Feature: Why a gift card mall isn’t just for Christmas?

Gift card malls, gift card shops and centres were launched into British retail shops just before the Christmas stampede. While a number of leading suppliers and issuers have been offering gift cards for several years, this was the first time that retailers in the UK started to sell multiple brands of gift cards in-store.

The gift card market in the US is estimated at over $100bn in sales and, in the UK, gift card malls are expected to have significant impact on gift card adoption and performance. “Gift card malls are launching in the UK at the same time as gift cards in many cases,” said Chris Grace, sales and marketing director for gift card mall vendor Coinstar.

High street retailer WHSmith and supermarket giant Sainsbury's both rolled out programmes in November 2006, and many additional high-traffic retailers are expected to launch in 2007. Russell Morris, general manager for customer business development at Sainsbury’s commented on the launch of its first gift card mall: “While the concept is still very new to the UK market, scanned sales of gift cards in-store have been in the millions, which demonstrates a very encouraging early response.”

Kim Dinan, general manager for the Woolworths gift card sees great potential: “This is a very innovative product area that is bound to increase awareness of gift cards.” Grace continues: “Consumers love gift cards – they are a fun, new and convenient way to gift. We believe that display units, as well as card assortments, are crucial to the success of this new and exciting retail category.”

While retailers are excited at the prospect of offering gift card malls in-store, there have been, as with all new launches, some experimentation as retailers strive to make the most of the opportunity.

Sainsbury's Morris said: “We have identified many opportunities for improvement. We are initiating trials of new fixtures, store locations, as well as ranging and expect to double our sales run rate in the coming months.”

Bernard Grant, business controller at Debenhams further added: “Retailing of gift cards malls has to be executed properly in order to achieve the desired effect.” Dinan agreed: “Ultimately the success of any initiative will depend on how well retailers communicate the offer, and educate the consumer that such fantastic choice is available in one place.”

As retailers extend their range of gift cards in-store, consumers will be given a much wider choice of possibilities. Debenhams doesn’t have a gift card mall in house but its electronic gift card is available in a selected range of other retailers. Grant commented: “At the moment we are trailing the gift card mall concept and have selected a few retailers who can offer our gift card as part of their mall. We are keeping an open mind about in-house gift card malls.

“Gift cards and gift card malls are definitely the way forward for the industry. While it’s great that the voucher and gift card community is moving ahead at rapid speed, we need to ensure that the British public is also fully up to speed with the changes and likes them.

“We heavily promote gift cards in store but still provide consumers with the opportunity to select a gift voucher. Overall we have found that our customers are happy with the new technology that we have been offering for the last four years. It really is all about letting the consumer know the advantages of a gift card.”

These sentiments were echoed by Woolworths’ Dinan who asked: “Does the average consumer completely understand the proposition that they can buy and load a gift card from one retail brand within another store?”

While it is inevitable that the high street will welcome gift card malls with open arms, what will this mean for the growth of gift cards used in sales promotion and loyalty scheme programmes?

Sally Hunter, product manager for cards and vouchers at Maritz, commented: “Within business to business incentive programmes there is no doubt that the increase in the number of gift cards on the high street will lead to an increased demand for innovative card-based rewards in incentive programmes.”

Morris also stated: “This initial success at a customer level demonstrates a broad acceptance of the card technology and this, combined with the manifold operational benefits, will surely lead to a ‘tipping point’ being reached, where cards become a popular sales promotion mechanic.”

Grant finished off: “In the last 12 months we have seen a significant increase in the move towards gift cards within the corporate market who are beginning to latch onto the idea, whereas traditionally they have always used paper vouchers. Adding value to the gift card on a remote 'top-up' basis is very attractive to ongoing promotional and motivation schemes.”

Gift cards and gift card malls are hear for the foreseeable future and the voucher and gift card industry needs to ensure that everyone involved is educated properly of their merit. While the industry moves ahead rapidly it is imperative that the great British public isn’t left behind. It really is all about education, education, education!