Feature: Gift cards: Design for giving

For the past three years, US department store chain Macy’s has been handing money to its customers to encourage them to come back and shop. It started as a promotion in its New York store for the day after Thanksgiving in late November, with $1 million of gift cards simply given away to shoppers in denominations between $10 and $500, with the only catch being that they could only be spent during the three weeks before Christmas. Since then, Macy’s has run similar gift card giveaways at its 800 stores across the US on the basis that they will come back and spend more.

Using gift cards in promotions has only really started in the UK this year, with B&Q giving cards loaded with between £100 and £200 to people spending over certain amounts on its bathrooms, kitchens, flooring and tiles. “B&Q has conducted a number of trials using gift cards in sales promotions. The results have been extremely positive and create a genuine win-win scenario for B&Q and their customers,” explains Arun Glendinning, gift card manager at B&Q. “As opposed to the traditional promotional mechanic of discounting at point of purchase, B&Q can afford to be more generous with the values rebated onto a gift card as they know the customer will be returning to spend in one of our stores.”

PizzaExpress launched its gift card less than a year ago but this spring was already running an innovative incentive that not only promoted the restaurants but also the cards themselves. In the run-up to Father’s Day, it placed 400,000 of the cards in PizzaExpress pizza boxes in Sainsbury’s, offering customers a 20 per cent discount off any money they loaded onto it.

Promotions using cards can be more effective than discounting in the long term, explains Brian Dunne, a consultant specialising in cards and vouchers whose background includes Leisure Vouchers and The Gift Voucher Shop. “If you compare it to promotional offers, such as a free bottle of wine or two for one, these will always be seen as a discount but, but a voucher or gift card is something that’s been given by someone who is recommending that restaurant or retailer. It is word-of-mouth marketing. By giving money off your product, you lower the value of the product in the customer’s eyes. With a card, you have given them a positive view of the business.”

At this year’s VA Conference in London, speakers highlighted the value of gift cards at a time of falling high-street sales. “They are a way of locking money into your brand and driving footfall,” says Andrew Johnson, director-general of the VA. “The best customer is a person who buys a gift card for someone who doesn’t use that particular store already. They are bringing in a new customer who will then come back.”

Once they are in store, there is the all-important boost to sales from “incrementality” – the average consumer spends an extra 40 per cent on top of the value of their voucher or gift card, according to VA research published last year. However, despite all of these direct benefits, Dunne believes that many companies still do not appreciate the potential of the pieces of plastic on sale at their tills. “Retailers understand the margins on every inch of their stores but they don’t have a real understanding of gift cards and vouchers,” he says. “They must understand the basic spend and profitability per gift card. They need to look at the epos data and do qualitative research.”

Sainsbury’s was one of the first to introduce gift card centres, where different retailers’ cards could be bought in one location, and in July, it switched from paper vouchers to cards. Yvonne West, manager of Sainsbury’s Business Direct, says: “In the UK, retail space is at a premium, and every single item stocked has to justify itself. Success is driven by pounds earned per square foot, and, during this time of economic uncertainty, each product line has to work even harder.”

However, she stresses that retailers could be missing out if they fail to look at promoting sales of cards in-store. “It’s crucial that you have striking designs so that you capture your audience and their imagination. It’s also vital you merchandise your cards correctly and that your point-of-sale communicates well to ensure that you maximize on all potential sales opportunities.”

This summer, representatives from seven UK retailers, including Woolworths, went across the Atlantic on a fact-finding trip to look at how their US counterparts were driving gift card sales through design, packaging and point of sale. Hosted by card services supplier PCC, it found some innovative in-store activity by the likes of bookseller Barnes & Noble, pharmacist CVS, Subway, Starbucks and general retailer Target, which sells more gift cards than any other retailer in the US.

Woolworths retail development manager Alan Kellock says the trip highlighted opportunities in the UK. “To promote cards properly, you need to have them near the purchasing point or the impulse point, which they make a priority in the US but a lot of UK retailers don’t do enough,” he comments. “To do it properly, you have to devote time, effort and space. The Americans are ahead of us because that’s what they do.” Woolworths is significantly increasing the number of gift card stands at tills in its British stores, rising from one stand per set of tills to having one on up to 50 per cent of all tills.

The UK is also behind the US on packaging, with the potential for more exciting wrapping and gift boxes rather than just a mounted carrier or inside a greetings card. Kellock says they also learned the importance of staff being trained to understand cards, something that has now been added to Woolworths’ own training manual.

Card design is also more advanced in the US, particularly at Target where cards have “scratch and sniff”, such as peppermint, glow in the dark or LED lights. Other enhancements have included a recorded voice message, MP3 music tracks and a wind-up flashlight.

The company behind many of Target’s cards is Americhip (pictured), which has just opened an office in London to bring some of its “Multisensorizing” innovations over here. There are some limitations on what can be achieved with plastic cards that need be thin enough to be swiped, but Janie Leahy, the UK’s new business director, says that companies are looking at lenticular finishes as well as multisensory holders and carriers.

Some British retailers are already using designs to promote sales. Experiences company Buyagift has three designs based on its Silverstone packages and WWF Adopt an Animal, which are aimed at enticing customers away from others displayed on gift card centres, says head of marketing Alison Wade, who designed them. “By using already established brands such as Silverstone and WWF, the customer has an added incentive to make a purchase with the safe knowledge that they’re investing in a trusted brand.”

Vue Entertainment continually refreshes the appeal of its cinema cards, which are promoted through Parallel Promotions. They feature blockbuster movies, with six new ones every summer and Christmas. Current cards feature Sex and the City, Indiana Jones, The Hulk, Mamma Mia, Wall-e and Kung Fu Panda, while Christmas will see imagery from James Bond film The Quantum of Solace. Films also help to promote Woolworths’ cards, with its first themed cards in 2005 featuring Star Wars as well as Barbie and Bratz. Since then, cards with Harry Potter and Superman have all outsold conventional gift cards. “Spend is not restricted to the character merchandise, although redemption patterns do show that most value goes towards character-related product,” Kellock says.

The recipients, particularly children, are also more likely to hold on to the cards, which their parents will top up as pocket money – again ensuring sales go into Woolworths, Kellock adds. “Our character gift card range has dramatically improved the longevity of card usage.”

Pictured: A multisensory card-holder from the US from Americhip