Gift Cards for Employees: What You Need to Know

A gift card to employees is a great way to show your appreciation for all their hard work. It can also be a great way to motivate them and keep them happy. In 2022, the GCVA revealed that employee benefit, reward and B2B schemes powered by gift cards continue to increase in significance; and 39.5% of consumers received at least one gift card over the last three years through work rewards or incentives.

In this article, we will discuss the ins and outs of gift cards for employees. We will cover everything from how to choose the right gift card to how to distribute it effectively.

The history of gift cards in the UK can be traced back to the early 1990s when retailers started offering “gift vouchers” as an alternative to cash. These vouchers could be used to purchase items in-store or online, and they quickly became a popular way to give gifts. In recent years, gift cards have become even more popular, with many people choosing them over traditional gifts such as flowers or chocolates.

Are gift cards gift cards anymore?

Great question. Digital gift cards have been on the rise in recent years, with more and more businesses offering them as an alternative to physical gift cards. Digital gift cards have a number of advantages over their physical counterparts. For one, they are much easier to distribute – you can simply email them to your employees. They also tend to be more secure, as there is no risk of them being lost or stolen. And, perhaps most importantly, they are much more environmentally friendly.

The stats on digital vs physical gift cards show that the trend is definitely moving towards digital. In 2018, the percentage of people who said they preferred to receive a physical gift card dropped from 60% to 53%. COVID left more people open to receiving digital gift cards, especially remote workers. That being said, a GCVA 2022 study shows that 74% of people still want to receive physical gift cards.

The State of The Nation Report from the same industry body reveals an average of 7.7% of UK consumers per month purchased a gift card for themselves over 2021 vs. 6.4% over 2020, with significantly higher purchase propensity among younger age cohorts

The proportion of UK consumers purchasing gift cards increased over Christmas 2021, with 27.1% of shoppers buying a gift card for someone else over December 2021, compared to 25.2% in December 2020

Physical gift cards bounced back strongly in 2021, as stores reopened; across the year, a monthly average of 47.4% of gift card buyers purchased physical gift cards instore vs. 43.4% in 2020 Gift card purchasing was boosted by retailer stock issues in 2021, with an average of 35.8% of gift card purchasers over Q4 stating it was easier to buy a gift card than a physical gift,.

Consumer expectations around digital cards and cross-channel flexibility continue to increase; 40.8% of consumers expect all gift cards to be cross-channel in the future

Gail Cohen, Director General at the Gift Card and Voucher Association said

“It’s encouraging to see that gift card and voucher sales have remained resilient, despite a backdrop of inflation and rising living costs. The industry has made a fierce comeback following the challenges of the Covid-19 pandemic and gift cards continue to have an important place in people’s spending habits. “Many are using gift cards as an innovative way to lessen the impact of the cost-of-living crisis, for example, to manage overall spending on presents and reduce the extra costs associated with physical gifting. Businesses are also using gift cards to reward employees and customers when money is tight. “The leisure industry has seen exponential growth and people are continuing to prioritise socialising and experiences, as we move out of the pandemic. “Whilst retail is holding steady, in-store B2C sales have increased, showing that people are returning to the shops and footfall is rising. The multi-channel element of gift cards clearly remains crucial as digital and in-store spending increases. Once again, the gift card industry is providing a much-needed solution to consumer and business’ needs.”

Don Williams, Retail Partner at KPMG UK, added: “Despite the well documented challenges for consumers, with rising prices of essentials (gas/electricity and food) exacerbated by an increase in the tax burden and interest rates, retail sales have been more resilient than many might have predicted. The gift card and voucher market has in many ways surpassed this performance with strong growth of 44.7% in the B2C market. This is particularly reassuring when set against declining consumer confidence, including a record low in June. “The step up in digital gift card products seen during Covid-19 remains “locked in”, and the like-for-like growth of 22.7% in the first half of 2022 is particularly pleasing when set against the backdrop of the lockdown seen in the previous year.

Digital products look intent to become the dominant form in the gift card and voucher market over the next year and continued investment in availability and experience of these products should be high up all participants’ agendas.

