Study: Gift card sales to surpass $124 billion

Arlington, Va. - Gift cards will surpass $124 billion in sales in 2014, up 5% from 2013. According to from advisory firm CEB TowerGroup, the gift card market should undergo an annual growth rate of 5-6% through 2017, but double-digit growth rates experienced in recent years have peaked and subsided.



In addition, e-gifting (the sending of financial gifts through online channels, including via person-to-person platforms), which is expected to supply the next leg of long-term growth for the gift card industry, grew less than expected this year. E-gifting revenues increased 20% to $6 billion in 2014 from $5 billion in 2013. CEB expects e-gifting to more than double in growth to $14 billion by 2017, by then making up nearly 10% of a projected $149 billion market.



Other notable changes, which reflect CEB's projections for 2014 and revised 2013 figures based on confirmed data include:



• Open network branded cards grew from $43 billion to $45 billion;

• Retailer card volume grew from $39 billion to $41 billion;

• The restaurant segment was flat at $19 billion, while the miscellaneous segment grew from $12 to $13 billion.



Spillage, or the amount of unused gift card volume, is projected to come in under $1 billion this year and account for significantly less than 1% of total gift card volume. This continues a downward trend since the introduction of the CARD Act in 2009 limited expiration dates and annual fees for gift cards. Spillage rates were as high as 10% when CEB began studying gift card trends in 2006.



"The gift card market has moved beyond novelty and is now firmly in the mainstream," said CEB TowerGroup senior research director Brian Riley. "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."