Indian shoppers nowadays are more willing to opt for gift cards and coupons rather than hunting for suitable gifts for each occasion. According to the gift card provider QwikCilver Solutions, the number of transactions through these cards in India has grown to one million a month from just 3,000 five years ago. And the market is expected to grow from Rs 2,500 crore to Rs 9,000 crore by 2018.
According to TP Pratap, CMO, QwikCilver Solutions, the key factors driving the growth include increased acceptance of organised retail categories and growing preference for gift cards amongst the Indian consumers.
Echoing similar views, Vinay Bhatia, Senior Vice President - Marketing and Loyalty, Shoppers Stop, says that the trend reflects a change in the psyche of Indian consumers who are now willing to offer such vouchers instead of carrying physical gifts.
Cashing in on the growing trend
Retailers including Future Group, Shoppers Stop and DLF Brands are increasingly cashing in on this opportunity in a big way. Future Group’s Big Bazaar Profit Club card for Rs 10,000 provides shopping benefit of Rs 12,000. DLF Brands has launched gift cards which can be used across several brands such as DKNY, Claire’s, Mothercare and Sunglass Hut.
Dipak Agarwal, CEO, Operations and Strategy, DLF Brands, says, “We are elated with the outcome of the DLF gift card. These cards are fast, convenient, hassle free and highly personalised. We believe that this initiative will yield positive results.”
The trend is not only accepted in metros, but also in small towns. Tier II and III cities including Nasik, Patna, Cuttack, Guwahati and Nagpur are performing much better than anticipated by many retailers in certain categories and brands.
Offering dual benefit
The category is providing benefits to customers as well as retailers – customers are no more required to hunt for suitable gifts for each occasion and retailers are witnessing higher billing amount than the gift card value. They have seen 50-80 per cent increase in transactions through gift cards during the last quarter of 2013.
While gift cards have been launched by various retail categories, the fastest growing includes department stores (average spend Rs 2,600), premium fashion brands (Rs 3,200) and F&B (Rs 1,200). And the uplift on these cards (spending more than the card value) varies from 25-30 per cent for mass consumption products to as high as 300 per cent for premium accessories, highlights Pratap.
The adoption of gift cards by Indian consumers is high when compared to many other emerging markets across the globe. “Brands would now start to focus and build their gift card portfolio to become the single most important SKU in their product mix,” notes Pratap.
At the consumer front, this category would increasingly see the adoption of social gifting and at the corporate level, the increased acceptance of virtual cards would see the growth of digital gift cards over the next few years.