Digital gift cards overtake physical cards for first time in 'pivotal shift'
The Gift Card & Voucher Association (GCVA) has revealed a "pivotal shift" in the UK gift card market as digital gift cards surpass physical cards for the first time.
Digital gift cards now command 52% of the market share, with sales surging by 17.1% in the first half of 2024. That’s up from a market share of 30% in 2019.
The "significant shift" reflects the growing preference for digital options, which offer benefits such as instant delivery, customisation and insightful data analytics – making them ideal for employee rewards, customer retention and promotional campaigns.
However, physical gift cards "continue to hold their place" and provide a tangible personal touch, especially valued during traditional gifting occasions. The GCVA’s data for the second half of 2024 will show whether physical cards continue to hold their position in the key festive sales period.
Hannah Shimko, Managing Director of the GCVA, said: "The rise of digital gift cards is a landmark moment for our industry, highlighting the shifting preferences of both consumers and businesses. This trend underscores the innovation and flexibility in the gift card market, which continues to adapt despite economic headwinds.
"As we approach the crucial Christmas period, it will be intriguing to see how these trends evolve and shape the future of the market."
Don Williams, Retail Partner at KPMG UK, added: "The UK gift card and voucher market remains a bright spot in a challenging retail landscape.
"Despite the summer of sport and some easing of pressure on household finances, consumer spending and confidence remain subdued, with BRC data showing flatlining retail sales at 0.2% in June 2024, and the GFK Consumer Confidence Index for August sitting at minus 13%.
"However, the gift card sector defied this trend with 9.4% like-for-like growth (compared to H1 2023). Growth was the highest (16.9%) in B2B, where employee benefit schemes are proving particularly valuable for businesses seeking to support their staff.
"Grocery gift cards saw a 23.2% like-for-like sales increase, perhaps reflecting a focus on essential spending."