Gift Cards produce double digit growth

Published on 1 January 1970 by Raffick Marday

£4bn UK gift card & voucher industry experiences second successive quarter of double-digit growth

  • Consumer sales up 17.5% year-on-year
  • Sales through stores up 9%
  • Business-to-business sales increase by 12%
  • Corporate direct sales, the largest sales channel, rise by 12%

The UK’s gift card and voucher market has experienced a double-digit increase of 14.3% in year-on-year sales in Quarter 2 (Q2) of 2011, according to the latest statistics from The UK Gift Card & Voucher Association (UKGCVA), the trade body representing the £4bn UK market.

The report, compiled independently by Ernst & Young (E&Y), confirms a significant boost in this market performing well ahead of overall retail sales growth of just 0.8% over the same period, according to statistics from the British Retail Consortium (BRC). These UKGCVA results are the second successive period of substantial growth year-on-year following a 15.6% increase in the market in Q1.

In Q2, it was consumer sales rather than B2B that experienced the bigger growth at 17.5%. Easter has been identified as a possible contributor to this boost, as is early summer discounting helping to attract consumers onto the high street. Sales through stores continue to show staunch resilience, with a 9% increase, again a strong performance against a struggling retail sector. Online consumer sales have also recovered compared with the same period in 2010, increasing by 10%.

Corporate direct sales reported a 12% increase and remain the largest sales channel for gift cards and vouchers.

Business-to-business (B2B) sales are up by 12%, whilst online B2B sales have made striking gains, up 150%. Continuing to form an important part of the B2B category, like-for-like sales by agents increased by 27% in Q2, as the category maintains its position as a strong area of overall growth in the gift card and voucher market.

Andrew Johnson, Director-General of the UKGCVA, comments: “The buoyancy of this sector is hugely encouraging and demonstrates that in this challenging consumer environment, the flexibility and choice delivered by gift cards and vouchers offers an attractive solution. The gift card and voucher market clearly remains resilient against the backdrop of weak consumer spending and depressed retail sales.

“According to The E&Y ITEM Club’s Summer 2011 Forecast these statistics show growth beyond predictions as inflation rises reduce households budgets by a predicted 1.4%. Predictions from E&Y also suggest that the consumer gift card and voucher market will maintain its growth levels into Q3; a positive sign in a recovering economy otherwise. With direct sales through shops proving strong, this suggests that consumers see gift cards and vouchers as a good value-for-money solution, whilst the continued growth across the B2B sector reflects the dynamic approach businesses are taking to motivate and incentivise staff during a period of economic adversity.”

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