Top Predictions:
According to Paytronix Gift Card Data from the last several years, some retailers have much to be cheerful about. The data shows that the shift to digital gift cards is in full swing and that dining trends across the country continue to edge towards sit-down concepts. But despite the swing to digital, an arctic blast last December translated to lower gift card sales on a key shopping day, demonstrating that gift card sales are not insulated from factors such as weather.
Last year, holiday gift card sales were largely up across the board. The total dollar value of cards sold was up 2.2% versus 2019 and up 1.4% since 2021. 2022 was the best year for gift card sales in recent memory, with more dollars spent on gift cards between Black Friday and Christmas Eve than any year since 2019. With inflation still higher than usual, we predict that this year, the total value of holiday gift card sales will reach a new high.
However, while the total dollars spent on gift cards has increased, the number of gift cards sold was substantially lower than previous years. For the holiday period from November to December, numbers of gift cards sold dropped by 5.1% vs 2019 and by 10.7% from 2022. However, this trend has a notable exception: digital gift cards. Between Black Friday and Christmas Eve 2022, the value of physical gift cards dropped nearly a fifth (22%) vs 2019 and 7.9% since 2021. Digital gift cards, on the other hand, saw the value of sales increase by a whopping 77% since 2019 for the same time period, while the value of digital gift cards sold also increased 4.6% since 2021. We predict that digital cards will continue their rise and that the value per card will continue to increase.
One trend of note during the Holiday Season of 2022 was the impact of a severe winter storm that froze out a large portion of the country just before Christmas. As shown in the chart below, December 23 is typically the best day for gift card sales. While this still held true for 2022, gift card sales suffered significantly, with numbers of cards sold per day down 32.6% from 2019, down 23% since 2022, and down 10.9 percent since 2020 during the height of the worst year on record. Shoppers who procrastinated had to find other stocking stuffers as the weather prevented last-minute shopping. However, we predict that if the weather is normal on December 23, that the gift dollars loaded will reach a new high on this critical day (and if your brand is concerned about the risk of bad weather, consider offering a promotion earlier in the season, like this sports bar did).
Inflation has also impacted the values of gift cards sold. $5 and $10 cards were far more popular in 2019, representing 11.2% and 16.7% of gift cards sold that year, respectively. During 2022, the sales of those values of cards dropped approximately 3% each, with sales of each representing 8.8% and 14.1% of total gift cards sold, respectively. On the other hand, sales of higher value gift cards increased to match, with sales of $50 growing from 12.2% to 16.3% and $100 gift cards getting a boost from 6% to 7.8%. As inflation has continued this year, we predict that higher value cards will increase in popularity.
Finally, gift card sales this holiday season reveal that, 2 years out from the worst year on record, consumer tastes are changing. Between Black Friday and Christmas Eve, the value of gift cards sold for QSRs dropped 3.2% compared to 2019 and 6.9% compared to 2021. But the value of cards for fine-dining restaurants has increased 9% compared to 2019 and by 3.7% as compared to 2021, indicating a building demand to revisit concepts with a sit-down model. Moreover, dollars spent per day for fine-dining gift cards during the holiday season is up 80% as compared to 2020’s holiday season, indicating the trends of the 2020 are receding. While there were variants of note in 2023, we predict the fine-dining resurgence will continue, while the value of cards sold at QSRs will hold approximately the same.
So, what does this all mean for restaurants? Inflation has taken its toll on the American consumer, but as previous Paytronix resources have shown, loyalty offerings like gift cards are an effective shield against inflation. Moreover, the concepts that suffered the worst during the pandemic will continue their resurgence. Finally, the proliferation of digital gift cards shows that digital guest engagement is increasing in popularity and will likely continue to build in popularity.
And of course, cross your fingers for good weather on December 23rd.
Click the graphic to read the report