The past few years have thrust digital shopping into the spotlight and it’s a trend that’s here to stay. The 2022 holiday season was no different, as shoppers continued to purchase online goods and gift cards for their loved ones, providing valuable insights on the emerging ways consumers are approaching gifting across channels. Retailers looking to capitalize on the evolving gifting landscape in 2023 must upscale their digital footprints, while also embracing alternative payment methods and offering a spin on the traditional gift.
Taking Cash to New and Digital Heights
According to a recent study, gifting and receiving cash is a growing preference among younger consumers. In addition to cash, younger consumers are also more apt to use digital platforms such as Venmo or Cash App for their gift-giving. Nearly 70 percent of Gen Z respondents intended to give, and hoped to receive, a monetary gift over the holidays, with gift cards being the most popular option.
The National Retail Federation (NRF) predicted $28.6 billion in gift card spending alone this past holiday season. And while 52 percent of survey participants planned to purchase a physical gift card, 29 percent planned to give a gift card digitally, highlighting the need for retailers to offer seamless experiences and omnichannel options that meet the varying needs of their customers. If retailers don’t have the technology infrastructure in place to have such offerings, they should look to third parties and embedded offerings that can support these functions and ultimately create profitable returns and growing customer loyalty.
Buy Now, Pay Later … for Gifting, Too
As the future of gift giving becomes more focused toward cash, another way retailers can keep up with the wants of the newest consumer generation is to offer a wide variety of payment options to make sure there are no barriers when it comes to gifting. That’s where buy now, pay later (BNPL) can come in; and it’s growing in popularity. This past holiday season, usage of BNPL as a payment method increased 41 percent over the 2021 holiday season, according to Bread Financial’s post-holiday research.
In addition, nearly three-quarters of BNPL users made three or more holiday purchases using BNPL, with at least one of them completed digitally. For a younger generation often shut out from traditional credit solutions, offering BNPL at checkout can help budget-conscious consumers stretch their dollars and check everyone off their gifting list.
Creating a Unique Digital Gift-Giving Experience
While retailers need to ensure they offer ample gifting options — both physical and digital — to suit customers’ preferences, equally important is the gifting moment. In a world where Gen Z consumers are quickly influencing gift types, with 95 percent of respondents stating they like to receive a gift card as a gift, this is a great opportunity for brands to consider additional ways to surprise and delight both the gift giver and the recipient with personalized messaging, for example.
Yet another way retailers can take advantage of digital gifting is to encourage consumers to gift an experience. It could be for a service or a special event, but it’s sure to leave a lasting impression and has the potential to increase incremental sales.
In a world of ever-evolving consumerism, retailers must stay nimble and adapt to changing trends across the customer journey, as can be seen from this year’s holiday shopping season. A blended suite of digital and in-store financing options, as well as the incorporation of digital capabilities, can be the key when it comes to winning the retail wars in the emerging age of digital gifting. Meeting customers across every part of their digital gifting journey — from purchasing to redemption — and making those interactions impactful will help instill increased brand loyalty and set retailers apart from competitors.
Tiffany Wong is head of merchant success for Bread Financial, a leading provider of simple, personalized payment, lending and saving solutions.
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