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2014 Gift Card Sales To Top $124 Billion, But Growth Slowing
Eighth Annual CEB TowerGroup Report Shows Market Maturing; Established and New Entrants Positioning for E-Gifting Wave

ARLINGTON, Va., Dec. 10, 2014 /PRNewswire/ -- Gift cards will surpass $124 billion in sales this year, a five percent increase over 2013, according to CEB (NYSE: CEB), the leading member- based advisory company. CEB TowerGroup research on the industry shows signs of a maturing market and accordingly, a slower rate of growth. E-gifting, the industry's next innovation, has yet to break out of its niche category, although its long-term prospects remain promising as mobile payments become more mainstream. 

CEB gift card research highlights

 While CEB projects solid annual growth of 5-6% for the gift card market through 2017, this year's report suggests that the explosive double-digit growth in the years immediately following the recession has peaked and subsided.

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 growth for the gift card industry over the long-term, grew less than expected this year, up from $5 billion last year to $6 billion in 2014. 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.

"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."

As major players expand their reach within the world of mobile payments, including non-traditional entrants such as Apple, PayPal and CurrentC, a system backed by a conglomerate of major retailers, the potential for a large e-gifting market via person-to-person (P2P) transfers will become increasingly clear. While the mobile payments market remains fragmented and far from mainstream, increasing adoption of services like Apple Pay will lay the foundation for a robust e-gifting market. Already, major retailers such as Wal-Mart, Target and JC Penny have adopted e-gifting programs as part of their holiday sales strategies.

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 remarkable downward trend since the introduction of the CARD Act in 2009. Spillage rates were as high as 10 percent when CEB began studying gift card trends in 2006.

For more information on 2014 gift card sales, please visit: CEB's Gift Card page.

About CEB
CEB, the leading member-based advisory company, equips more than 10,000 organizations around the globe with insights, tools and actionable solutions to transform enterprise performance. By combining advanced research and analytics with best practices from member companies, CEB helps leaders realize outsized returns by more effectively managing talent, information, customers and risk. Member companies include approximately 90% of the Fortune 500, more than 75% of the Dow Jones Asian Titans, and 85% of the FTSE 100. More at cebglobal.com.

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SOURCE CEB

Justin Lavelle, CEB, Email: Justin Lavelle, 703-912-7671