2018 U.K. Prepaid Gift Cards SURVEY · purchase eGift/digital gift cards from Amazon. Nearly 8/10 consumers will choose to purchase eGift/digital gift cards from large retailers

2018 U.K. Prepaid Gift Cards

SURVEY££

For informational purposes only

Table of

Contents

Objectives and Methodology 3

Market Opportunity and Penetration 4

Purchasing Channels 11

Card Design and Materials – Influencers 15

Cross-border Usage – Global Retailers 17

Reloadable Gift Cards 18

Key takeaways from First Data U.K. and U.S. Consumer Insights Survey 2018 19 18

2018 U.K. Prepaid Gift Cards Survey — 2

GIFT CARD INCIDENCETotal population sample size n=1,491

GIFT CARD TRACKING SURVEYTotal complete sample size n=1,032

Qualification Criteria

• Adults age 18+ residing in the U.K.

• Purchased or received a gift card

(physical or virtual) in the past 12 months

Generation Groupings (Age)

• Age – 2018 Survey

METHODOLOGY

Sample

• Total sample surveyed representative to U.K. population in terms of gender,

age, ethnicity, and income; no oversample added to reach ethnicity quotas

• Total sample (including terminates, incompletes, and quota full) used to

calculate incidence; qualified sample used for all other calculations

15Minutes

October 2018

Survey Conducted Length of Interview

Gen Z Millennials Boomers+Gen X/Y

18–23 24–37 38–53 54+

Objectives and

MethodologyObjectives: Understand and track trends in physical or eGift/digital gift card usage among both gift card purchasers and gift card receivers.

A

B


55%

45% 47%

40%

Physical eGift

62%

18%

44%

27%

Preference to Purchase

Preference to Receive

Purchase Incidence

Receiving Incidence

Market Opportunity and

PenetrationSlightly more U.K. consumers purchased and received physical rather than eGift/digital cards over the past year.

Overall, 15% of U.K. consumers claim to have purchased more physical gift cards in the past 12 months compared to a year ago. Purchases of eGift/digital cards have also increased over the past year.

More of these gift card purchases were for other people versus oneself.

In the future, 47% of all U.K. consumers are highly likely to send eGift/digital gift cards to other people. This is even more likely among Millennials.


Market Opportunity and Penetration

Millennial U.K. consumers are the most active in terms of purchasing both physical and eGift/digital gift cards.

Average Number of Physical and eGift/Digital Gift Cards Purchased in the Past 12 Months by Age and Ethnicity (Base=Purchasers)

16.4

12.4

5.5

3.0

7.9

2.7

5.0

White/Other

Black

Asian

Gen Z

Millennials

Boomers+

Gen X/Y

# of Physical Card Purchases by Age and Ethnicity – 2018

N/A

8.4

3.8

3.0

6.2

N/A

3.7

White/Other

Black

Asian

Gen Z

Millennials

Boomers+

Gen X/Y

# of eGift Card Purchases by Age and Ethnicity – 2018


Physical($101 in U.S.)

Avg. Spending/Card – 2018(Base=Purchasers)

Avg. Value/Card – 2018(Base=Receivers)

eGift($98 in U.S.)

Physical($75 in U.S.)

eGift($66 in U.S.)

£61 £58

£99

£74

£

eGift/digital cards are beginning to be an increasingly popular choice in the U.K. 38% of consumers annual gifting budget is spent on gift cards.

Although consumers purchased slightly fewer of each type of card, eGift proves to be a popular choice in the U.K. It is worth noting that a key difference between the U.K. and U.S. is the proportion of total gift spending that is spent on gift cards.

U.K. consumers indicated that they spent an average of £531 in the past 12 months on all gifting (i.e., cards, presents, cash) compared to an average of £203 on gift cards. To draw a comparison, in the US $728 on average is spent on all gifting whilst $397 is spent on gift cards.

One in three (32% vs. 33% in the U.S.), spent more on a gift card than on a traditional gift.

AllGifts

£531 GiftCards£203



Overall, very few of the surveyed consumers purchased a gift card for themselves exclusively – either a physical or eGift/digital gift card. Those who did, did so primarily for a discount or to receive loyalty rewards.

