Globally, the status of the gift card has been elevated from seasonal sales tool to year round money-maker. In the US, the gift card market is currently worth between $70m and $80m, and its penetration into the European market is rapid.
The benefits of what effectively boils down to a pre-selling of revenue lie in an exchange of small investment for good return. And that return is not purely monetary. Earning money in advance of the card being redeemed translates into a double whammy winning. Indeed, customers in Europe and the US spend between 40% and 140% more than the face value of the card. And, because they’re buying a gift for themselves, and because part of that cost is already covered, they also tend to select more expensive items.
But the gift card scheme also serves the retailer in less tangible, less measurable ways. It simultaneously procures for the retailer a peripheral marketing system whereby store customers transform others into same-store customers – at no extra cost to the retailer. Retailers also have the option of using the gift card as an employee incentive. And what’s in it for the bestower of the gift? Supreme convenience!
In South Africa, nearly every major retailer offers gift cards, and the offering is proving popular. Top end retailer Woolworths, for instance, launched its gift card last October, and celebrated the issue of its millionth card after just seven months. The Pick n Pay Gift Card was launched in December. With its focus on convenience and safety, this card is designed to be as much a gift to oneself as to another.
In terms of anti-theft measures, local retailers are just as astute as their international counterparts. Today, shoppers will find that most gift cards are protected by scratch-off security codes and protective packaging to prevent information theft. Musica activates cards as they are purchased. Some retailers’ cards are only available on request, while others give the option of an online purchase.
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