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Welcome to a new week. Summer is still officially with us for 10 more days, but the ecommerce events calendar has already fully transitioned to fall mode. Leaders will be gathering at events around the world this week, and we expect news to be one of the byproducts. Plus, the latest inflation and retail sales data is set to arrive from the federal government. Here's a look at The Current's calendar for the week:
- Chicago Ecommerce Summit: The one-day gathering brings together brands, retailers and solution providers. The event features panel discussions and presentations from leaders of #paid, Xena Workwear, Adobe and more. (September 13)
- eTail Connect West 2022: The invite-only forum for ecommerce and digital marketing leaders is going live in La Jolla, California. (September 14-16)
- MakeUp in New York: The beauty industry meets in New York, as skincare and makeup brands connect with suppliers during this two day event. Alongside an exhibition, the event includes educational programming featuring speakers from Olaplex, Coppertone, Goop and more. (September 14-15)
- Shopify Unite: The annual developers conference for Shopify is getting underway in London with the first of three planned international events to take place this fall. Be on the lookout for headlines from the event. (September 12-13)
- Amazon Accelerate: The conference for Amazon third party sellers features a keynote from Amazon's new CEO of Worldwide Amazon Stores, Doug Herrington, tennis legend Venus Williams and educational programming. The conference is in-person at the Seattle Convention Center, and virtual. (September 14-15)
- Consumer Price Index: August data on inflation from the federal government will offer a snapshot at whether prices are continuing the gradual fall they began in July, or whether they will continue to stubbornly remain at 40-year-highs. In July, the inflation rate fell to 8.5% from the 9.1% year-over-year increase reported in June. (September 13, 8:30 a.m.)
- Producer Price Index: Also known as the wholesale price index, this measure of the prices paid for goods in the phases before they reach retail shelves is another key inflation measure. It showed a 9.8% year-over-year increase in July, down from 11.3% in June. (September 14, 8:30 a.m.)
- Retail sales: The overall measure of consumer spending on goods provides a snapshot of demand. With steady year-over-year increases, numbers so far this year have shown that willingness to buy hasn’t been dented by elevated inflation. (September 15, 8:30 a.m.)
- Consumer sentiment: The University of Michigan will provide its first reading on consumer sentiment for the month. This metric showed some improvement in August as the inflation rate dipped. (September 15, 10 a.m.)
Stories we’re following
- Is inflation continuing to cool off? Inflation continues to be the focal point of both businesses that set prices and the central bankers that seek to keep the economy on track. After a decline in the overall inflation rate in July, there is some optimism that the worst might be in the rearview mirror. The Consumer Price Index data for August will offer a look at whether those sentiments are warranted, and offer hints at whether and how much the Federal Reserve may seek to hike interest rates later this month.
- What did earnings season tell us? With second quarter earnings reports mostly completed, what overall lessons can we take from the data and analysis reported by retail, CPG and ecommerce companies? Many reported seeing a tough environment that will continue through the end of year. How will they adjust for the times, and what are the bright spots in the clouds?
- Will there be a fall Amazon sales event? All summer, there was talk that Amazon sellers were moving inventory and deals into place for a fall sales event after they were contacted by the company. But September is nearly half over, and a date has yet to be announced. The Current is working to learn more about if and when the event is happening.
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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.