Gift Card Sales Defy Retail Downturn to Deliver Double-Digit Growth

The gift card market is thriving despite broader challenges in the retail sector. According to the latest research from the Gift Card & Voucher Association (GCVA) and KPMG UK, gift card and voucher sales surged by an impressive 11.4% in the second half of 2024. This growth represents the first double-digit increase since early 2021 and far outpaces the sluggish 0.7% growth seen in total retail sales during the same period.

Grocery and Leisure Sectors Drive Strong Retail Performance

Retailers saw an 11.3% rise in gift card sales, with grocery stores leading the charge. The grocery sector experienced a remarkable 20.48% increase, driven by employers and consumers leveraging food-related gift cards to navigate ongoing cost-of-living pressures. Employer-sponsored gift card schemes have gained traction, helping employees stretch their earnings further.

Meanwhile, the leisure sector continued its impressive run, recording 13.3% growth for the seventh consecutive period. Consumers increasingly opted for experience-based gifts, reinforcing the demand for leisure and entertainment-related gift cards despite tighter budgets.

Read More: One4all Gift Cards Expands Retail Partnerships With Screwfix

B2B Sales Lead the Way

The B2B gift card segment remained the strongest driver of growth, expanding by 13.7%. The rise in employee benefits, savings programs, and salary sacrifice schemes underscores the growing role of gift cards in workplace financial well-being. Businesses continue to use gift cards as a practical way to support employees with everyday expenses.

Digital Gift Cards Cross a Major Milestone

For the first time, digital gift cards surpassed 50% of the market share on a rolling-year basis, with sales increasing by 20.6% year-on-year. This milestone highlights shifting consumer preferences toward flexible, instant gifting options. The rise of digital transactions reflects the increasing demand for convenience in both consumer and corporate gifting.

Despite the rise of digital, physical gift cards remain a popular choice, particularly during the festive season. Retail stores accounted for over half (54%) of consumer sales, with gift card mall sales growing by 13.6% and in-store purchases increasing by 5.6%.

Read More: Enhancing Security in Card-Not-Present Transactions: Essential Steps for Businesses

Industry Leaders Weigh In

Commenting on the findings, Hannah Shimko, Managing Director of GCVA, emphasized the resilience and versatility of the gift card market:

“This report demonstrates the resilience and versatility of the gift card market. Gift cards are a vital tool helping consumers and businesses navigate challenging times. Whether it’s employers supporting staff through benefits schemes or consumers choosing flexible gifting options, the sector has shown remarkable adaptability.

“The strong growth we’re seeing shows that amidst wider retail struggles, gift cards remain an essential part of the UK’s shopping landscape. As we celebrate these results at our GCVA Conference, I’m excited about the future opportunities for our industry, particularly in the digital space and through B2B channels.”

Key Takeaways from the GCVA H2 2024 Report

• Like-for-like gift card sales rose by 11.39%, with rolling year growth at 10.64%—the first double-digit increase since H1 2021.
• Retail gift card sales grew by 11.3%, with grocery gift cards accounting for 50% of total growth.
• The leisure sector maintained strong momentum with a 13.3% increase.
• B2B gift card sales expanded by 13.7%, driven by employee benefit programs.
• Digital gift card sales soared by 20.6%, surpassing 50% market share for the first time.
• Physical gift cards remained resilient, growing by 4.7% in H2 2024.
• Consumer demand remained strong during Christmas, with 47.2% of shoppers purchasing gift cards or vouchers in December 2024, up from 45.9% the previous year.

Read More: The Downsides of Gift Cards

The Future of Gift Cards

With the UK retail market facing ongoing challenges, the gift card sector continues to demonstrate resilience and adaptability. The growing adoption of digital solutions and employer-driven initiatives suggests that gift cards will remain an integral part of consumer spending and corporate benefits programs in the years ahead. As the industry looks to the future, digital innovation and B2B expansion are poised to drive further success.