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Don’t waste another dime on bloated channel reporting and vanity metrics.
Don’t waste another dime on bloated channel reporting and vanity metrics.
Check out what's ahead in the consumer economy for Dec. 19-22.
Welcome to a new week. It’s the final week before the holidays, and commerce is ready to finish 2022 strong. That means it’s time for last-minute holiday deals, and a push to get that pressing work tied up before the New Year. Economic indicators and earnings reports will provide a look at where things stand in the consumer economy right up until the end.
Brands and retailers are in the home stretch of peak season, and this year consumers are expected to show plenty of late demand as they hold out for deals. So the industry focus is all on holiday shopping this week.
Amazon’s Very Merry Deals offers a host of last-minute shopping discounts through Wednesday, Dec. 21.
Target has a host of deals and fulfillment options for the final shopping push. Same-day delivery and pickup will be available on Christmas Eve to customers who place orders before 6 p.m.
The year closes out with a flurry of economic reports that will offer the final snapshot of how conditions stand heading into 2023.
Housing Starts: The US Commerce Department offers monthly data on new home construction. This is one important predictor of demand for home and garden retailers. (Tues., Dec. 20, 8:30 a.m.)
Consumer Confidence: The Conference Board shares the results of its monthly survey on consumer outlooks and expectations on buying conditions and the economy, including inflation. This index has fallen for the last two months. (Wed., Dec. 21, 10 a.m.)
Existing Home Sales: Another metric that is watched by home goods retailers, the National Association of Realtors shares data on sales of existing homes. With interest rate increases slamming the brakes on the housing market in recent months, this will be a closely watched indicator for the whole economy. (Wed., Dec. 21, 10 a.m.)
Personal Income Expenditures: The US Bureau of Economic Analysis shares monthly data on consumer spending, incomes and prices. This is the preferred inflation measure of the Federal Reserve, so economists will be looking for more signs of cooling after last week’s Consumer Price Index slowed to 7.1%. ( Friday, Dec, 23, 8:30 a.m.)
Durable goods orders: The US Commerce Department issues its monthly report on orders from manufacturers for goods that are designed to last three years or more. (Fri., Dec. 23, 8:30 a.m.)
Consumer Sentiment: The University of Michigan Survey of Consumers issues its final report for the month on consumer views of the economy and expectations for inflation. The reading improved slightly from November to begin the month, but has remained near historic lows in the face of 40-year-high inflation. (Fri., Dec. 23, 10 a.m.)
New Home Sales: The US Commerce Department issues monthly data on sales of new homes. (Dec. 23, 8:30 a.m.)
Corporate earnings season finishes the year strong with brands and retailers that will offer a snapshot of holiday shopping results so far:
Mon., Dec. 19: Steelcase
Tuesday, Dec. 20: Nike, FedEx, General Mills
Wednesday Dec. 21: Rite Aid
Thursday, Dec. 22: Carmax
On average, customers spend $59 more than the value of their gift card, Fiserv found.
In retail, sales are often measured in goods, whether they are purchased for ourselves or someone else. There are plenty of strategies that brands and retailers use to increase those sales, whether it is marketing, loyalty programs or how that item is presented.
In most cases, these are two different parts of the equation for retailers: The product that is bought and the strategies that lead to the purchase.
That’s what makes the gift card unique.
It is an item you can buy, with a section in the store all its own. Eventually, it leads to the purchase of other goods, so the gift card is leads to a direct sale. Yet it’s also a means to build a retail brand and create incentives that both introduce customers to a store and keep them coming back.
That’s a key takeaway from the 20th Annual U.S. Prepaid Consumer Insights Study from fintech and payments company Fiserv.
At this point, the gift card feels like a staple of the shopping experience. But it is only about 30 years old. In 1994, Blockbuster Video pioneered the sale of cards for gifted purchases directly as a means to combat fraud in paper gift certificates. Since then, they’ve proven to have a multitude of uses that stretch beyond the holidays.
Starbucks and Amazon gift cards are commonly distributed as prizes at team-building events and as pick-me-ups by friends showing they care. In 2022, 60% of consumers said they received a gift card from an employer, according to the Fiserv report. That was a big increase from 32% in 2019. People appreciate the gesture. The survey found that 85% of employees think that gift cards from an employer make for appropriate incentives.
For people looking to show generosity, gift cards can also be a means to stretch dollars. At a time of high inflation, people are looking for deals with their discretionary purchases. Gift card promotions that offer discounts and bonuses are proving particularly popular, the study found. Two-thirds of consumers said promotions can influence them to purchase more, while more than half of consumers took advantage of such an offer in 2022.
Yet the more difficult consumer environment is also having an impact on overall gift card sales. In 2022, the growth of gift card purchases slowed.
“Overall, 56% of U.S. consumers purchased more gift cards in 2022 compared to 2021,” said Tom Niedbalski, VP of gift solutions at Fiserv. “This was a decline from the 73% of consumers who said they bought more gift cards in 2021 than they did in 2020.”
Inflation and less discretionary income were the driving factors for consumers who said they bought fewer gift cards during 2022, as 35% of consumers said inflation was the reason they were purchasing fewer cards.
It's important for brands and retailers to understand why consumers buy gift cards. But it's just as crucial to understand where they can fit in retail strategy. Beyond sales, gift cards can help drive repeat customers, and extend a brand. These tools are particularly valuable at a time when retailers are focused on profitability in a tougher consumer environment.
Fiserv explained four areas in which gift cards are of particular value for brands.The following is directly quoted from Niedbalski:
Improving cash flow and revenue. Gift cards not only drive in-store and online traffic, there is an associated “lift,” or overspend, when a gift card is converted into a sale. On average, customers spend $59 more than the value of their gift card.
Repeat customers. Retailers use gift cards to foster loyalty and customer engagement, ultimately leading to repeat customers. One way we see this play out is through promotions associated with gift card sales. For example: a consumer who buys a $100 gift card for the holidays will receive a $20 bonus card that can be used after January 1 – creating a pre-holiday sale and post-holiday transaction in the New Year.
Branded currency. A gift card places a merchant’s brand directly into the consumer’s wallet, increasing brand awareness and ensuring the merchant’s brand is with the consumer when they are looking to buy.
Year-round marketing. The gift card has grown beyond the traditional holiday season. From birthdays and graduations to anniversaries and babies, gift cards are becoming the most popular way to recognize milestones – giving retailers opportunities to run additional promotions throughout the year.