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The Evolution Of Gift Cards
The Gift Certificate: Predecessor Of The Gift Card
Gift certificates were first created in the 1930s by major department stores. They were limited to select customers, however, as associates were instructed to conceal gift certificates behind store counters and only offered when requested. The popularity of gift certificates significantly increased in the 1970s when McDonald’s provided customers with a Christmas gift certificate program. From there, additional retailers, restaurants and shops caught on with the trend and started to offer gift certificates to consumers.
While at one point beneficial, gift certificates eventually became a problematic burden. The issuing and redeeming process was time consuming for employees. Counterfeit paper gift certificates were difficult to control with the invention of color copiers; the paper certificates were effortlessly reproduced, and the numbers easily forged. This type of fraudulent activity was difficult to track, leaving retailers with lost revenue. By the mid-1990s, a new product called the gift card entered the market. [find and add source – wiki?]
Gift Card History: Who Invented Gift Cards
According to Smithsonian Magazine, gift cards were first created by the luxury department store Neiman Marcus in 1994. Although Neiman Marcus was the first to invent and sell gift cards, they didn’t market to their consumers which enabled Blockbuster to become the first company to publicly display plastic gift cards in their store. From there, the gift card industry significantly expanded to other well-known brands including Starbucks which was the first company to introduce reloadable gift cards in 2001. As reported by MarketWatch, the sales of gift cards rose from $80 billion to $124 billion between 2007 and 2014.
The Most Popular Gift Card
Amazon is one of the most popular egift cards according to a recent study conducted by Gift Card Granny. Other well-liked online retailers include Walmart, Target, Kohl’s, eBay, Macy’s and Best Buy. The study also found that digital gift card popularity continues to rise; 87% of respondents claim to have purchased an eGift card. Regarding age, 56% of millennials aged 25 to 34 favor eGift cards; however, 46% of baby boomers aged 55 or older prefer plastic.
While electronic gift cards are steadily gaining interest, a study by First Data found that those surveyed prefer to give, and receive, physical gift cards rather than electronic. Additionally, 33% of respondents claim to spend more on a gift card than they do a traditional present.
The Rise Of The Visa Gift Card: 2002 To 2015
Visa gift cards entered the market in 2002 because merchant gift cards were limited for use at a single merchant, they became well-known online with websites like GiftCards.com offering customized Visa gift cards that could be used for any merchant in the US. The Visa gift card became especially popular with large companies as an incentive for consumers to use their product or switch brands. For example, companies such as AT&T offered $100M+ in Visa reward cards to customers who switched to their service.
Problem With The Gift Card: Billions In Unused Funds
In 2018, CEB Tower Group claimed that customers spend more than $130 billion on gift cards per year with practically $1 billion unused. The amount of unused gift cards has increased by $250 million over the past four years compared to $750 million in 2014.
Included among unused gift cards are even those who have been misplaced. Sixty-three percent of consumers claim to have lost a gift card as reported by Gift Card Granny. The majority of people surveyed reported that they re-gift a card when they receive one to a store they do not like.
What’s Next After Gift Cards: Experiences, Gift Credits, and Convenience
Experiences are one of the latest gifting trends. Instead of giving a gift to unwrap, consumers have transitioned into giving an experience; for example, a brewery tour, rock climbing or miniature golf. The act of sharing a moment together is becoming more valuable than something tangible.
Gift credit platforms like GiftYa allow gift-givers to text personalized eGifts within seconds which can be purchased for any local or national merchant. You can send someone an eGift for an experience such as a visit to the zoo, a dinner at their favorite restaurant or a trip to the spa.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes.