By Euphemia Erikson, First Data
The holiday season is once again approaching, and this year, retailers are not leaving any tactics on the table as they begin strategizing creative ways to boost customer traffic. Starting Black Friday and continuing past Christmas, retailers will turn to door busters, flash sales, deep discounts, and shockingly early store openings to drive their holiday sales higher than years before.
With big picture tactics like these, it’s also important for retailers to remember the power traditional retail tools command when driving revenue up. Gift cards are consumers’ most desired holiday present, and for retailers this classic has the unique ability to drive value far beyond a single purchase. Digital and plastic gift cards, more so than store credit, add a nice edge to retail sales planning by supporting marketing efforts, driving sales, and even engaging new audiences.
Reach Your Newest Customers
It’s important for all retailers to pay attention to changes in their customer base, but for the toy retailer, the newest wave of shoppers may require extra attention. Parents are key customers for the toy industry, and catering to them can make a major difference at the cash register. Today, there are 13 million millennial moms in the U.S., each with unique needs and expectations that challenge retailers. With a whopping $750 billion in annual spending power, they’re certainly not a demographic to be ignored.
To engage the newest generation of parents, it’s important to enable shopping on their terms; e-gifting options are a great way to reach this evolving customer segment. Multiple redemption options – online, mobile or in-store – are ideal for busy parents. More than three-quarters of millennial shoppers will purchase holiday gifts on their smartphone or tablet, making digital gift cards a natural option for online payments.
Drive Holiday Sales
Against fierce competition at the mall, retailers can draw crowds and drive future sales by giving customers an extra incentive for stopping into their stores. A US Prepaid Consumer Insights study found that 32 percent of consumers made an unplanned purchase at a store that offered an incentive, and 40 percent spent more than they planned to because of it, meaning classic promotions such as offering a free gift with purchase can go a long way. When the incentive takes the form of a gift card, the retailer benefits even more. Offering a $5 gift card for every $50 spent will not only push customers to pick up an extra item to meet the reward benchmark, but will drive future sales as gift cards are cashed out.
Online, driving traffic is not as much a problem as pushing consumers to complete a purchase. Just as a small incentive can bring shoppers into a brick-and-mortar location, this same tactic can stop shopping cart abandonment in its tracks. Digital gift cards are an easy way to deliver a small shopping credit to wavering consumers, and can give them the push they need to complete a purchase and in some cases drive them to pick up additional items on the same order.
Keep Sales Going Post-Holiday
After Black Friday and Cyber Monday are over and the New Year holiday has passed, gift cards continue to be the gift that keeps on giving for retailers. Whether received as a present or as store credit for a returned purchase, consumers will be carrying a surplus of gift cards after the holiday season is officially over. This is good news for retailers, as consumers with gift cards will go back to the business an average of three or more times to spend the balance of the card. As a bonus, consumers shopping with a gift card will typically spend $23 over and above that original amount, aiding retailers’ bottom lines even after the holiday rush.
To make the redemption process even more convenient for consumers, retailers can offer digital gift cards that are always accessible via customers’ mobile phones. This is a growing want for shoppers, with 55 percent reporting they are interested in using a mobile app to store their gift card information, and eliminates the problem of forgetting a card at home. Even better, mobile apps make it quick and easy for consumers to manage the balances on their gift cards and instantly reload their cards via their phones. This ultimately leads to additional sales, providing an added boost for retailers.
From big box sellers to the corner toy store, gift cards are a powerful way to drive sales and should be an integral part of every retailer’s holiday strategy. Whether digital or in the traditional plastic form, gift cards complement holiday sales and other tactics to help bring consumers in and encourage them towards making a purchase. Beyond the holiday season, gift cards can help keep consumers engaged and boost business year-round.
Euphemia Erikson is a Director of Client Solutions, Network & Security Solutions at First Data.