The Merchants With the Best Gift Card Programs – Total Retail

NAPCO Research, in conjunction with Blackhawk Network, recently executed a comprehensive review of the state of U.S.-based merchants’ gift card offerings. The 2022 report included an assessment of retailers’ e-commerce/digital, mobile, and in-store gift card offerings, providing an omnicommerce view into the consumer gift card purchase and recipient experience.

The subsequent report, the fifth annual version, features data and analysis from the assessment of 100 U.S.-based retailers. Those retailers, which represented a range of product verticals, were evaluated across 176 unique criteria. Key components evaluated included the online consumer purchase and recipient experience of both digital and physical cards (e.g., ease of discoverability, payment options, delivery options); in-store consumer purchase experience of physical cards (e.g., how well stocked were gift card checkstands and fixtures; how helpful was signage); and the mobile consumer purchase and recipient experience of digital and physical cards, as well as in-store mobile payment options and functionality.

The research was conducted from November 2021 to February 2022. Our analysts went through the research and buying experience, purchasing both physical and digital gift cards from each of the 100 retailers evaluated.

Retailers would be wise to invest resources into optimizing their gift card programs given the market opportunity. The gift card market in the United States is expected to grow by 9.5 percent year-over-year to reach US$188.8 billion in 2022, according to a report from Research and Markets. That positive momentum is expected to continue, with the report forecasting a compound annual growth rate of 8.3 percent during 2022-2026.

What Our Assessment Revealed

By earning 107 percent of the total points across all the criteria (bonus points were available for certain criteria), took the top spot in the 2022 rankings. The e-commerce giant was closely trailed by one its chief competitors, Target, which earned 101 percent of the total points. There was a significant drop-off in scoring following Amazon and Target, with the next closest merchant, Subway, receiving 88 percent of the total possible points). The rest of the top 10 rankings looks as follows:

  • Kroger (85 percent)
  • lululemon athletica (83 percent)
  • Bath & Body Works (82 percent)
  • IHOP (82 percent)
  • Nordstrom (82 percent)
  • Best Buy (80 percent)
  • Dunkin’ (80 percent)

When looking at the results of all 100 merchants on an aggregate basis, they earned a total omnicommerce average score of 64 percent. On an individual basis, 69 merchants improved their total omnicommerce score YoY. Contributing to the overall omnicommerce average score were the following average scores for the criteria within the three legs of the assessment:

  • E-Commerce/Digital: 60 percent
  • In-Store: 65 percent
  • Mobile: 65 percent

Overall, the merchants evaluated earned, on average, just less than two-thirds of the points available to them. The numbers suggest that many merchants, even top performers, have plenty of work to do as they look to optimize the performance of their omnicommerce gift card programs.

When examining this year’s data by product vertical, a positive emerged: YoY scores on an industry basis increased 7 percent, led by gains in the home improvement and grocery sectors. Regarding the latter, Kroger, H-E-B, and Publix all posted a 20 percent or more improvement in total omnicommerce score YoY. The gains in the home improvement sector were largely driven by significant YoY improvement from Harbor Freight (35 percent YoY) and Tractor Supply Co. (26 percent).

Conversely, the merchants in the Restaurant – Casual and Health/Beauty industries saw their scores improve the least YoY (1 percent and 3 percent, respectively). For Restaurant – Casual the decrease can be attributed to a 7 percent YoY decline in its overall in-store score; for Health/Beauty, the struggles were concentrated in the mobile criteria, which saw YoY scores decrease 5 percent.

In a follow-up article on the 2022 Merchant Gift Card Omnicommerce Evaluation, U.S. Edition, to come next week, we will dig deeper into the data, including identifying strengths and opportunities for merchants’ gift card programs across e-commerce, in-store and mobile channels, as well as share best practices for improving performance in these areas. In the meantime, you can download the full report, which includes the rankings of all 100 merchants (including broken down by product category) as well as more valuable trends and tips gleaned from the data, here.

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