Higher inflation is driving the demand for supermarket and grocery gift cards

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When it comes to tackling the soaring prices of basic goods and amenities like petrol and fresh produce, consumers are increasingly resorting to gift cards. Consequently, several supermarket chains and grocers are providing discounts on gift cards to help customers manage their household budgets. For instance,

• In October 2022, Coles Supermarkets Australia Pty Ltd. (Coles) started to provide discounts on their gift cards that can be redeemed for fuel, groceries, power bills, and many more. Importantly, these gift cards can be used anywhere where Mastercard is accepted. Consequently, the supermarket started attracting customers by offering a 10% discount on US$100 and US$250 gift cards, however, they have to pay a fee as an administrative charge. Thus, customers can save about US$6 on every US$100 gift card and around US$19 on a US$250 gift card.

The supermarket giant strategized to increase its sales by offering these discounts at a time when the interest rate is surging and fuel costs are shooting up. Moreover, after the current floods in Victoria, the prices of fruits and vegetables are to increase, thus, these discounts on gift cards will particularly help customers to manage their daily budget.

Additionally, the members of the National Roads and Motorists' Association Limited (NMRA), Australia will be able to buy these discounted gift cards and use them at several retailers such as JB Hi-Fi, Rebel, etc. According to NMRA, usage of supermarket gift cards rose by around 45% in the last four quarters as people started to use more of such cards to maintain a high cost of living. Consequently, PayNXT360 anticipates, offering discounts on gift cards will continue boosting the usage of Coles gift cards in Australia amidst rising prices. 

Several grocery gift cards are also being distributed by local governments and social organizations around the globe to fight the rising prices. For instance,

• Meals For Good, Inc. (MFG), a social food venture in Canada, developed a supermarket food voucher and gift card program to curb the food insecurity problem in East Harlem and the South Bronx of the New York region. This gift card program was invested in by the Robin Hood Foundation, a charitable organization from New York. Notably, MFG created these food vouchers and gift cards to enable individuals to buy food from supermarkets in East Harlem using vouchers and gift cards in the South Bronx.

To launch such a gift card program, MFG teamed up with a few community-based organizations in the region to distribute these vouchers and gift cards to the residents suffering from food shortages. As a part of the program, the residents would receive vouchers or gift cards to purchase food from local grocery stores.

• In August 2022, another non-profit organization in Canada, the Food Bank of York Region (FBYR), announced the distribution of grocery gift cards worth US$75,000 across the region. These gift cards, which were part of an initiative to help improve food security in the region, were funded by the federal 2022 Emergency Food Security Fund. 

According to FBYR, the households of the York region will receive grocery gift cards ranging between US$25 and US$50. However, the number of gift cards to be given out per household depends on the size of the household. Consequently, PayNXT360 projects, when inflation is at an all-time high, these gift cards will help households to tackle the food crisis.

• In October 2022, the government of Denver, United States, announced spending about US$1 million on grocery store gift cards and also with food boxes to help the residents with food shortages as a lingering effect of the pandemic. The council members agreed to provide a US$200 grocery store gift card to around 4,000 residents of Denver followed by three food box distribution events. Notably, the households who earn 200% below the mentioned federal poverty level will receive one grocery gift card each; however, these cards will be distributed on a first come first serve basis.
• Another initiative was taken by the government of England in February 2022 to help families struggling with living costs through the distribution of supermarket e-vouchers. Importantly, the government prepared a £500 million Household Support Fund designed to help particularly those individuals who fight to pay even for essential costs. This fund provided e-voucher payment of a maximum of £275 in North Yorkshire. While eligible and successful individuals could receive a £50 e-voucher together with an e-gift card in Nottingham. In Derbyshire, eligible individuals could access vouchers worth £64 per household, while those living in Ealing could get £75 in supermarket vouchers.

On the other hand, several gift card providers are expanding their partnerships with grocery and supermarket chains to see growth in their businesses. For instance, 

• In May 2022, New Seasons Market, a chain of grocery stores, expanded their partnership with the gift card provider, Blackhawk Network to enhance its gift card program. Under this partnership, the West Coast neighborhood grocers, namely New Seasons Market and New Leaf Community Markets, will elevate the gift card experience where customers will be delivered gift cards to their doorstep. 

Since Blackhawk’s digital gift card program was very successful, the grocers now will leverage the gift card platform’s e-commerce capability to enhance their digital gifting programs. Importantly, according to Blackhawk, customers have always requested gift cards for groceries, consequently, this partnership will help both parties to increase their revenue by tapping the existing demand for grocery gift cards. Thus, PayNXT360 expects, through Blackhawk Network’s capability, both grocers will be able to provide a seamless customer experience, generating higher revenue over the next four to six quarters in the country.

To know more and gain a deeper understanding of the global gift card market, click here.