Reasons to Purchase Gift Cards for Self and Relative Spending (Base=Purchasers)

38%

37%

25%

19%

18%

3%

Don’t need tocarry cash

Other reasons

To receivea discount

Loyalty/rewards programme

Budgeting/moneymanagement

To shop online

Reasons to Purchase Cards for Self – 2018(Multiple Responses)

Spend More/Less on Cardsfor Self vs. Others – 2018

Same

More for self

More for others

Not sure

38%

36%18%

8%67%

40%

27%

43%

40%

0%

33%

White/Other

Black

Asian

Gen Z

Millennials

Boomers+

Gen X/Y

Spend More for Self – by Age and Ethnicity – 2018



Nearly half of consumers would consider sending an eGift/digital gift card in the future.

Reasons why likely to send eGift/Digital Gift Card

Reasons why unlikely to send eGift/Digital Gift Card

Immediate delivery

Want to give an actual card/gift to

the recipient

They are harder to lose than a

traditional card

Easier to send than mail a physical

gift card

Want the recipient to be able to unwrap a gift

Email notification when the gift is

received

Easier to purchase than traditional cards

Unsure the recipient would be able to retrieve it

It’s a cool gift to give

Easier for the recipient to redeem (don’t need

the actual gift card)

Redemption process may be too difficult for

the recipient

Can send a personalised

message

Environmentally friendly way to give

a gift card

Worried about online safety

Choice of delivery method (e.g., text

or email)

45% 29% 29% 28% 27%

24% 23% 21%

21%

21% 19%

56% 32% 18% 16%

Consumers are primarily interested in eGift/digital gift cards as they allow for immediate delivery. However, those who would not send an eGift/digital gift card claim that they would prefer to give a physical gift rather than a gift card.

Future likelihood to send eGift Cards (Base=Purchasers)



Gift cards have an impact on consumer purchasing behaviour in the U.K.

34%

of U.K. consumers will visit a store they would not have visited otherwise, if they have a gift card.

of U.K. gift card receivers have redeemed a gift card in the

past year.

96%

of U.K. consumers will visit a store more often.

of U.K. gift card receivers have spent over the value of the card

at the retailer.

74%

of U.K. consumers say that receiving a gift card from an

employer would make them more likely to stay with that company.

39%

of those surveyed are unsure.

22%

The average amount that they spent over the card value is

�41 in the U.K.


44%


Key Talking Points

The growth trend in gift cards (physical and

eGift/digital) is positive and demonstrates that

there is an opportunity to drive your gift card

programmes into new segments and deepen the

reach within existing verticals.

There is opportunity to increase store spend

(clicks and mortar) above the value of the original

gift card. The research indicates that, on average,

this is by £41.

With a gift card 34% of surveyed consumers

would visit a store that they would not otherwise

have visited, whilst 44% of receivers would visit

more frequently. How are you retaining this

footfall?

We are seeing that growth in the U.K. is

outpacing the U.S. In line with research from the

UK Gift Card & Voucher Association (UKGCVA),

digital is driving this growth (B2B) in addition

to growth in cards being distributed in malls.

Gifting drives consumer engagement, spend

and increased footfall to clicks and mortar.

Leveraging gifting as a discount or loyalty offer

can drive incremental spend.

Nearly all of the surveyed gift card receivers have

redeemed a gift card in the past year (96% in

the U.K.), and three-quarters of them have spent

over the value of the card at the retailer (74%).

About a third of receivers say they would like to

use an exchange website, even if they had to

give up some of their gift card value.

U.K. Consumers check their gift card balances infrequently. This offers an opportunity for retailers to add value to the gift card proposition by pointing consumers to where they can check their balances.

• Only 39% check their balance at least once a month or more, although 29% say they never check their balance.

• Most of those who check their gift card balance

do so online (45%) or in a store (31%).



Have purchased in past 12 months

From a gift card mall

36%

In-person at the store

41%

Online at store’s website

35%

Online site selling cards for many stores

32%

Proportion who buy eGift cards here

Proportion who buy physical cards here

32%

Number of cards purchased here

4.2%

Total spending on physical and

eGift cards

Proportion receiving free/discounted

cards

37%

Number of free-discounted cards received

3.3%

Prefer to purchase cards from a large retailer

Rank order Amazon #1 or #2 in preference

Rank order Marks & Spencer #1 or #2 in

preference

Bank website

34%

Bank mobile app

33%

Social media site

26%

Interested in purchasing from

Online-only merchants

56% £76 77%

69%

39%

Clicks and mortar are both very important channels, driving both new footfall and repeat purchases.

