The number of retailers issuing prepaid gift cards in the United Kingdom is expected to double by the end of 2009, according to a market analysis by Giftex Prepay.
While it has taken six years for 75 companies to provide consumers with what Giftex Prepay terms 'the gift of choice' using prepaid gift card technology, the company predicts that within 18 months that number will double to 150 retailers selling gift cards from around 20,000 stores nationwide.
Following the US
The US currently leads the way in the use of gift cards but the European sector, with the aid of organisations such as the Voucher Association and PIF, is clearly working hard to close the gap across the whole prepaid market.
The UK still has a long way to go before it can match the penetration of gift cards in the US (where 79% of people either gave or received a retailers' gift card in 2007), but leading UK retailers such as M&S and Debenhams already use gift cards to help consumers give worthwhile gifts. As a result, many tier 2 and tier 3 retailers are now following their example.
New gift card category
In addition, Giftex Prepay reports seeing retailers adopt a new category which also serves as a new channel for other retailers, including their competitors: Retailers such as Sainsbury's and WHSmith are using gift card distributors to sell a range of different retailers' gift cards in their stores.
So far, eleven leading retailers have launched their own 'gift card centres', selling more than 40 different retailers' gift cards. According to Tony Craddock, CEO for Giftex Prepay, "Gift cards are a source of profit in tough times on the High Street. Gift cards solve problems for consumers. Our research in the US, Canada, and the UK shows that consumers using gift cards are extremely satisfied, and very likely to use gift cards themselves in future."
Retail benefits
The company reports that retailers also enjoy significant commercial benefits from gift cards, including increased revenues, footfall, and margins. And even a small retailer with a handful of stores can enjoy the same commercial uplift in customer traffic, sales, and profits by using prepaid cards.
Craddock concluded: "Now that the big retailers have proven the case for gift cards, we are seeing smaller retailers launching their own local gift card programmes ready for the all-important last quarter of the year, when 75% of all gift cards are purchased."
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