Written by: Mrudul

Self-Use Gift Cards: Impact On Consumer Behaviour

Despite the world's erratic economic position, Gift Cards remain a staple of gift-giving worldwide, joined by the emergence of new trends such as the boom in self-use. Now that several world regions are resuming their transition from crisis management to recovery and economic revitalization, new consumer behaviors are emerging: shifting purchasing patterns, shifting preferences, digital

Despite the world’s erratic economic position, Gift Cards remain a staple of gift-giving worldwide, joined by the emergence of new trends such as the boom in self-use. Now that several world regions are resuming their transition from crisis management to recovery and economic revitalization, new consumer behaviors are emerging: shifting purchasing patterns, shifting preferences, digital acceleration… They are present in all aspects of life.

While we’ve all battled to find the right gift for others, self-use is the habit of purchasing items for oneself, such as gift cards, which is a relatively new phenomenon that has grown dramatically in the last five years. Between 2013 and now, self-use growth has nearly tripled, particularly online, rising from 20% to over 60%, primarily among Millennials and Generation X.

The self-use phenomena in the United States

Self-gifting is used by over 60% of the population in the United States. Getting a bargain is a major motivation for Americans, who spend an average of $38 every transaction. Those who are most engaged with both physical and digital gift cards love self-use as a reward: to earn spending-based rewards, such as at Starbucks, or to trade hotel and credit card loyalty points for gift cards that they use for themselves.

Acquiring Gift Cards for personal use also influences consumer purchasing and travel decisions, particularly for clothing, movies, restaurants, and other routine spending categories. Then, self-use permits people who are barred from banking to make purchases. Fashion, supermarket, and entertainment gift cards are the most popular self-use categories in the United States.

What is going on in Europe?

Self-gifting is frequently associated with a particular occasion in France. It could be associated with feeling low, melancholy, during a stressful period, a rise in discretionary income… Context is important. However, gift card self-use is still underdeveloped, with the exception of discounts: for example, if a merchant sells a card worth €50 for €40.

The gift card business in Denmark is expanding. International gift card sales and self-use products such as subscriptions or games drive the retail channel.

The retail market size in Germany, a mature market with few players, is large due to self-use. The gifting business is expanding, and self-use is increasingly popular, particularly when gift cards are purchased online. Indeed, Germans enjoy shopping online but rarely have credit cards. As a result, they are motivated by convenience.

How about the rest of the world?

While it is well established in some parts of the world, it is developing more slowly in others.

For example, in recent years, the Indian gift card market has shown rapid expansion across retail and corporate consumer groups. Retailers have begun to see the value of gift cards, not just as a gifting option, but also as a powerful tool for enticing customers to spend money in their store by providing cards for self-use.

Historically, the gift card industry in South Africa has grown steadily, with rising adoption in the self-use category projected to earn a considerable market share in the next few years.

Without a doubt, one of China’s distinctive features is its traditional gift-giving culture. They don’t have to wait for a special occasion to manufacture gifts. They are provided throughout the year to strengthen relationships. In Chinese society, where the group takes precedence over the individual, the collective is extremely significant. As a result, the self-use trend has failed to gain traction.

Finally, while the gift card market in the UAE is projected to be impacted across retail and corporate segments owing to the Covid-19 outbreak, certain areas, such as self-use, are expected to acquire considerable market share. This could be due to UAE consumers becoming more conscious of how they spend their money and forming new habits to save money.

Who stands to gain from this trend?

The self-use trend benefits both online and offline brands. Customers who purchase cards for themselves also contribute to increased loyalty. Indeed, nearly 57 % of self-purchasers say they visit a specific store or restaurant more frequently as a result of their gift cards. It also provides for customer acquisition because many shoppers think that receiving a gift card will inspire them to shop at a place they would not ordinarily visit.

As a result, brands that sell their gift cards using third-party services like 99minds within distribution channels and programs that provide a high level of self-use acquisition might benefit from a larger market share. It can also help to boost brand recognition and loyalty by allowing customers to load value into their branded currency before spending it elsewhere.

Nowadays, customers are just as likely to buy gift cards for themselves as they are to give them to someone else. This means that the gift card is no longer regarded as a gift, but rather a means of payment first and foremost. Whether it’s as a reward for completing a personal goal, to perk yourself up when you’re feeling bad, because you have extra money to spend, or just because it’s your birthday, hedonic consumption impacts an increasing number of people and is a huge challenge for companies. This tendency will continue to influence the growth of gift cards, and others may emerge in the coming years.