Malls are equally an important channelto attract gift card purchases.

There is a strong and unsurprising preference to purchase eGift/digital gift cards from Amazon.

Nearly 8/10 consumerswill choose to purchase eGift/digital gift cards from large retailers.

UK

U.K. consumers are using various new purchasing channels.

Purchasing Channels 24/7

Gift Card Purchasing Channels – 2018 Survey


Retailer brands are strong in gifting.

Purchasing Channels - The Gift Card Mall

Most consumers who buy a gift card at a gift card mall say they have a particular store or brand in mind prior to making their selection. Typically the gift card malls where these purchases are made are located in a department store or food supermarket.

Department store Food supermarket or grocery store

Online only merchants Entertainment Discount store/Big box

30% 26% 17% 10%

9%

Speciality retail store

7% 6% 5% 5%

Chemist/health store Fast-casual restaurant Fast food restaurant Coffee shop

4%

Petrol station or convenience store

5%

Other stores or establishments

4%

Fine dining restaurant

11%


Social Media - are you using this channel effectively?

Social media sites are not the first choice for the purchase of gift cards in the U.K. However, interest and likelihood to purchase are highest among Gen Zs.

Level of Interest and Likelihood to Purchase Gift Cards from a Social Media Site in the Next 12 Months (Base=Purchasers)

Social media is an interactive and instant source of product information. Gen Zs are influenced by the immediacy and “chatter” around products and services. Ease around use of embedded links is a great attraction to this demographic and for retailers, targeted advertising yields better results at a reduced cost.

Likely to Purchase (4+5)�by Age & Ethnicity – 2018

63%

42%

16%

3%

Gen Z

Millennials

Boomers+

Gen X/Y

23%

23%

White/Other

Asian

Black 54%

Interested (4+5) �by Age and Ethnicity – 2018

50%

45%

20%

4%

Gen Z

Millennials

Boomers+

Gen X/Y

24%White/Other

Asian

Black 46%

39%

Purchasing Channels


About one in three respondents indicate having a high interest in purchasing gift cards from either a bank website or banking mobile app.

24/7

Interested in Banking Mobile App (4+5)�byAge and Ethnicity – 2018

67%

25%

7%

Gen Z

Millennials

Boomers+

Gen X/Y

31%

46%

White/Other

Asian

Black

60%

60%

Interested in Online Banking (4+5) �byAge and Ethnicity – 2018

69%

59%

27%

Gen Z

Millennials

Boomers+

Gen X/Y

33%White/Other

Asian

Black 60%

42%

10%

Purchasing Channels


The design of a physical gift card is important, yet, not a game changer in terms of where it is purchased. Plastic physical cards are preferred over paperboard cards. Any type of card should be recyclable, including the magnetic stripe.

Card Design and Materials

Influencers

The design on the face of a gift card is very important to about half of the surveyed U.K. consumers. However, about two out of three agree that if they dislike a design, they will still buy the card at the store.

Design – 2018 U.K. Survey Type of Card – 2018 U.K. Survey

A majority of U.K. physical gift card purchasers prefer a plastic card over a paperboard one. However, if the card was board, it should be recyclable. A plastic card with a recycle logo would be acceptable to most, yet, a magnetic stripe on a card would render it not environmentally friendly.

56%

70%

Design of a gift cardis important

Will still buy a card, even if they dislike the design

Would pay a fee topersonalise an eGift card

Attractive card carrierwould eliminate the need

for a separate greeting card

62%

27%

11% 92% 87% 49%60%

Prefer a plastic card

Prefer a board card

Would expect a board card to be recyclable

Would purchase a plastic card

with recycle logo instead of board

Would consider card with magnetic stripe to be environmentally

friendly


Card Design and Materials Influencers

Key Talking Points

60%

of consumers still prefer Plastic over Paper for gift cards but would like to see a recycled logo

Our card specialists can source alternative materials such as recycled PVC, Bio PVC, and PET-G, and can source ECO-friendly materials other than board.

of consumers who purchase a board card expect the board to be rigid and recyclable

A range of laminated premium FSC board materials are available which are great for the environment and strong enough to be washed.

