eGifter 2014 · eGifter 2014 Trends in Digital Gifting Study 2 Table of Contents » Introduction 3 • Consumer behavior is changing. 3 » Digital Gifting - Addressing Opportunity

1eGifter 2014 Trends in Digital Gifting Study

eGifter 2014 Trends in Digital Gifting Study

February 2015


Table of Contents » Introduction 3

• Consumer behavior is changing. 3

» Digital Gifting - Addressing Opportunity in These Challenges 4

• Methodology 4

» The Problems with Traditional Gifting 5

» Trends in Gifting 6

• Gift cards most common gift across generations 6

• The gifts consumers prefer to receive 8

» Consumers Want to Get Gifts Right and Avoid Returns 9

• Who is the most difficult person to buy gifts for? 10

» The Shift from In-Store to Omni-Channel Gifting 11

» The Consumer Perspective on Digital Gifting 12

• Social Media as a Gifting Trigger 12

• The Drivers of Group Gifting 13

• Digital Gifting’s Impact on Office Gifting 14

• Digital Gift Cards – A Brand’s Own Currency 15

• Their Role in Mobile Payments 15

• Powering eGifting and Other Digital Gifting Innovations 15

» Conclusion 16


How, when, where and even for whom we shop is all changing with new technology. The integration of e-commerce, mobile devices and social media are all factors changing the gifting game.

The eGifter Digital Gifting Study identifies gifting trends across demographics and explores consumer adoption of emerging technologies created for the digital consumer. These technologies are being designed to adapt and evolve with the rapid changes in consumer behavior brought about by immediacy of

social networks, our reliance on mobile devices, and the predictive power of big data.

While consumers are open to new technologies in the gifting experience, they’re not satisfied with gifting in its current form and want elevated levels of convenience, personalization and flexibility. The goal of this report is to help retailers not only understand this evolution, but also develop strategies to satisfy customer expectations while growing their gifting businesses.

Gift giving appears to follow a set of unwritten rules, especially around the holiday season: your best guess is OK when giving clothing; gift cards are great, but can sometimes feel impersonal; and always include a gift receipt for high-ticket items.

But the technologies that have dramatically changed many aspects of our lives in recent years have now begun to take aim at gifting. Governed by traditions and social complexities, gifting has historically been slow to change, but it’s becoming clear that gifting is poised for some significant changes.

Introduction

Consumer behavior is changing.


The suite of technologies supporting digital gifting is gaining momentum. It is driven by big data, stitched seamlessly in consumer’s social behavior and built to support a mobile, on-the-go lifestyle. This report gives retailers insights on how to use these new technologies to drive more gifting revenue, increase sales of high-ticket items, and reduce return volumes, all while increasing customer acquisition and satisfaction.

Digital Gifting - Addressing Opportunity in These Challenges

eGifter conducted a survey of more than 1,200 U.S. consumers to explore their gifting behavior and understand their perception of emerging technologies that influence how, when, why and for whom they gift.

Methodology


Gifting is a segment of shopping fraught with problems for both consumers and retailers alike. Until recently, there has been surprisingly little innovation aimed at solving these inconvenient and costly challenges.

The Problems with Traditional Gifting

Our survey shows that while consumers are receptive to new innovations aimed at solving these problems, they have yet to achieve mainstream adoption.

A high percentage of gifts are never used, or are regifted:

49%55% 12%

21%

49% of people received a gift over the past year that they did not like or did not fit, but they did not return it.

21% of consumers planned to regift in the 2014 holiday season.

While 55% will return or exchange a gift they don’t want, 12% will just leave it in the closet.

While 54% of consumers planned to gift clothing and apparel during the 2014 holiday season, 55% of people say it’s the category for which they’re also most likely to return.

While the majority (57%) of consumers say they prefer to receive gift cards, primarily because of the flexibility they offer, some of those same consumers are still concerned with being perceived as less thoughtful when giving a gift card (37%).

Adding to this, millennials want higher ticket electronics, gaming and tech accessories that cost more than consumer’s budget for a single gift.

While 48% of people shop online for gifts (versus 41% at a retail store), 71% of people are less likely to return a gift if they have to ship it.


