Retailers participating in prepaid gift card schemes are accessing a market worth in excess of £7bn annually according to a new industry report.

The Saving the High Street Report published by One4all, highlights the increasingly important role such gift cards play in helping high street retailers tackle a sharp fall in their share of consumer spending.

The report highlights a growing preference in the UK for open-loop, prepaid gift cards, with the majority of consumers (57%) now preferring this more flexible choice to single brand gift cards and vouchers.  Such cards are seeing the fastest growth in the sector, 30% year-on-year.

In addition to the £5bn estimated to be loaded annually onto such cards, research indicates that consumers typically ‘top-up’ their gift card spending by 40%, making the total consumer spending related to prepaid gift cards worth in excess of £7bn each year.

Declan Byrne, group director at One4all, says, “Prepaid gift cards are becoming a major source of income for many high street retailers at a time when they are facing a sharp erosion of their share of consumer spending.

“Evidence in this report points to how prepaid gift cards encourage people to rediscover what a pleasurable experience shopping on the high street can be, with research indicating that cards will be used to ‘try out’ stores that they might not ordinarily visit.

“Of those that do 32% of shoppers say they are more likely to become repeat shoppers, delivering an even greater return for the retailer.”

The report highlights the breadth of UK retailers now opting to participate in open-loop, multi-store gift card schemes such as One4All sold through 11,500 UK post offices.

Fashion, beauty products and treatments are the big winners, with 73% and 39% of consumers spending gift cards with them.  Although spending also spreads down to less traditional outlets, with travel (11%), gardening (8.2%) and motoring (2.6%) also seeing significant numbers of customers coming to them to spend their gift cards.

David Hibbert, Gift Card Manager at River Island says, “Being in the One4all scheme has certainly helped generate extra turnover in our stores across the UK. Every year it has got better and better and the scheme consistently brings extra turnover to our business in the UK.”

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