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Technology/Services

What’s Behind the Growth in Gift Cards?

Paytronix analyzes trends in recent study
Photograph: Shutterstock

NEWTON, Mass. —Paytronix Systems has uncovered year-over-year growth of 10% in gift card sales at convenience stores and other retailers in the Paytronix Annual Gift Card Sales Report: 2019.

The report includes a look into holiday gift card sales, sales by channel and service type and anticipated redemption. It also reveals new insights on e-gift cards, such as average load to a virtual stored value card and how restaurants can anticipate their e-gift card sales to look during the busy holiday season. And the report examines the effects of gift cards redeemed online. More than 200 brands were surveyed for this year’s report.

Not only are quick-service restaurant gift cards redeemed more frequently, they also contribute to higher sales in the online order channel, with a 6% increase in check size on orders placed and paid for online with a gift card, the report said.

While in-store gift card sales continue to contribute to more than half of annual gift card sales, this percentage decreases slightly in favor of third-party sales. Discounted gift card sales, through retailers such as Costco, BJ’s, and Sam’s Club, amount to more than a third of all third-party sales, the report said. Restaurants seeking to increase gift card sales should investigate third-party channels, given that adding just one third-party retail partner could contribute to increases of more than 25%.

“The Paytronix Annual Gift Card Sales Report: 2019 highlights the significance of a gift card program to a brand’s overall sales,” said Michelle Tempesta, head of marketing for Paytronix Systems Inc. “The report demonstrates that gift cards are effective sales tools across all restaurant types and that developing a multichannel program that includes both traditional and e-gift cards will result in a boost to overall restaurant sales, especially during the holiday season.”

Gift card sales drove a large portion of the increase in card sales from 2017 to 2018 as the popularity of gifting stored-value cards continue to grow. The average increase in card sales throughout the year was about 6.3%, but in the holiday months, gift card sales increased more than 15% from 2017, the report said. Gift card sales from Nov. 1 to Dec. 24 pick up for the holiday season around mid-November, with the first noticeable spike in sales from 2016 to 2018 on Black Friday.

Based in Newton, Mass., Paytronix provides software as a service (SaaS) customer experience management solutions for c-stores and restaurants. Paytronix works with more than 330 customers to build big data consumer insights that Paytronix generates from one-to-one engagement with its more than 165 million loyalty members across its customers’ brands. Recently, restaurant P.F. Chang’s migrated its rewards program to the Paytronix Platform and launched a new mobile app custom-built by Paytronix.

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