Younger Gen X and older Millennials (Gen Y) continue to become a more meaningful part of the economy, causing a shift in shopping behavior. In gifting, age not only impacts how consumers shop for gifts, but also the types of gifts they purchase.

Trends in Gifting

Gift cards most common gift across generations

18-2553% 57%61%61%54%

53% 55%56%55%53%

45% 33%36%37%

47% 42%41%39%

34%

41%

39% 25%35%33%32%

26-35 34-45 46-60 61+

Gift cards Clothing/ apparel Entertainment Food/

candyBath & body products Alcohol CashGaming technology/

Tech accessories

According to the eGifter Digital Gifting Study, 57% of consumers over the age of 60 say they give gift cards during the holiday season, with cash not far behind (42%). Younger consumers, aged 26 to 35 are more likely to give gift cards (53%) than cash (19%), suggesting that when flexibility is the desired outcome of gifting, younger consumers are more than twice as likely to turn to a gift card as they are to cash.

Clothing and apparel play a close second to gift cards as the most gifted across age groups with an average of 54% of consumers saying they planned to gift clothing

in the holiday season, which is problematic given the high rate of returns for clothing and apparel.

Millennials are more than twice as likely to give entertainment gifts, such as movie tickets, as consumers over 60 (46% v. 21%), and also more likely to gift alcohol (34% v. 16%).


Not surprisingly, male and female consumers also diverge in their gift shopping preferences. Male consumers are more likely than females to shop online (45% v. 39%).

Female consumers are more likely to give for a wider range of holidays and special occasions, such as friends’ birthdays, graduations, baby showers and Father’s Day. During the 2014 holidays, female shoppers were more likely than males to gift their friends (60% v. 35%) and colleagues (20% v. 10%).

Birt

hday

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fam

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Anni

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Birt

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sfri

ends

Birt

hday

sex

tend

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fam

ily

Fath

er’s

Day

Mot

her’s

D

ay

Gra

duat

ion

Vale

ntin

e’s

Day

East

er

Wed

ding

s

Important Holidays for Gifting

96%

86%

52%45%

39% 37% 33% 31%22% 20%

13%

0%

40%

20%

80%

60%

100%

Hol

iday

se

ason

While the holidays are typically known as the most important time of year for gifting, research shows consumers plan to gift year-round, with the next most popular occasions being:

Consumers also plan to gift for holidays not commonly associated with gifting, such as Halloween (5%), St. Patrick’s Day (4%), Boss’ Day (4%), Administrative Professional’s Day (4%), Teacher Appreciation Day (4%) and Grandparent’s Day (4%). Ten percent of consumers plan to give an employee gift this year.

Gifting has become a year-round revenue opportunity and merchandising category for retailers, not just an October to December event.


The gifts consumers prefer to receive

When receiving gifts, millennials and consumers over

60 don’t always see eye to eye. While 42% of younger

consumers list electronics, gaming and technology

accessories at the top of their wish lists, only 27% of

consumers planned to give such gifts this holiday

season.

Younger consumers are nearly three times as likely

to prefer electronics, gaming and tech accessories

compared to their elders (42% v. 15%). Fifty-eight

percent of younger consumers (ages 18-25) prefer

receiving clothes, compared to 38% of older consumers

(over the age of 60); but both generations appreciate

gift cards: Millennials (62%) and consumers over 60

(54%).

According to the Retail Gift Card Association, more

than three-quarters of consumers have given gift cards,

and 90% have received at least one in the past year.

1

Confirming this trend, gift cards remain the largest

fraction of what consumers plan to give – and what

they’d like to receive.

Opting for gift cards doesn’t necessarily mean spending

less – 42% of consumers give gifts that cost between

$26 and $50, and 41% of consumers give gift cards

valued within the same price range.

Key Takeaway

The most flexible of gift options, the gift card continues

to be a top gift choice for both men and women in all

age groups. For most occasions, the convenience for

the gift giver and flexibility for the recipient has helped

consumers overcome the fact that gift cards can be

seen as impersonal. Despite the negative connotation

around gift cards, they fill a more important need for

recipients. RSR Research found that gift cards give

individuals the ability to treat themselves to items they

really want, and buy things they truly need rather than

accumulate more “stuff.”2

Which of the following gifts do you most like to receive?

Clo

thin

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appa

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Ente

rtai

nmen

t

Food

/ ca

ndy

Alc

ohol

Expe

rienc

e/

dest

inat

ion

gift

s

Spor

ting

good

s

Jew

elry

Bath

/bod

y pr

oduc

ts

Gam

ing

Tech

nolo

gy

Cas

h

Gift

car

ds

othe

r

0%

20%

40%

60%


The majority of consumers (90%) say they’re likely to return gifts in at least one

category. Vast consumer choices have made it more difficult for shoppers to

nail down the perfect item.

Consumers Want to Get Gifts Right and Avoid Returns

The eGifter Digital Gifting Study revealed that while 58%

of consumers believe that having more color choices

and other options have improved their satisfaction

when shopping for themselves, 61% believe these same

factors have made selecting the right gift even more difficult. Fifty-eight percent of consumers believe that

clothing and apparel are the items they are most likely

to return.

Shoppers are interested in giving the right gifts and

want to avoid giving a gift that needs to be returned

and are willing to spend more to get the gift right.

Nearly all consumers (91%) say they would spend

more on a present than they had originally planned

if they knew it was exactly what the recipient wanted.

Two-thirds would spend at least $20 more, and one in

three consumers would spend at least $50 extra for the

same results.

Interestingly, consumers also tend to spend more on

people who they find more difficult to shop for. Moms,

bosses and in-laws top the list of recipients who leave

gift-givers stumped.


Who is the most difficult person to buy gifts for?

Key Takeaways

Consumers really want to give the right gifts and they

are willing to spend more to do so. The people they

spend the most on are the ones they also find the most

difficult to shop for. Despite the best intentions, picking

the right gift is becoming increasingly difficult as more

choices make the job of picking the right gift a chore

instead of a joy. This of course results in costly returns.

This gifting pain point is one retailers can focus on to

increase customer satisfaction and reduce returns, and is

an ideal place for innovation.

Clothing and apparel are perhaps the most difficult

to gift given the issues with size and color preference.

It creates added challenges for retailers, as this is a

category also most likely to result in returns. Consumers

recognize these issues as they find themselves

inconvenienced on the receiving end of clothing and

apparel gifts, which helps drive gift card sales. (As a

category, apparel follows a close second to gift cards as

the gift people most often give.)

Lastly, gift budgets of consumers also often do not align

with the gifts millennials want the most, resulting in

lower overall satisfaction among younger gift recipients.

New offerings in digital and social gifting are helping

consumers to more readily give the personal gifts they

prefer. Group gifting, for example, helps recipients

receive the higher-ticket gifts they prefer, improving

customer satisfaction and resulting in more profitable

gifting for retailers.

Spouse

Mother-in-law

Mom

76% of married consumers find their spouses one of the most difficult people to buy gifts for.

91% of shoppers will spend a significant amount on spouse gifts.

75% of consumers who buy gifts for Mom think she’s one of the most difficult people to shop for.

90% of shoppers who think Mom is hard to shop for plan to spend the most on her.

68% of consumers who buy gifts for their mother-in-law say she’s one of the hardest people to shop for.

63% of shoppers say their mother-in-law is one of the top 5 people they plan to spend on this holiday.


Overall, nearly half (48%) of consumers say they’re most likely to shop for a gift online in some form, including on mobile devices and via social media, making online the number one way consumers gift. Fewer than half (41%) of consumers say that they’re most likely to shop for gifts in-person at a retail store.

The Shift from In-Store to Omni-Channel Gifting

But this isn’t a tale of e-commerce replacing the in-store experience, rather part of a growing trend of the omni-channel consumer who blends their shopping experience seamlessly online and offline as needed to meet their unique requirements. In fact, according to a study by Accenture for holiday 2014, 68% who bought a gift online had also shopped the item in a physical store before making the eventual purchase online (often referred to as showrooming), with 36% of these using their mobile device to compare prices while in the store.3 Others also used their mobile devices in other supporting roles such as checking for coupons or reviews. Interestingly the opposite was also true, whereby 71% of consumers who shopped for a gift in-store first sought information about it online (often referred to as webrooming).

