Gen Z and Millennial Shoppers are Driving Urgency for Gift Card eCommerce Optimization

New research reveals a generational divide in the way younger consumers shop, pay and engage with gift cards in an evolving shopping landscape. Although brick-and-mortar retail still has a strong foothold in the market, demand for egifts from Gen Z and Millennial consumers is beginning to rapidly catch up with physical gift cards as interest in innovative shopping and branded payments continues to grow. While gift card merchants are increasingly embracing omnichannel gift card options, there is still much room for progress in their offerings. These are among the findings of the latest research commissioned by branded payments provider Blackhawk Network.

"With the digital age continuously transforming the shopping landscape, our research allows us to pinpoint key differences in behavior and payment adoption across generations," said Theresa McEndree, vice president of marketing, Blackhawk Network. "As interest in innovative shopping and payment tools continues to grow among younger generations, our findings indicate that the gap between egifts and physical cards is quickly closing for Gen Z and Millennial consumers. We anticipate demand for egifts from these generations to continue to rise in the near term. By optimizing their digital gift card solutions, retailers can keep these younger consumers engaged by giving them the digital experience that they crave."

Key findings from the research include:

Purchase of egifts is more frequent among younger generations and is catching up with physical cards. Forty-one percent of Gen Z consumers and 39 percent of Millennials surveyed purchase egifts at least once every three months, compared to 26 percent of Gen X consumers and 14 percent of Boomers. In comparison, purchase of physical gift cards is only slightly higher with 51 percent of surveyed Gen Z consumers and 47 percent of Millennials shopping for a physical card at least once every three months. Frequent egift usage by younger generations has also been impacting egift purchase of older generations, with 20 percent of Gen X surveyed choosing to buy egifts for their children.

Younger generations, led by Millennials, are open to using egifts as branded payment tools. The majority of Millennials surveyed (72 percent) have used egifts and have also tried other mobile payment solutions, including mobile apps (60 percent), gift card in mobile wallet (44 percent), and mobile wallet (42 percent). Gen Z consumers are not far behind with 63 percent of those surveyed having used egifts to make a payment. Surveyed consumers from both generations purchased four egifts over the past year for self-use compared to three physical cards, indicating a growing tendency to use digital branded payments.

Younger generations are more receptive to innovative shopping. Fifty-one percent of Millennials surveyed are likely to shop online for egifts compared to 46 percent of Gen X, 42 percent of Gen Z, and 30 percent of Boomers who generally tend to be more interested in traditional shopping methods. Younger generations are also more frequent users of mobile commerce with 42 percent of Gen Z consumers and 46 percent of Millennials surveyed placing monthly orders on their mobile phones for delivery—a habit less common among Gen X (29 percent) and Boomers (13 percent). Moreover, surveyed Gen Z consumers are significantly more likely than any other generation to use the latest shopping innovations on a monthly basis or more including voice shopping (20 percent), pop-up stores (21 percent), and virtual reality shopping (17 percent), compared to an average of eight percent across generations. 

Gift card merchants have made improvements in their omnichannel gift card offerings, but more can be done. According to the 2018 Merchant Gift Card E-Commerce Evaluation report conducted by NAPCO research and sponsored by Blackhawk, 51 out of 100 brands evaluated were found to offer both egifts and physical gift cards across desktop, mobile and mobile app (when applicable). Though this marks an improvement over the previous year's study, which found that only 36 merchants evaluated had incorporated such omnichannel offerings, more progress can be made particularly in mobile. Only eight out of 87 brands evaluated offer a commerce app with an in-app experience that tallies with their desktop purchase experience. The report also highlights the need to make gift cards more easily accessible across each of the brands' channels. 

*About Blackhawk Network Consumer Research
The consumer research includes two online surveys conducted by Murphy Research on behalf of Blackhawk Network between February 4 and February 12, 2019. Retail Trends and Transformations included a sample size of 3,381 respondents between the ages of 18–75. Gift Card State of the Union included a sample size of 3,389 respondents between the ages of 18–75.

**About the 2018 Merchant Gift Card E-Commerce Evaluation
The 2018 Merchant Gift Card eCommerce Evaluation was an analysis conducted by NAPCO Research on behalf of CashStar in July–August 2018. The analysis included 100 top merchants determined by industry rankings and measured against more than 100 criteria.