Lockdowns and lower incomes made the demand for gifts rise.
On the contrary, the demand for gift cards more than doubled in 2020, according to a report by Research and Markets.
The gift card market in the US is expected to record steady growth over the forecast period, driven by increased adoption of digital or e-gift cards. The ongoing pandemic has changed consumer behavior in 2020.
Online purchases of gift cards more than doubled in 2020, outperforming the YoY growth recorded in 2019.
Though online purchase of gift cards has increased in the last few years, the growth has been rapid in 2020 due to the COVID-19.
Also, gift cards are increasingly being purchased by consumers for digital content including streaming and gaming services.
The open and closed loop gift cards were mostly spent on online shopping in 2020. Among various categories, gift card spending increased especially in electronics and grocery categories.
The rise in spending on electronics was due to the work from home trend and the rise in spending on home entertainment options such as gaming and online streaming. In 2020, spending on gaming based gift cards rose significantly.
Also, consumers purchased nearly twice as many digital streaming cards per quarter than the average in 2020.
Globally, the margin of the projected increase is even larger. Gift card purchases soared by 50% in 2020. This signals that, as more conventional means of payments become digital, gift cards will benefit and become further embraced across the world.
Looking forward, the global industry for gift cards is forecast to grow at a CAGR of 14% from 2020 to 2025, with an increase projected from $378 billion in 2020 to $510 billion in 2025, as shown in the graph below.