Our post-pandemic world is full of changes and new trends, including how consumers will shop for gifts this holiday season-and pay for them. In fact, according to a 2022 inflation study from gift card leader Blackhawk Network, 58% of consumers are planning to change their shopping behavior, seeking to use more discounts and promotions.
Besides looking for deals, consumers are also looking for new ways to shop. Compared to pre-pandemic shopping, there’s been a rapid adoption in the use of alternative payments (Apple Pay, digital wallets, etc.). And after a couple of years staying at home, consumers are looking for in-person, in-store shopping experiences.
To learn more about consumers and 2022 holiday gift shopping, PaymentsJournal sat with Blackhawk Network Global Chief Marketing Officer Jay Jaffin, Blackhawk Network Senior Global Insights Manager Sarah Kositzke and Jordan Hirschfield, Director of Prepaid Advisory Service for Mercator, for a two-part discussion. In Part 1, they focused on holiday season expectations, as well as the still-growing importance of gift cards.
Shopping Trends in a Tough Holiday Economy
To help set the holiday table for this discussion, Blackhawk Network data reveals there will be a 23% increase in in-person holiday gatherings in 2022. “This is not only the case for Gen Z and Millennials, but Gen X and Baby Boomers as well,” said Kositzke. “And more get-togethers lead to the potential for more gifting opportunities,” she added.
Another finding: Many are planning to purchase holiday gifts earlier this year than previously. This is due to a combination of factors, Kositzke explained. Consumers don’t want to miss out on potentially out-of-stock items due to global supply chain shortages. And inflation is pushing them to be more budget conscious. The Blackhawk Network research says 37% of consumers planned to start holiday gifting before November, while another 43% plan to begin in November.
“People have concerns on out-of-stock items, and they’re also trying to stick to their holiday budgets,” Kositzke said. “They are also really looking for deals. They want to take advantage of any kind of deal or savings discount.”
In fact, the top reason for early holiday shopping is budgeting (42%), followed by out-of-stock concerns (38%), then looking for deals (37%).
Yet, despite the state of the economy and all the unknowns associated with recent holiday shopping seasons, “consumers are planning to spend 8% more this year on holiday gifts,” said Jaffin. “This really speaks to the idea of the resilient consumer,” he added.
Gift Cards are #1-Again
According to research from the NRF and Prosper Insights & Analytics, gift cards are the #1 preferred holiday gift for the 16th year in a row. Jaffin pointed out that, on average, a consumer will purchase 36 gift cards-both physical and digital-this holiday season.
“That number might sound big, but think about the things we do over the holidays,” Jaffin continued. “You might buy your kid’s teachers each a $20 gift card. There are all the people we interact with on a day-to-day basis that we want to show a small token of appreciation to.”
According to Blackhawk Network data, gift card spending represents about half of the total holiday gifting spend, and it’s trending up. Gen Z shoppers, in particular, say they’ll increase their holiday gift card spend by 57% in 2022, from $185 to $290. And younger consumers (Gen Z and Millennials) are more likely to shop before November for gift cards (41% vs. 29% of Gen X and Baby Boomers).
With the increase of in-person get-togethers, more people will be handing physical gift cards to their recipients, but digital gift card gifting is growing, too. eGift cards let consumers send last-minute holiday gifts up and send them almost instantly. About 20% of consumers say they’ll be sending out digital gift cards.
Of course, gift cards are more popular this year because, in many cases, the gift card buyer is also rewarded. Hirschfield noted, for example, how people like getting fuel points back on gift card purchases, especially with today’s higher gas prices. “If I’m buying five $10 gift cards for my kid’s teachers and I can save on gas at the same time, that’s very appealing,” he said.
Shoppers also love the promotions often associated with buying gift cards, said Hirschfield, such as getting a free $10 gift card with the purchase of a $100 gift card.
The reasons consumers are buying and wanting more gift cards don’t end there, Kositzke added. Recipients like gift cards because they don’t have to deal with returns or unwanted gifts. Gift cards give consumers flexibility on what they buy, how they buy it and whether they buy it online or in-store. And gift cards can be used by recipients to treat themselves, or for more practical, everyday purchases.
“Instead of a dreaded return day, you can have a day that’s more retail therapy,” Kositzke said.
Alternate Payments Continue to Rise
Since the pandemic began, retailers have seen the rapid adoption of not only digital payments, but digital wallets, as well. Retail-branded payments apps, such as digital wallets for a particular store or restaurant, have seen the most growth. “There are hundreds, if not thousands, of different digital wallets now,” said Jaffin.
These merchant apps “blur the line between physical and digital,” Jaffin added, leading to more of a hybrid shopping experience. For example, you could order and pay for food on a restaurant’s app while shopping-all digital-then go to the restaurant to pick up the food in person.
Mercator data from 2021 showed that more than 30% of younger consumers have used a retail-specific app to make a payment, Hirschfield said. When the 2022 data comes out, he added, “I expect that number to increase even more.”
Alternate payments encompasses more than apps, however. Consumers are using Buy Now, Pay Later (BNPL) to pay for holiday gifts, for example. This is especially true for younger consumers; 27% say they will use BNPL to pay for holiday gifts (versus 10% of older consumers). In addition, 17% of younger consumers will use cryptocurrency for their holiday shopping (versus 4% of older consumers).
In general, “consumers are much nimbler now in how they not only fund their shopping expenses but how they pay for their shopping, as well,” Jaffin said.
Hear it For Yourself
To hear Part 1 of this PaymentsJournal podcast, click here. Then watch this space for Part 2, as the discussion continues on subjects such as hybrid shopping, the unique shopping behaviors of Gen Z and how you can gift smart this holiday season.
