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Top Takeaways:

• – Total holiday gift card sales value is up in 2022 while the total number of cards sold is down.
• – Digital gift card sales continue their rise.
• – The large holiday winter storm cooled what is traditionally the biggest day of gift card sales.
• – More consumers are opting for higher value gift cards.
• – Fine dining gift card sales are up, QSRs sales are down.

According to Paytronix Gift Card Data, some retailers have much to be cheerful about. An early look at the data shows that the shift to digital gift cards is in full swing and that dining trends across the country continue to trend towards sit-down concepts. Despite the swing to digital, an arctic blast translated to lower gift card sales on a key shopping day, demonstrating that gift card sales are not insulated from factors such as weather.

Holiday gift card sales are largely up across the board. The total dollar value of cards sold is 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.

However, while the total dollars spent on gift cards has increased, the number of gift cards sold is 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, the value of physical gift cards is down nearly a fifth (22%) vs 2019 and down 7.9% since 2021. Digital gift cards, on the other hand, have seen 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.

One trend of note during the Holiday Season 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 pandemic. Value of cards sold was down by 19% since 2019 and down 14.3% from 2021. Physical gift card sales in particular suffered significantly due to the storm, with numbers of in-store cards sold down by 37% as compared to 2019. Shoppers who procrastinated had to find other stocking stuffers this year as the weather prevented last-minute shopping.

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%.

Finally, gift card sales this holiday season reveal that, 2 years out from the worst of the pandemic, consumer tastes are changing from both pre- and post- pandemic. 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 pandemic are receding.

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 are enjoying a 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 23^rd next year.

Happy New Year!

The changing of the years always gives us a chance to look ahead. As the Paytronix team enters 2023, we asked our experts what to look for. Here are some of the responses from those with their fingers on the pulse of loyalty, online ordering, and the overall world of guest engagement.

Jeff Hoover, Director of Convenience Store Strategy

I think convenience stores will focus even more on loyalty in 2023 as more guests will be looking for value in a commodity (gas) during periods of high inflation. I also think convenience stores will begin to see even more value in the ability of loyalty to segment audiences and engage with customers in a personalized manner, with the ultimate purpose of driving both traffic and sales.

Also, reduced demand for gas due to higher prices and the growth in electric vehicles will force more retailers to focus on food service and other in-store convenience items. As these offerings come on the market, loyalty will provide a great tool to connect with customers, drive awareness, and encourage them to try new items. Overall, it’ll boost the longer-term sales of non-gas items.

Kristin Lynch, Director of Restaurant Strategy

Restaurant brands will continue to focus on loyalty in 2023 and will make guest engagement a priority.  They will look to answer the question “how best can I communicate, recognize, reward, and overall engage with my most loyal guests to drive their behavior?”  They might do this via program design (i.e. Bankable Points), guest recognition layers (i.e. Tiers, Badges) or Segmentation driven by AI (i.e. Individualized campaigns).

Marc Schultz, Head of Data Privacy and Security

Consumer sensitivity to Privacy and Security will continue to grow in 2023, as will the number of laws and regulations affecting how companies manage financial and personal data. This is a time to review what data is collected, how it is used, how it is protected, and how long it is retained. California’s CCPA/CPRA has redefined “Personal Information” and “Sharing” which is making companies re-evaluate the need to update their Privacy Policies and the opt-out links being presented to consumers.

EJ Van De Vegte, Director of Software Development

Loyalty accounts and programs are becoming more and more important for restaurants and convenience stores, but also for guest users. Where people were less concerned with the security of their loyalty accounts before, it is getting more important to the brands and their guests. The consumer threat is losing their data but also losing loyalty points or even gift card balances. Loyalty points represent value because an individual can use them to get free products or discounts. And eGift cards are straight-up money. All and all, aspects of a loyalty system become more akin to a banking system and need to be well protected. That protection has an impact on the user experience, so it becomes a balance between UX and security.

It’s gift card season.

Restaurants sell the bulk of their gift cards during the holiday season and the big change this year is that Cyber Monday has become the new Black Friday. When the Paytronix data specialists looked at the numbers, sales of eGift cards outpaced physical cards when it came to year-over-year growth.

Of course, the big news of 2022 remains inflation, and that’s what brought Rachel Wolfe at the Wall Street Journal to look at gift cards.

“Long viewed as impersonal by some, gift cards have taken on a new shine this season as a way to help givers maneuver around rising prices and let receivers buy what they actually need,” Wolfe wrote.

She also looked to Paytronix for commentary on gift cards and inflation. Said Chief Data Officer Lee Barnes: “… if I’m going to spend $50 on my brother-in-law, I may as well give him a gift card rather than get him that T-shirt I had been planning, which now may cost more.”

Read the full article over on WSJ.com (subscription required)

Loyalty gamification offers a great way to connect with the growing demographic of young, tech-savvy guests.

Simply put, gamification means applying “game play” to different aspects of the digital marketing.  When it comes to loyalty, this can happen at three levels: core, layers, and promotions.

World of Beer tackled this at the core level in which its entire program rests on a game. Gamified layers would be actions like adding badges to the program, while gamified promotions are short-lived game-based discounts, like a free offering when your favorite sports team wins.

World of Beer is seeing smashing results with its gamified loyalty program. Founded in 2007 in Tampa, Florida as a craft beer bar that serves a variety of brews from across the world. WOB has a long-running loyalty program that awards guests $5 for every $75 spent. It then gamifies the whole program with badges and challenges.

Two recent challenges this year saw between 10-25% increases in spend and completion rates over 90%.

“Customers can earn badges when they try different beers. The badges are to honor their achievements, which they can show off to friends,” explained Cori Rosecrans, Director of Brand & Digital Marketing for World of Beer. Customers can enter challenges for their chances at more than just bragging rights. “We encourage customers to try beers and [enter for a chance to] win trips to beer capitals of the world. These challenges help highlight our [brand] differentiators and our assortment of beers.” More than fun, the challenges have produced serious results. Two recent challenges this year saw between 10-25% increases in spend and completion rates over 90%.

World of Beer’s loyalty program shapes its brand experience. At every engagement, guests climb the ranks of badge leaderboards and try their luck at life-changing prizes. As a digital engagement strategy, WOB’s gamified loyalty program keeps guests coming back and drives revenue.

Wondering how your brand might benefit from gamification? Speak to a loyalty expert at Paytronix today.