Colorful Kate Spade New York product display with pocketbooks and flowers.
There are gift-givers who always wait until the last minute to make their gifting purchases, and Kate Spade New York learned that electronic gift cards can be a perfect solution. — Kate Spade New York

Why it matters:

  • Gift cards alone are a $160 billion market in the U.S., and the availability of digital gift cards is projected to grow 23% by 2025.
  • Accessories retailer Kate Spade New York began promoting digital gift cards more heavily in 2020, and the items remain a top-three seller.
  • Retailers and brands can optimize their gifting sales by promoting all of their gifting services on a dedicated page, by offering personalization like monogrammed items, and providing other solutions such as live customer service chat agents online.

When it comes to driving a healthy gift business, personalizing the gift-giving exchange is key.

Retailers can optimize their gift sales by ensuring that they offer certain features on their websites to make gifting easier and more rewarding both for the giver and the recipient — from personal shoppers that help you make just the right pick to gifts that align with social causes, according to panelists from Kate Spade New York, Chico’s and other companies in a recent CommerceNext webinar attended by CO—.

Kate Spade New York, for example, has a page on its website dedicated to “all the ways we make gifting easier (and stress-free),” where consumers can access the full gamut of services that the accessories brand offers for those seeking to purchase gifts. The page was created after the company came to realize the significant role that omnichannel retailing plays in the gifting process, said Jackie Diette, director of e-commerce at Kate Spade New York, during the webinar.

“Gifting requires some effort and some research, so whether the customer is going to buy in-store or online, they are likely to be using online to learn something about the offerings,” she explained.

In order to ensure that Kate Spade was meeting the needs of these customers, it created the dedicated page to showcase all of the options available for gift buyers, including a private appointment service offering “one-on-one help picking up something special,” the ability to personalize gifts with monograms or embroidery and the ability to have gifts wrapped before shipping.

“Every gift-giver is different,” said Diette. “They differ in how much they know about the person receiving the gift, they differ in how much help they want and they differ about the channel they use to purchase.”

Lauren Freedman, president of the E-tailing Group, recently conducted an evaluation of the online gifting capabilities of several large companies and found that brands that excel at optimizing gifting opportunities tend to offer some common features.

These so-called “gift-rich” retailers, which include Best Buy, Kay Jewelers, Michaels, REI, Target, Tory Burch and Walmart, all offer the following on their websites:

  • Plastic gift cards and digital gift cards;
  • An online gift center;
  • Gifts sorted by attribute;
  • A posted return policy, and
  • A wish list.

Other features many of the top gifting companies offer include the ability to personalize gift certificates, live chat for customer service and a link to the most popular gifts.

One emerging area in gifting is the ability to send personalized video messages with gifts, the panelists said. Among all retailers surveyed by the E-tailing Group, 16% offered this service.

That compared with 96% that offered digital gift cards, 92% that had an online gift center and 76% that had live chat available for customer service.

[Read here on how the pandemic has changed customer service.]

We thought it was the COVID shopper, but what we found was that there was this last-minute, evergreen, ‘Oh no, I forgot’ shopper.

Jackie Diette, director of e-commerce, Kate Spade New York

Solutions for last-minute shoppers: tapping into the $160 billion gift card market

One of the lessons that Kate Spade New York learned from marketing gifts during the past year was that there are gift-givers who always wait until the last minute to make their gifting purchases, and electronic gift cards are often the perfect solution for these procrastinating customers.

Amid the slowdown in brick-and-mortar shopping during the COVID-19 pandemic, the retailer began promoting gift cards more prominently by touting them at the top of its website and at the top of email communications. The company noticed “huge spikes” in electronic gift card purchases around the holidays, right after the cutoff for on-time shipping, and often even on the day of the holiday itself, Diette said.

“We thought it was the COVID shopper, but what we found was that there was this last-minute, evergreen, ‘Oh no, I forgot’ shopper,” she said.

E-gift cards have remained among the top three items sold online every day at Kate Spade New York, she said, and the company has continued to promote them more heavily even as in-store shopping has returned, and even outside of holiday seasons.

Gift cards are a $160 billion market in the U.S., according to research from Incisiv, which projected that digital gift card adoption is expected to grow 23% during the next four years.

“Retailers can still derive tremendous value from gift cards, but in an increasingly digital world, it requires new thinking,” said Dan Farrell, general manager of gift cards at GiftNow, a provider of gifting services that sponsored the research.

[Read here on how to offer gift cards at your business.]

 Interior of Michaels showing a fall-themed floral and decor display.
Michaels is considered one of the leading retailers for the online gifting services it provides, according to research from the E-tailing Group. — Michaels

A pandemic-induced shift: Gifts that align with social causes gain appeal

Lori Gatto, a veteran e-commerce executive who recently joined women’s apparel retailer Chico’s as senior director of digital marketing, said consumers’ gifting patterns changed somewhat during the past year. Gift-givers often sought out less-expensive items as “quarantine gifts” just to let the recipients know they were thinking of them, for example.

In addition, there was also a shift toward seeking gifts that were aligned with specific social issues, such as gifts from Black-owned or women-owned businesses, Gatto said.

Diette of Kate Spade New York cautioned, however, that as companies seek to align with social causes, they need to make sure that their efforts are sincere and that they reflect the persona of the brand.

“If a brand is just jumping on the bandwagon, it can come off as kind of insincere,” she said.

Gatto agreed, citing examples of brands that excel at cause-related tie-ins such as Bombas, the sock merchant that donates an item on each purchasing customer’s behalf to organizations supporting homeless people, and Toms, which donates a third of its profits to grassroots community organizations.

“It does have to feel like it’s part of the DNA of the company,” she said.

John Grech, head of retail partnerships at GiftNow, who was also a panelist on the webinar, said cause-related gifting is also gaining traction among corporations buying gifts for their employees or business partners, for example.

Among its other features, GiftNow offers companies the ability to allow gift recipients to donate the value of their gift to a specific charity or cause if they so choose, instead of receiving an actual gift.

“It creates a feel-good moment for everyone involved,” said Grech.

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