How Retailers Can Tap Gift Cards to Unwrap Holiday Success

With the holiday shopping season fast approaching, a simple addition to your catalog can go a long way: gift cards.

Unlike other types of inventory, gift cards are cheap to produce, easy to ship and unlikely to be returned. If you offer digital gift cards, you can’t run out — and you can keep making sales until a few minutes before gifts are exchanged.

“People love giving gift cards,” says Rachel DeCavage, owner and creative director at Cinder + Salt, an eco-friendly clothing company based in New England. “It's a no-brainer way for them to give someone something that they're going to love.”

People love getting them, too. In an October survey from the National Retail Federation, 55% of respondents said they hope to get a gift card as a present this year.

Here’s how you can make gift cards part of your holiday strategy, whatever you sell.

1. Create your gift cards

You may be able to order physical cards or offer digital ones through your e-commerce platform or point-of-sale system. Physical cards typically cost less than $2 per card, and digital cards are often free.

Physical cards are more popular gifts for Chicago-based indoor golf facility The Green, says founder and managing partner Connor Ptacin.

During the holidays, Ptacin estimated his team mails out "like 20 gift cards a week" to people who want to give their loved ones something physical.

Digital cards let you keep making sales until the very last minute. DeCavage says she usually sees a rush of gift card orders “like three days before a holiday.”

The right mix of digital and physical cards depends on your customers. If most of your sales take place in person, physical cards may be more popular. But if more of your customers shop online and you tend to ship orders farther away, or if you’re trying to grow your online sales, lean into digital cards.

2. Promote them as gifts

Display gift cards by your register and prominently on your e-commerce website to catch shoppers’ eyes.

“Just pop it right there on the counter and drive the impulse purchase,” says Jay Jaffin, chief marketing officer at Blackhawk Network, which helps retailers create and sell gift cards and other rewards items.

You can use gift cards to encourage other spending. This year, DeCavage is offering gift cards as bonuses to customers who spend more than a certain amount at Cinder + Salt.

“It could be an incentive for them or it could be something they can give to someone else, and it also feels like they're getting a discount,” DeCavage says.

Make sure your cashiers know how to load gift cards using your point-of-sale system and how to package them. Those transactions give your staff the opportunity to make additional sales, too: DeCavage encourages gift card buyers to add something small, like a sticker, so it’s more exciting for the recipient to open.

“We try to make it a part of the shopping experience for people who are really unsure about what to get,” DeCavage says.

Promote gift cards on social media and via email, too. A well-timed online marketing campaign can remind previous customers that you have gift cards available — especially if you can reach last-minute shoppers at the right moment.

Lastly, Ptacin recommends swapping gift cards with other local businesses that serve similar audiences. That can help you reach new customers who might have just needed a push to visit you.

3. Prepare for redemptions

If you sell enough gift cards, you might reduce the intensity of another post-New Year’s headache: returns.

“A lot of times, what you see is a bunch of returns at the beginning of the year,” Jaffin says. “Sometimes, those gift cards can actually help balance that out — that first-quarter lull.”

Shoppers usually spend more than what’s on their gift cards, Jaffin adds.

DeCavage says gift card shoppers often behave differently. Instead of making a beeline for their desired item, they tend to spend lots of time browsing.