Splurge or save?

An indulgent treat for themselves and/or others or a way to stretch the household budget? How do people redeem their gift cards?


It’s well known that gift cards and vouchers are popular choices for businesses looking for simple, convenient ways to reward and incentivise their employees. They, in turn, appreciate the flexibility and choice that cards and vouchers bring, particularly if the brand or brands involved cover off a wide, aspirational range of goods.

But what exactly are recipients spending their gift cards/vouchers on? Are they more likely to treat themselves to little luxuries, spend on gifts for others, or save them for a special or large purchase?

Colin Hodgson explains how Edenred has seen significant shifts in redemption trends over the last five years: “At one time, merchandise accounted for 40-45% of all redemption, with the balance made up of vouchers, gift cards and experiences. Today, vouchers and gift cards now account for about 75% of all redemption, with our multi-retail gift voucher, Capital Bonds, being the most popular option by some way.”
Although Edenred doesn’t track what its gift cards are redeemed against, research suggests that non-cash rewards such as vouchers and prepaid cards have a significant uplift in results as they lack ‘buyer remorse’ – recipients are more likely to use the reward to treat themselves, whereas cash is consumed by everyday domestic and family activities.

Hodgson continues: “Points banking programmes establish significant ‘savings cultures’. Points are ‘banked’ and exchanged for items of merchandise, gift vouchers/cards and prepaid cards in November and December. We don’t have visibility of the products purchased but, from merchandise programmes and consumer insights, we know that the most popular products being purchased at Christmas were tablets, smartphones, games consoles and, for the younger family members, Furbies etc.” 

One brand that has a high ‘personal indulgence’ rating is House of Fraser. House of Fraser’s John Dove says: “Our data shows that recipients are quick to redeem our gift cards and vouchers – they’ve usually redeemed around 80% of the total amount within the first month of receipt and the rest is spent within three months. We want people to spend our gift cards, which is why there is a two-year expiry and why they can be redeemed online and in store.

“When the load value is higher, we tend to find that they spend more than the face value, as they’ll go for something that is less price sensitive and quite indulgent. And when the value is high, we encourage the recipient to take on our personal shopper experience. They can help the recipient to put together an outfit, provide buying ideas and so on – it’s another element of choice.”

It seems House of Fraser isn’t the only prestige retailer to experience this, as Tracy Finn, of Harrods Corporate Service, agrees: “Harrods gift cards can be redeemed online, but Harrods itself is seen as a destination and although customers may come to the store with a specific purchase in mind, they may also choose dine in the restaurants and make additional purchases. The average uplift from a Harrods gift card is 100%.

“The cards that link to personal shopping days, including lunch or afternoon tea plus spa treatments, are very desirable. And, as many beauty and fashion ranges are exclusive to Harrods, we’re able to create incentive schemes that allow you to offer a unique incentive with a greater perceived value i.e. the latest handbag that can’t be found anywhere or a visit to men’s tailoring to be fitted out for a bespoke suit.”
That passion for fashion must-haves can be hard to resist and it seems that, when given a fashion gift card, the recipient’s likely behaviour is to treat themselves.

Julian Courtney, New Look Business Solutions, says: “If gift cards are chosen well, it gives the recipient a real sense of being valued by the employer and makes them more likely to treat themselves, rather than make their budget go further by spending it on some everyday item.

“New Look gift cards can be used to buy an affordable new outfit or add to an existing one with a range of accessories. Treating yourself to new clothes always gives the feelgood factor, especially when you know someone else has paid for it.”

Love2reward’s vouchers and gift cards offer recipients a vast choice of redemption options across many retail brands. Love2reward’s Simon Birch adds: “Department stores and fashion take permanent first and second places in terms popularity, regardless of the time of year. Health and beauty tends to fall into third place during Q1 and Q2, which we believe is due to customers buying items in the run-up to summer holidays. After the holiday period, the sector slips to fifth place.”

Birch continues: “The last Q2 also saw customers preparing for Christmas in advance and taking advantage of pre-peak sales. More recently, budget and discount sectors showed growth ahead of Christmas.”
Although evidence from these examples would suggest that gift cards and vouchers are predominantly used by recipients to treat themselves, there is also a growing trend for using such rewards to help with essential household spend.

Andrew Johnson, director-general of the UK Gift Card and Voucher Association (UKGCVA) has seen changes in usage coming from the rise of supermarket cards being redeemed against everyday products.
He says: “When people have the choice, they’re more likely to opt for a card that goes towards their shopping – a reflection of the economic environment and the fact that budgets are being squeezed. Employee benefits programmes and the discounts they offer on gift cards and vouchers are also popular, as people can benefit from the initial discount and then spend them in retail sales, making even bigger savings.

“People often use gift cards to upgrade their choices, so they go from buying a basic own brand to a better one to treat themselves. We’ve seen these trends develop over the last two years and it may be indicative that there are plenty who are not as frivolous as they used to be and are focused on making their money go further.”

It will be interesting to see whether, as the UK moves into economic recovery, those adopting the latter trend move towards one of indulgence or whether the necessity to use cards for essential spend becomes habit. Either way, gift cards and vouchers allow for both behaviours, which demonstrates just how flexible their usage can be.


Shaun Weston, Servisair: “Our ASPIRE lounge vouchers are used by people who either buy the vouchers for themselves or pass them on for others who are planning a trip. They are often bought as wedding gifts, as having access to a lounge is a nice way to start a couple’s honeymoon. Our vouchers allow you to sit in comfort, away from the airport throng. It’s a nicer way to travel.”

Ben Cook, Costa Coffee: “When you’re looking for a reward, it’s important to choose a brand that appeals to, and is aspired to, by your staff. Costa Coffee has over 1,000 UK outlets, so our rewards can be used conveniently and are really appreciated by people who enjoy buying their coffee and muffin each morning on the way into work.”

Martin Alden, Wickes for Business: “Many employees are keen to have the opportunity to choose a reward that offers a more practical solution and delivers long-lasting appeal. A Wickes voucher provides more than the opportunity to buy a pot of paint – it helps the homeowner to feel good about where they live and create a haven where they will enjoy spending time and relaxing with family and friends.”

Andrew Johnson, UKGCVA: “Ease of spend is a big issue. We’re still not seeing a massive adoption of digital gift cards – many retailers can’t accept online redemptions and there is confusion as to the best way to deliver. Additional hardware may be required in store for mobile, but that’s not necessarily the case for email. Some retailers are worried about having customers waiting in long queues to redeem goods using digital means, but I think that would be a good problem to have!”

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