Gift cards keep on giving for c-store operators

Play them right and consumers’ growing love of gift cards can be leveraged to build foot traffic and bigger basket sizes.
Customers getting gift card. Cheerful people happy about discount card, coupon or voucher. Vector illustration for sale, loyalty program, bonus, promotion concept

In recent years, the footprint for gift cards has expanded into convenience stores across Canada—a move that has proven to be successful for gift card providers and c-store owners. Customers now have new options for where they pick up gift cards aside from shopping malls, drug stores and merchants direct.

Generally speaking, Canada’s gift card industry has done very well over the last couple of years. Data from reflecting Q2 2022 results showed that business is expected to grow by 8.6% annually to reach US $6901.5 million. Drilling down into convenience stores, the numbers mirror the same sunny forecast. The C-store IQ National Shopper Study highlighted an uptick of 6% over 2019 when c-store shoppers were asked, “What non-edible products have you purchased at a c-store in the past month?”

“The category is strong,” says Jason Groulx, vice-president, merchant services at Payment Source. “Payment Source’s Now Prepay network serves more than 4,700 locations across Canada and we expect that number to grow through the rest of the year. In early 2020, we saw 30% year-over-year growth and foresee strong sales to continue with an additional 7% growth into 2022 already.”

Now Prepay by Payment Source has been in-market for almost 20 years, offering hundreds of different brands. “While restaurant gift cards are making a strong comeback, the experience and gift-of-choice categories are very popular,” he says. “For example, we’re seeing strong growth with Happy Cards, which allow your customers the freedom to eat, shop or play at any of the stores appearing on the front of the card.”

One-stop shopping

The blossoming relationship between c-stores and gift cards is a symbiotic one.

“Convenience stores are the staple of their surrounding neighbourhoods and are a popular destination for most Canadians,” explains Groulx. “They are designed to provide their communities with a one-stop-shop for all their needs, including gift cards.”

The onset of the pandemic had more customers seeking gift cards from convenience stores since they remained open as essential businesses during lockdowns. Since people were unable to celebrate in-person together, sending along a gift card to a birthday or anniversary celebrant was a feasible, easy option. “This has bolstered the awareness among Canadians that these types of retailers are an available destination for purchasing gift cards,” he adds.

Adding popular prepaid brands that customers recognize and are looking to purchase is a great way to add extra income and instill repeat purchases at these types of retailers, feels Groulx. “Many customers visiting convenience stores may be time-crunched and are looking for lottery products, confectionery or a last-minute gift while on the road,” he notes. “Once they discover that gift cards are available and experience the simple buying process at convenience stores, brand recognition will become more apparent. Gift cards also act as a great add-on purchase, raising overall basket size.”

In the lead up to the busy holiday season, consider this: 

  • Gift cards don’t take up a lot of space.
  • Gift cards are a valuable add-on, raising overall basket size.
  • Busy customers rely on c-stores to be a one-stop shop–gifting included. 
  • A diverse selection is key to satisfying consumer demand.
  • Prompt last-minute purchases by placing fixtures on or near checkout.

Turnkey category

InComm Payments, a global payments technology provider, has seen similar success with its gift card offerings. “We continue to have a great year-over-year in the demand for gift cards,” says Marie-Hélène Senécal, the company’s senior director, retail, Eastern Canada. “There was a big flood of consumers that went into their convenience stores during the pandemic. They were able to quickly access the products they needed, including gift cards, at that point. Prepaid remains top of mind for customers and has become a way of life as well.”

InComm Payments works with more than 1,000 brands to create one of the largest assortments of gift cards in the industry. “For each channel, we look at the consumer demographic and really align a strategy for a merchant to offer the right product portfolio for the demand,” she says. Along with gift cards for restaurants, apparel, entertainment and more, the company is also seeing increased interest in the gaming category, partnering with companies like Sony, Xbox, Nintendo.

A strong, diverse selection is a good driver of business for convenience stores, notes Senécal. “They are now very well recognized as a retail destination so offering gift cards is creating and keeping foot traffic. It's a really turnkey program, very easy for convenience stores to work with our buyers. We really are the experts. We come in, we know the product, we do launches and really support them. We manage everything for them, from program launch to optimized planogramming, to analytics to merchandising, and ship products directly to them.”

Gift cards have the advantage of also not taking up a lot of valuable retail space. They hold no value until the customer pays for them and are validated at the cash—a desirable quality for the reduction of loss due to theft.

Providers of gift cards are finding that they are not always being gifted. More customers are using them because they feel uncomfortable about putting their credit card information online to make purchases, according to Senécal. Gift cards have a limited amount of exposure, and they can be used for everything from wireless services to apps and prepaid gift cards from companies like American Express and Visa. 

The future is in the cards

To maximize the potential of gift card sales, especially with the busy holiday period on the horizon, c-stores should offer a variety of gift cards to meet customers' growing and changing desires, recommends Groulx. 

He notes that placement is critical. “We have seen the greatest success when store owners select a counter fixture or placement of larger fixtures near their checkout to sell gift cards,” he says. “Our counter fixture is designed to sit on the counter but not impede the sales clerk’s view and holds 18 card options. Now Prepay considers national sales trends to select and auto-refill the right gift card options for each convenience store, removing the hassle of inventory management.”

Looking ahead over the next 12 to 18 months, continued growth is expected. “If we continue this growth trajectory, it could become one of the main reasons Canadians visit a convenience store,” predicts Groulx. “By strengthening this sales channel, customers will increasingly see convenience stores as their one-stop-shop for all their needs, trust they can expect a seamless checkout experience and support their local community.”

Originally published in the September/October issue of Convenience Store News Canada

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