“The economic outlook is set to be challenging for the next year or more. This will require a renewed effort by retailers to attract and retain customers, many of whom will be increasingly on the lookout for new ways to save. This backdrop, however, may well provide good opportunities for the gift card and voucher sector, for instance, with the strength of employee benefits schemes within the B2B market highlighting this as an important route for employers to support their staff.”

You can find the reports here 

So, what does all this mean for you? If you’re thinking about giving your employees a gift card, there are a few things you need to take into consideration.

How can businesses buy gift cards for employees?

When you have hundreds of staff members, you can’t simply head to a shop and load up your basket. Businesses have a few different options when it comes to buying gift cards for employees. The first is to buy them in bulk from a retailer, which does require some advance planning, but this eliminates choice.

In a study into gift cards and choice, KPMG found that “the ability to choose a gift card from a wide selection of retailers is the key driver of satisfaction for consumers.” This is followed by “a flexible and convenient way to shop”, “no fees or charges associated with the card” and “ease of use”. By using a provider, businesses can buy “multi-loop” or “closed-loop” gift cards. Multi-loop gift cards can be used at a variety of retailers, while closed-loop cards are restricted to just one store. Which you choose will come down to your budget and the needs of your employees.

Employees’ views on gift cards

A study run by OnePoll on behalf of VoucherCodes found that “employees would feel more valued if they were given a gift card to spend on themselves (64%) rather than a physical present (36%).” The research also showed that “the top reasons employees said they would prefer a gift card are because it allows them to buy what they want/need (77%), they can spend it when they want to (74%) and because there is no need to worry about returning it (54%).”

When asked what type of gift card employees would like to receive, “one in four (25%) said they would prefer a Visa or Mastercard prepaid card so that they could use it wherever they wanted. One in five (21%) would like an Amazon gift card, while a similar proportion (20%) would prefer a John Lewis Partnership Gift Card.”

The common thread appears to be a desire for some sort of ‘unlimited choice’ or ‘department store.’

On the high street and in eCommerce, department stores were the best-performing retail sector in the UK in July, with sales up almost 19% on 2019 levels. “This was driven by a combination of heatwave weather and the release of pent-up demand following the end of the national lockdown in June,” said Retail Economics.

While there are some clear frontrunners when it comes to choice of gift card, it’s important to get delivery and redemption right.

Redemption

Redemption is the process of exchanging a gift card or voucher for goods or services of equal value, while delivery is the methods used to get the gift card or voucher into the hands of consumers/ employees.

There are a few different options when it comes to delivery, including sending e-gift cards via email, text message or social media, putting physical gift cards in the post or on a desk, or giving them out in person.

According to the OnePoll study, “the most popular way to receive a gift card is by email (45%), with one in four (26%) wanting to receive it via text and 13% hoping to get it through the post.”

Redemption methods vary. The need for security means that many gift cards or codes require a unique 16-digit PIN as well as a code to be entered at the point of sale. Other cards use QR codes, or a scratch off to reveal PIN. Some need to be swapped for other retailers’ cards or codes, some can be taken into a store or online checkout and used as if it were money on a bank card.

Fees

Businesses should also be aware of any fees associated with buying or redeeming gift cards, as these can eat into any budget. Some providers of business gift cards will charge a fee to buy the card, or there can be an inactivity fee if the card isn’t used within a certain time period.

Also, this needs to include expiry dates. The UK laws on gift card expiry came into effect in October 2015, and within this framework, gift cards and vouchers can’t expire within five years of being bought. As a business, you are looking for the benefit to the employee, so it’s in your interest that the gift card is used within this period.

When it comes to giving employees a gift, businesses need to consider what will work best for them. Gift cards are a popular choice, but it’s important to get delivery and redemption right. With so many gift card options available, the most important thing when it comes to gift cards is to make sure they can be used where employees actually want to shop.

Questions to ask a gift card issuer

Survey your teams, speak to them, and line up providers ready to ask them those all important questions:

  • How long is expiry?
  • Do you have any inactivity fees?
  • Can the card be used online and in-store?
  • Is there a minimum or maximum value I can load onto the card?
  • Are there any purchasing fees?
  • When will my employees receive their cards?
  • How can I see they have been used?
  • What if they are lost?
  • Where can they be used?