13 December, 2013 – By Rachelle St Ledger, PrePay Solutions
This year, as never before, retailers are looking to capitalise on the multichannel shopping environment to make the most of the festive season. Christmas is a time of great importance to the entire retail establishment, but this year, claiming the maximum share of the market will be – in part – an exercise in technological prowess.
To put a figure on the importance of Christmas to retailers – they will spend £390 million on Christmas advertising in the last three months of 2013- roughly the same figure that was spent in 2012. Online advertising spend over this same timespan is set to increase by 11%, three times the increase between 2011 and 2012, according to the Advertising Association. This is clear evidence that online is quickly catching up to more traditional forms of retail, both as a marketplace and as a business imperative.
It is forecast that £2 billion pounds will be spent on gift cards and vouchers in the run up to Christmas according to the UK Gift Card and Voucher Association. To capitalise on this across the channels, major retailers have – almost universally – laboured to bring their online proposition in line with their store offering. The run-up to the festive season has seen the rise of digital gift cards, a focus on online only promotions and the appearance of apps and portals designed to give instant access to accounts and help customers keep track of online spending. The advantage of these new products is that they combine the convenience of a fully supported digital gifting option with increased ease of purchase. For example, virtual gift cards can be bought on Christmas Eve and still be ‘delivered’ anywhere in the country instantly. These virtual cards can then be spent online whenever and wherever the recipient wants, even on Christmas day.
In the build up to Christmas 2013, some of the biggest names in high street retail have launched their first digital gift cards. Big name brands such as Debenhams have chosen this year to match the quality of digital gifting with the in-store variety. This includes a move by Debenhams to launch a digital version of its B2B gift card, another sign that the virtual channel is influencing the entire retail spectrum.
However, the online extension of the gift card offering by key market players is only half the story. The biggest evidence of this change is in how these products are being treated. Retailers are going to great lengths to bring together the online, in-store and App-based offerings, integrating the three to create a genuine multi-channel experience. One of many examples of this is the recently launched Mothercare gift card. What makes this product unique to 2013 is that any gift card, bought online or in a shop, can be spent, monitored, or topped up across all the channels.
It’s important to remember however, that while the major retailers are tapping into a high demand for a digital retail offering, this is not simply a shift from a traditional environment to a digital one. Rather it is an extension of the market to fully encompass all channels. The latest research from the UK Gift Card and Voucher Association shows that half (50%) of consumers still prefer a physical gift card that they can hold in their hand to other forms of gift cards and vouchers. This proves that the demand for physical gift cards is not dwindling, but that interest in gifting across other channels has certainly arrived.
This year will see a ‘multi-channel Christmas’, not simply because more stores have launched digital and mobile gift cards and increased their spend on online promotion, but because the retailers’ attitudes have changed. Across the whole sector there is a renewed enthusiasm and understanding of the importance of social, mobile and online to the consumer. The market is moving quickly in that direction and the build up to Christmas 2013 will almost certainly be a multi-channel tipping point. In past years, having an online or multi-channel offering was an advantage, a bonus for the consumer. This year, it is a requirement.