92%

of respondents note that an attractive carrier will negate the need to buy a separate greeting card

A range of styles, shapes and sizes with different finishes such as foils, glitters, and embossing are available to create that perfect gift.

70%

of all respondents noted that the design of the card is still an important part of the selection of a gift card

Our experienced design team and consultants can support your programme to create your perfect range suitable for every occasion i.e., Birthdays, Weddings, Christmas...

Almost 2 3


55% of respondents are interested in the ability to use a gift card in multiple countries.

Cross-border Usage –

Global Retailers

91%

74%

50%

27%

52%

92%

81%

White/Other

Black

Asian

Gen Z

Millennials

Boomers+

Gen X/Y

Ability to Use in Other Countries is of Interest – 2018(Total “Yes” Responses)

Is Ability to Use Gift Card in Multiple Countries Where Retailer Operates

of Interest? – 2018

No

Yes

Yes, but returning items concerns me

Yes, but other reasons concern me (e.g., foreign exchange charges, security, etc.)

33%

45%

17%

5%

If retailers improve the process of returns, then cross-border could increase by 17%.

The main barriers to cross-border usage can be addressed:

• Foreign exchange - leverage First Data’s Bloomberg rate.

• Security - global fraud prevention capability.

• Charges - retailer discretion.


Two in five of those who bought themselves a gift card or received a gift card have reloaded them, primarily to enable additional purchases.

Reloading Gift Cards – Incidence, Reasons, and Reminders (Base=Purchased for Self + Receivers)

46%

27%

25%

21%

15%

14%

Be environmentally friendly

Don't need to carry cash

2%Other

Make additional purchases

Loyalty/Rewards programme

Budgeting

Receive a discount

Reasons To Reload – 2018(Multiple Responses; Base=ReLoaded)

Interest in Reminders – 2018

S/W interested (3)

Interested (4+5)

Not interested (1+2)

43%

28%

29%

Interest in Auto-Reload – 2018

S/W interested (3)

Interested (4+5)

Not interested (1+2)

21%

20% 59%

24/7Reloadable Gift Cards


First Data U.S. Consumer Insights Survey 2018

Physical is still the preferred form factor across all age groups. However, the average number of eGift/digital gift cards purchased continues to grow YOY…subsiding cannibalisation concerns.

Consumers stated they are spending 55% of their annual gifting budget on gift cards.

For the fifth year in a row, lift is increasing and it’s up $21 YOY (from $38 in 2017 to $59 in 2018).

Self-purchasing is on the rise (up 6 points YOY) and the majority of those are spending more on themselves.

Of those surveyed, Gen Z and Millennials are most interested in purchasing a gift card from their bank’s website or mobile app.

Banking website: 39% of Gen Zers and 50% of Millennials purchase from a bank website.

Banking mobile app: 41% of Gen Zers and 46% of Millennials purchase from a banking mobile app.

The number of consumers interacting with eGift/digital gift cards is much higher in the U.K. Millennials are the most active in terms of purchasing both physical and eGift/digital gift cards.

Consumers stated that they are spending 38% of their annual gifting budget on gift cards.

One in three consumers spent more on a gift card than on a traditional gift.

Receiving a gift card impacts consumer behaviour; visiting a store they otherwise would not have done, visiting a store more frequently.

Consumers expect a variety of channels to purchase/redeem gift cards. There is an interest in purchasing a gift card from a bank website/mobile app.

Plastic physical cards are preferred over paperboard cards, yet any type of card should be recyclable, including the magnetic stripe. Plastic tax is a consideration.

First Data U.K. Consumer Insights Survey 2018

Key takeaways - A snapshot of the U.K. and U.S. gift markets


Ready to evolve your Gift Card Strategy?

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2018 U.K. Prepaid Gift Cards SURVEY · purchase eGift/digital gift cards from Amazon. Nearly 8/10 consumers will choose to purchase eGift/digital gift cards from large retailers