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Gift cards sales in 2014 will top $124 billion in the United States, but that comes amid slowing growth, says a new report from CEB TowerGroup.
The Arlington, Va.-based advisory firm predicts that gift card sales will see annual growth rates from 5% to 6% through 2017, an indication of a maturing market and increased competition.
“The gift card market has moved beyond novelty and is now firmly in the mainstream,” said CEB TowerGroup Senior Research Director Brian Riley, in a press release. “With maturity comes slowing growth, but innovations in the e-gifting space will ultimately breathe new life into the industry. As the battle for consumers' mobile wallets heats up, expect to see a new set of winners and losers emerge.”
There is a potential bright spot, in the form of electronic gift cards. The firm expects these gift cards to more than double in growth to $14 billion 2017, which then will comprise nearly 10% of the projected $149 billion market.
Much of the e-gift card growth could come from the entry of non-traditional payment companies, like PayPal, which launched a digital gifts store this year, Apple Inc., and CurrentC, a merchant-backed mobile scheme still in development.
“While the mobile-payments market remains fragmented and far from mainstream, increasing adoption of services like Apple Pay will lay the foundation for a robust e-gifting market,” CEB Tower Group say. “Already, major retailers such as Wal-Mart, Target, and JC Penny have adopted e-gifting programs as part of their holiday sales strategies.”
The report also found that 65% of consumers spend 38% more than the face value of their gift cards.