Digital and physical shopping tendencies vary across age groups and genders, creating multiple avenues for retailers to engage different shoppers. And as younger generations become a larger percentage of shoppers the shift is likely to be to digital. In fact, an average of only 36% of consumers 45 and under say they are

most likely to shop for gifts in-person at a retail store, compared to an average of 46% of those 46 and older.

Key Takeaway

While these changes in shopping behaviors present challenges for retailers, they also present opportunities for growth in several areas of their business, specifically gifting. Connecting online and offline behavior helps attach valuable data to in-store consumers. As the tech-savvy younger consumers become a higher percentage of the economy, these trends will only gain momentum, helping retailers justify their investments in digital gifting technology.


Our research reveals several factors that play an important role in the evolution of digital gifting technology. Consumers’ responses shed light on a valuable opportunity for retailers that adopt new gifting capabilities early, allowing them to capitalize on shoppers looking for more convenient and innovative ways to gift.

The Consumer Perspective on Digital Gifting

Social media is making consumers more likely to purchase gifts for those they weren’t originally planning to gift. Specifically, 19% of consumers report social media reminders, such as Facebook birthday notifications, have played a role in their decision to give a gift in the past year. Of those, half (52%) report social media influenced a decision to give a gift they weren’t originally planning on.

Sixty-four percent of consumers have purchased a “just because” gift in the past year. Female shoppers are more likely to buy “just because” gifts (79% compared to 53% of male shoppers). Currently, social reminders are only responsible for around 10% of such purchases, illustrating the untapped potential of social platforms to create a new gifting category for retailers to focus on. Gifting in the digital social world can stretch beyond our traditional definitions of gifting, to include impulsive gestures aimed at cheering up a friend who had a bad day, or congratulating someone on their latest accomplishment.

If you were at the bar, you might buy your friend a drink. Such gestures are deep-rooted social traditions lost in a world where our social gathering spots are often

of the digital variety. When it comes to such impulse gifting, some is already happening. Males are more influenced by social reminders to give impulse gifts, with 13% percent of male consumers reporting that social reminders had a hand in giving impulse gifts over the past year, compared to just 7% of females.

Key Takeaway

For retailers, social media’s impact on gifting is multifaceted. The social graph contains data that can drive gifting activity, giving us clues into what to gift, reminding when to gift, even identifying recipients who may not have otherwise come to mind, creating opportunities to grow gifting as a category. To capitalize on these opportunities, new mobile-friendly and frictionless platforms are needed. Low price-point impulse, or gesture gifting, can emerge as a new sub-category of gifting. To realize this potential, new solutions are needed that will create that moment of reciprocal comradery you may have had when clinking glasses in the bar. Brands that respond to these opportunities first have an opportunity to become gifting destinations for millennials with long lasting implications.

Social Media as a Gifting Trigger


More than half of consumers plan to participate in a group gift over the next year (55%), compared to 48% that have participated in “group gifting” in the past year. And that’s not surprising, considering 60% of consumers say they would rather spend more money on a larger, more meaningful group gift than less on an individual gift.

With the right nudge, the practice may encourage consumers to expand their gifting circles, and even the amount they spend. The majority of consumers (60%) are open to purchasing a gift for someone they hadn’t originally planned to if it’s part of a group gift, creating a new gifting opportunity for retailers.

Group gifting also helps younger consumers get the higher ticket electronic, gaming and tech items that they want the most. By age, millennials are most likely to consider group gifting this year. Sixty-four percent of Gen Y plan to chip in on a group gift, compared to 60% of Gen X. However, 53% of Gen X would be more likely to buy a present for their boss if involved in a group gift, compared to just 25% of Millennials.

Female consumers are more likely to have participated in a group gift than males (56% v. 40%). A group gift alternative is almost twice as likely to encourage female employees to gift their bosses as male employees (29% v. 17%).

Beyond the holiday season, consumers said they would participate in group gifting for teachers, coaches, grads, mom and dad, weddings, baby showers and birthdays.

