Millennials are focusing their minds and wallets on experiences rather than stuff, bucking previous spending and gifting trends.
They’ve different shopping habits and how they spend their money could transform the gift card industry for the foreseeable future.
There’s two pieces at play here: the spending trend and how the gift card industry can keep up.
Generational Spending Shifts
Saving up to spend on large-ticket items, such as cars or houses, isn’t the focus of today’s millennials. They don’t appear to value luxury as much as their parents did, and their spending habits are noticeably different from other age groups.
So, where do gift cards fit into this equation?
Gift cards are the most popular consumer-requested gift at nearly 29 percent of holiday gift requests, according to a new study by CardCash, and they are a perennial favorite among employee rewards and recognition requests.
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They also hold more trophy value than cash, while also giving recipients the freedom to choose their own gift, indulging rather than putting extra cash toward bills.
For millennials, they want those gift cards to put toward their preferred experiences, whether it’s a vacation or a music festival, Forbes reports.
The proof for this is in the data: prepaid card purchases went from less than 50 percent of the hotly sought-after 25-to-34 year old demographic in 2015 to 60 percent in 2016, according to a Mercator Advisorary Group survey.
Innovative Opportunities For The Gift Card Industry
The gift card industry is working on ways to appeal to the millennial mindset. As with most shifts in industry related to millennial spending habits, the best way for the gift card industry to keep up with millennials is to meet them on their turf.
Whether it’s a traditional B2C transaction or a B2B program, gift cards geared toward experiences are gaining popularity and importance in the industry.
For example, Airbnb is offering a wedding registry option for couples, while StubHub has seen 20 percent growth year-over-year.
B2B gift card program implications essentially happen at scale. The stakes are higher for the companies that run the programs to promote health and wellness, safety or general employee rewards and incentives.
They need their programs to be effective and the easiest way to ensure that happens is by providing rewards that employees are demanding.
Conversely, the brands that sell gift cards into these programs focus efforts on ensuring program success because with the popularity of B2B programs, these retailers get widespread promotion and circulation in the business-to-business market.
As long as merchants continue to offer a wide variety of gift card options for differing experiences, they should remain a popular purchase for millennials.