Gift cards are becoming more popular BigStockPhoto
Gift Cards: A powerful way to promote brand awareness
Published: 27 August, 2009
There is nothing new about gift cards: in their former guise as paper-based vouchers they have been knocking around since the eighties. However, despite physical and technological transformations and rapid take-up in the UK, the nation’s retailers and shopping centres continue to lag some way behind our American counterparts.
But gift cards could just give Blighty’s shopping centres the much-needed boost they need during straitened times.
Shopping centres can derive many benefits from having a gift card. The most obvious advantage is that the card schemes help to build and maintain a brand and drive customer support for the individual centre. “It does act as a loyalty card for Bullring as it is a heavily branded pre-loaded card, which ties spend into Bullring’s stores,” explains Bullring’s marketing director, Louise Hamer-Brown. The customer purchasing the gift card may already shop in the centre, but the receiver may not, which could result in the centre winning new business and new consumers. In addition, for those viewing gift cards as a commercialisation activity, the business models can be structured in such a way to ensure a maximum return for the centre.
In this respect, some centres charge a £2 fee to load a gift card with the appropriate amount. “Levying a fee to the customer in respect of card issue provides a guaranteed revenue stream to offset some of the costs of operating and marketing a gift card programme,” explains Andrew Sims, sales and marketing director for Flex-e-vouchers (FEV). “The decision whether or not to charge issue fees is always one taken by our client,” he says.
However, according to Stuart Green, commercial director at Store Financial, whether or not customers are charged an activation fee is largely down to their own costs. “Many providers charge the mall an activation fee for every card that is loaded – I believe FEV charge £1.40 for each card for instance – therefore the mall charges a £2 fee to offset this cost and make a little extra themselves,” he says. “We don’t charge an activation fee as we try to put as few obstacles in the way as possible for the mall to have a programme.” This certainly makes sense – customers of FEV such as Westfield London and Bullring both charge a £2 fee for a card, whereas Bluewater, which is a customer of Store Financial, does not.
Quantifying cost
Despite the frequency of malls charging for gift cards, the proliferation of schemes is astonishing. FEV estimates that approximately 80 per cent of UK shopping centres that are
suitable for the operation of a gift card programme have one in place. Perhaps shopping centre managers have caught on to the idea that the money loaded on to a gift card is then locked into the centre, boosting much-needed footfall and spend levels. Green explains: “After all, a customer can buy a Debenhams gift card in Bluewater and spend it in any Debenhams, but a Bluewater gift card means that the spend will go to Debenhams in Bluewater.”
Bluewater is one of the larger schemes in UK shopping centres not to charge customers an initial £2 fee to load value on its gift cards. “When launching the gift card programme, we made the decision to focus purely on customer service and therefore opted not to charge a £2 fee for the card or any monthly charges,” explains Andrew Parkinson, general manager at Bluewater.
For Louise Hamer-Brown, marketing controller at Birmingham’s Bullring, tying footfall and spend to the centre is one of the big plusses of operating a gift card scheme. It also comes in handy when it comes to competition time. “It is the most successful give away/prize promotions we run,” she says. “For example, if we run a radio promotion and give gift cards away as a prize, we provide the cards and they are sent to or collected by the winner. We give gift cards away on email too as a prize or as a customer reward, as it is very simple for us to raise a gift card and very easy for the customer to understand what it is and to use when they have won it as they can redeem it at their leisure. Therefore there are no restrictions or regulations to worry about when the winner redeems their prize.”
Other benefits include profitability. Breakage – the balance left unspent when the gift card expires – goes directly to the mall’s coffers. But it is not just the cold hard cash which has a value, says Green. “Our web-based, real-time reporting suite provides fantastic data for the mall to be able to measure where and when the cards are being spent. In the current market with so much focus on how malls are spending service charge, a gift card programme can be measured and compared against other data such as footfall,” he explains.
For Bluewater’s Parkinson, the gift card is all about a flexible offering. “We feel the gift card has many benefits including the flexibility for guests to choose where they spend their gift card within Bluewater.” In addition, the simple technology backbone means that there has been a higher level of take-up among tenants, when compared with previous paper-based vouchers. “A larger number of retailers are able to participate with the gift card system, offering a wider choice of stores for guests. The majority of retailers at Bluewater accept cards whereas only a handful were able to accept the previous cheque system.”
The technology behind shopping centre gift card schemes certainly is less complex than those used to power retailer-specific programmes. Retailers’ own gift cards are closed loop programmes which have to be entirely integrated with their own till system – they have to develop their IT in order to be able to recognise and process their own cards, explains Store Financial’s Green. “clearly we can’t
do all of this IT development for every retailer within a mall for a
mall gift card, so we use a Mastercard that is already accepted at
all of the retailers within a scheme – this an ‘open loop’ programme,” he continues.
A complex offer
Birmingham’s Bullring has also recently launched a wedding gift card, complementing its existing gift card scheme. The bride and groom to-be open an account at Bullring and are given an account number which is then printed on little cards that are sent out with the wedding invitations. Guests can go to Bullring or call with the account number and add to the gift card balance as much as they wish along with a message for the couple. Bullring is also currently gearing up for the re-launch of its standard gift card offering prior to the busy Christmas period. “We just need to refresh the campaign as it has been running for two years, so it’s time to give it new life at our biggest time of the year for corporate and individual sales.”
Indeed the area of corporate sales is vastly profitable for shopping centres running gift card schemes. Hamer-Brown says that while it is difficult to measure the uplift in sales derived directly from gift card purchases, corporate sales opens up an “entirely new channel”, adding value as it indisputably increases spend at Bullring. In addition to this, research has shown that people are likely to make additional visits to a mall to spend their gift card, where Store Financial estimates the average person will spend an additional 20-25 per cent on top of the value on the card. In times of economic woe what credit-crunched centre can afford to miss out on a slice of that pie?