Key Takeaways

As the trends that are changing how we shop impact gifting, digital gifting innovation is gaining momentum and eGift cards are one of the fastest growing ways retailers are bridging the gap to the digital consumer. Some digital platforms even include innovations with implications beyond just driving more eGift card sales.

Group gifting is a growing trend, driven by consumers’ desire for higher-quality, higher-ticket items.

Digital gifting platforms have begun to solve the problem for online gifters, deploying systems to enable online and even mobile group gifting. In 2013, such systems began popping up on the digital gift card programs for several large retailers. Group gifting can play a role across the gifting landscape, including in the online catalog and inside the gift registry or wish list. Retailers who move early to add group gifting will become known as the “go to” source when consumers are looking for a convenient way to chip-in on a gift.

The Drivers of Group Gifting


Office gifting is a growing category, with consumers spending more on holiday gifts for coworkers than in 2013. For those planning on office gifting in 2014, gift cards were high on their shopping lists. Overall, 50% of consumers say they plan to gift a coworker this holiday season, with the most popular item a gift card (20%).

Group gifting could also be a key driver for higher office gifting sales. The office is the most popular place consumers plan to gift as a part of a group during the 2014 holiday, including bosses (23%) and coworkers (20%).

And they’ll likely be getting more from their older counterparts, with Generation X (ages 26-45) consumers more than twice as likely to buy an office present when involved in a group gift (53%) compared to millennials. Presumably, the group dynamic creates a natural buffer

that makes the act of gifting in the workplace feel more comfortable. Nearly one in five holiday gift givers (19%) would be more likely to chip in on a group office gift if payment was collected digitally instead of in cash.

Key Takeaway

Consumers in the workplace are already predisposed to chipping in to give more meaningful gifts as a group, making the act of gifting to coworkers feel more comfortable. The office is an ideal setting for digital gifting as office life is already centered around the computer. Within the spectrum of digital gifting services, office workers find group gifting the most important feature a brand can offer. To win a higher share of this market, retailers should deploy digital gifting platforms with group gifting capabilities.

Digital Gifting’s Impact on Office Gifting


Their Role in Mobile Payments

More than a quarter (27%) of consumers plan to use some form of mobile payment solution in the next year, and if experts are correct this number could even be higher. Digital gift cards play many roles in the mobile payments story. First, new use cases for eGift cards are emerging as part of payment and loyalty solutions, as demonstrated most notably by Starbucks. In this model, a reloadable digital gift card acts as a brand’s own currency to add efficiency and reduce cost at the point of sale. For their willingness to participate, consumers are rewarded with some of that savings in the form of loyalty points and discounts.

In the more traditional use case, digital gift cards continue to take market share from their plastic counterparts. Why? Fifty-three percent of consumers have reached for a plastic gift card only to realize it wasn’t on them when they were getting ready to pay for an item. This dynamic has contributed to more than $27 billion in gift cards going unused from 2007 through 2013, with another $1 billion in spillage expected this year.4 While current gift card laws have reduced spillage, digital (mobile) wallets are poised to further rectify the problem. Digital gift cards are, of course, designed to work in tandem with digital wallets, however when plastic cards are in the mix, 40% of consumers are willing to scan them into a digital wallet to ensure they always have their cards when they need them.

Digital gift cards are also becoming the vehicle of choice to support store credit. Customer support representatives use them as a tool to help resolve difficult support situations.

Key Takeaway

Merchants around the US and the world are gearing up to service the smartphone toting consumer. Armed with a variety of digital currencies, the eGift card among them, consumers will want a frictionless checkout experience. Creative use cases for eGift cards will ensure they play a growing role in the future of mobile payments, therefore retailers need to invest in their digital gifting technology as part of a comprehensive plan to support mobile payments.

Powering eGifting and Other Digital Gifting Innovations

New digital gifting platforms use eGift cards as the underpinnings for innovative new solutions. eGifting is one such solution, whereby a consumer does not need to know the size, color preference or even the shipping address of the recipient to give a thoughtful hand-picked gift that has the flexibility of a gift card.

