The cost of living has surged rapidly over the last 12 months in the United Kingdom. Soaring food products prices including bread, cereal, and chocolate have also pushed the food inflation to a 45-year high in the region. The rising cost of food, coupled with higher energy prices, is dampening the disposable income, as the increase in pay for most consumers is not keeping up with the surge in product prices.
This is resulting in a growing trend wherein consumers are turning to bonus-value and discounted gift card offerings to combat the soaring cost of living in the United Kingdom. In 2022, grocery retailers launched discounted gift card products to attract consumers and drive revenue and sales growth. As inflation has continued to dampen the disposable income of many in the country, the demand for such gift cards has been also increasing subsequently. Consequently, to tap into the growing demand, firms are forging strategic collaborations to offer bonus-value gift cards to inflation-hit consumers.
• Prizeout, the United States-based AdTech firm, entered into a collaboration with financial services app Pockit in February 2023. The partnership is aimed at offering bonus-value gift cards to consumers in the United Kingdom. As part of the strategic alliance, the online gift card marketplace from Prizeout has been integrated into the mobile app of Pockit. This integration has enabled 700,000 Pockit users to purchase gift cards from 1,000 brands.
The nature of this gift card offering is expected to aid its popularity and adoption in 2023. Prizeout partner brands offer an average bonus value of 11% on gift card purchases from the online marketplace. At a time when inflation is hitting hard on consumers, these bonus value offering gift cards can provide some relief for Brits that are seeking to extend the budget through the month.
Rebates and incentives, on the other hand, are also popular ways for brands and retailers to attract new and existing customers. With disposable income on the decline, such bonus value offerings on gift cards can aid revenue and sales growth for retailers. Consequently, the collaboration between Prizeout and Pockit is expected to support gift card sales, thereby aiding the growth of the market from the short to medium-term perspective.
Over the last 12 months, several gift card providers have recorded strong growth in the European gift card industry. To continue on an accelerated growth trajectory, players are seeking to partner with more brands and retailers in the region. Recharge.com, for instance, announced that it will partner with brands across the European region to expand its reach among consumers. Going forward, Prizeout is also expected to adopt a similar strategy and expand its partner network beyond 1,000 brands.
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The gift card market in the United Kingdom is expected to reach US$9.98 billion in 2023, according to PayNXT360 estimates. By 2027, the firm projects the market to reach US$12.8 billion. The strategy to expand the partner network will enable players like Recharge.com and Prizeout to grow their market share in the United Kingdom's gift card industry from the short to medium-term perspective.
Amid the growing demand for gift cards, the trend of strategic collaboration is also growing significantly in the United Kingdom market in 2023. FreedomPay and Savvy, for instance, also entered into a collaboration in January 2023. The partnership will enable FreedomPay merchants to integrate the Savvy gift card platform into their card terminals. This will enable FreedomPay merchants to sell gift cards to their customers. On the other hand, the alliance will facilitate Savvy to provide its customers with the ability to use gift cards for in-store purchases using the FreedomPay devices.
Healthy Minds Club, a platform focused on health and wellbeing, has announced a strategic collaboration with Tillo, a gifting management platform. This partnership will enable Healthy Minds Club's membership and gift card platform to be available on the Tillo network, starting March 2023. By leveraging Tillo's extensive reach among both consumers and businesses, this collaboration is expected to support Healthy Minds Club's gift card sales and revenue growth in the short to medium term.
As the market continues to grow amid the rapidly growing demand for gift cards, PayNXT360 expects more such strategic collaborations and partnerships in the segment. This will also support the competitive landscape and innovation in the fast-growing industry in the United Kingdom. Going forward, PayNXT360 expects more retailers to launch discounted and bonus-value offering gift cards for consumers.
• Online retailers, including ShopTo, are currently offering discounted gift cards for their users. The retailer, for instance, is offering a PlayStation gift card worth £50 for £42.85 instead.
The strategic collaborations and discounted and bonus-value offering gift cards will, therefore, keep aiding the growth of the gift card industry in the United Kingdom from the short to medium-term perspective.
About the Creator
PayNXT360
PayNXT360 offers business intelligence and strategy research on prepaid cards, gift cards, mobile wallets, international and domestic remittances, BNPL, and emerging innovative payment trends.
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