularly in those crucial Q4 months when most retailers will expect to take 60% of their annual gift card and gift voucher revenues?

Comparisons to the USA

US Consulting Group Mercator recently released their annual American prepaid report for 2009. Mercator reports the closed loop market in the USA grew by 7% in 2009 with a total load value of $205.39 billion, accounting for 62% of all prepaid purchases leaving open loop at 38% of total loads. However we need to investigate this closed loop breakdown further to gain a full understanding of the USA category. Large growths are reported in government and digital content categories, digital media from the likes of Apple are showing a 16% increase according to Mercator. From a pure gifting perspective the growth is a more modest 3%. In the doldrums of early 2009 the closed loop and in particular prepaid gifting sector in the USA was predicted to crash with a down trend forecast; a 3% growth is a salvation.

Mercator identify the trend for virtual cards and mobile wallets, Tim Sloane, Vice President, Client Services and Director of Mercator Advisory Group’s Prepaid Advisory Service states, “While virtual cards and mobile wallets are a novelty today, these technologies will be instrumental in driving growth for the closed loop gift market over the next ten years.”

UK Maturing Market

For many UK retailers they are now entering a maturing stage in their gift card development; for others gift card remain a concept. Past trends in the USA have transferred to the UK with these trends flowing across parts of Europe. The UK has now firmly established its own set of trends; continuing to develop in both closed and open loop sectors. Whilst the rest of 2010 will be an excellent time for growth, sustaining the impressive Q2 results reported by members of the UKGCVA will be difficult. The slowing trends of the US market will not be seen in the UK for some years due to the increasing sales from established gift card retailers along with the rising number of new gift cards from new entrants including the leisure, hotels and restaurant sector.

Data referenced, the Ernst & Young, UK Gift Card & Voucher Association Quarterly Analysis (www.ukgcva.co.uk) and the Mercator Advisory Group Seventh Close Loop Prepaid Market Assessment (www.mercatoradvisorygroup.com)

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