The eGift card is also playing a role in support of group gifting systems. The variable denomination cards are an ideal solution when consumers chip-in together for a gift card. Each contributor can choose how much they want to contribute. Regardless of how many people participate or how much they each contribute, in the end an eGift card can be issued for the exact amount collected. Before the flexible eGift card was available, online group gifting systems did not really exist and group gifts were much harder to orchestrate.

Digital Gift Cards – A Brand’s Own Currency


Shoppers are already eager to adopt new technology that makes their lives easier, and almost all such innovations link back to the palm of their hands. They are changing the way they give gifts to friends, family and even casual acquaintances – and they’re

open to methods to make sure they get it right. As such, retailers that adopt the right technologies could augment their gift sales revenue and customer acquisition while improving customer satisfaction.

Conclusion

In the past 20 years, e-commerce has revolutionized retail, while gifting has remained surprisingly stagnant and riddled with inconveniences. It’s time for gifting to catch up. New gifting trends are emerging, enabled by a perfect storm of supporting consumer technology. Gifting is poised for significant growth as retailers learn to harness the power of mega trends in social networks, mobile, and big data to solve key gifting problems.

The data supports some very clear conclusions:

Online (including mobile) is now the primary way consumers gift:

Overall, nearly half the consumers surveyed (48%) say they’re most likely to shop for a gift online, compared to only 41% in-store. Online and mobile combined with in-store purchases create a true omni-channel experience.

Consumers like eGift cards and are open to making them more personal:

42% of consumers would take advantage of opportunities to personalize digital gift cards, such as recording video messages or picture uploads. If available, 17% would choose the option to send it to a recipient’s mobile number.

Getting the right gift for those most difficult to buy for is a top challenge for consumers:

More choices are making this challenge even more difficult and shoppers are receptive to new technology to help alleviate it. This is such a great challenge that 91% of consumers say they are willing to pay for better outcomes. Two-thirds would spend at least $20 more, and one in three consumers would spend at least $50 extra for the same results.


As consumers hold retailers to higher expectations for the general shopping experience, it’s only natural that the same standards apply to gifting. Offering an intuitive, hassle-free gifting strategy across social and mobile platforms will pay dividends. For consumers, features such as personalization, social integration and group gifting, all built into a frictionless mobile experience are improving the gift experience for both gift givers and recipients alike.

To succeed, retailers must first embrace the digital gift card, understanding its role in both digital gifting solutions and mobile payments strategies. Completely

new innovations bring with them the potential to truly change how we gift.

eGifting and other digital gifting innovations are responding to the needs of gift givers and recipients, while solving real problems for retailers. By making timely investments in the right technologies, retailers can grow gifting revenue, acquire new customers, reduce costly returns, and improve overall customer satisfaction.

Being perceived as thoughtful remains a top concern:

While consumers clearly support gift cards, many feel eGift cards would be more personalized if the gift giver included a link to the item they thought the recipient would like (39%). Of those who said gift cards are impersonal, nearly half (48%) said they thought it would seem more personalized this way.

Gifting is no longer a 1:1 event:

The majority (55%) of consumers planned to chip in on a group gift for the 2014 holiday season, up from 48% who said they had done so in the past year.


References

1. “US Shoppers Love Gift Cards, which Translates to More Revenue for Retailers,” Retail Gift Card Association. July 8, 2014. http://www.thergca.org/us-shoppers-love-gift-cards-which-translates-to-more-revenue-for-retailers

2. “2014 Digital Gifting Benchmark Study,” Baird, Nikki and Rowen, Steve. RSR Research and CashStar. September

2014. http://go.cashstar.com/resource-center/rsr-2014 3. “2014 Accenture US Holiday Shopping Survey,” Accenture Research. October 9, 2014. http://newsroom.accenture.

com/images/20020/2014%20Accenture%20Holiday%20Shopping%20Survey%20Deck%20FV%20%283%29.pdf 4. “Gift Cards State of the Union 2013,” The Corporate Executive Board Company. http://www.executiveboard.com/

exbd/financial-services/tower-group/gift-cards/index.page

Documents

eGifter 2014 · eGifter 2014 Trends in Digital Gifting Study 2 Table of Contents » Introduction 3 • Consumer behavior is changing. 3 » Digital Gifting - Addressing Opportunity