Covid Merchant Committee Discussions

By Matt Davies, Powerhouse Brands Consulting

The Gift Card Network has a monthly merchant call in which our merchant subscribers can connect and share best practices, ask questions among each other, and connect on their challenges. In our last two meetings, we’ve been reviewing the impact of COVID-19 and the closures of businesses in order to stop the spread of the disease within the US.

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Merchants within this group are major national and international retailers, restaurateurs, hospitality, and online service providers that offer gift cards in the public marketplace. Thank you to our merchant committee leaders--Benita Johnson (Petsmart), Len Sadek (Landry’s), Jason Miller (Zulily), and Peter Friend (Global Hotel Card). We have a rotating average of 10–15 company representatives on our calls.

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We want to extend our committee’s leaders and participant’s condolences for those companies and employees affected by the recent furloughs, layoffs, and bankruptcies. Our thoughts are with you, and please reach out if you need any support. We’re here for you!
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Here are the main subjects and take-aways from those meetings, specifically, regarding to how gift card businesses are being affected by social distancing policies.

Gift Cards Are a Great Tool for Sales During Social Distancing

Gift cards remain popular during the various levels of lock-down, as states start opening up. Many “essential” brands are being asked to help donate gift cards for things like computers (for online learning), food delivery (to provide meals or incentives when everyone is forced to be home), or necessities like pet food. Retailers are benefiting if they offer programs that allow consumers to fund gift cards for nonprofit organizations for these kinds of essential items.

Gift Cards Are a Positive Company Tool in a Looming Recession

Promotional gift cards are a proven and repeatable method to increase sales during hard financial times. Gift cards are more likely to be used than coupons for discounts and reach a higher demographic (there is a certain number of people who do not like using coupons—gift cards can be used instead to increase participation in the promotion.)
We had over 200 restaurants offer gift card deals over the last holiday season and we expect even more this year.

Digital is King, and Mother’s Day is Still Important

We’ve seen massive flip-flopping of digital and physical cards in online orders. Retailers who are closed are seeing huge spikes in online gift card orders, particularly, in cards that are digitally delivered. Retailers who were used to seeing 20% digital gift card sales during Mother’s Day were seeing 90% digital gift cards chosen instead. This trend has been felt across all of the retailers we’ve talked to—very high digital sales and in most cases, in-store or in-restaurant sales have been very low (usually due to full or partial closures). While this makes sense contextually to the virus impact, there is speculation on whether or not the trend will continue after we open up completely.
Overall Mother’s Day volume was similar to a regular year, with some negative impact for retailers that are closed, but a positive impact for those that are open or able to redeem cards for product or pickup.

Restaurants and Retailers Are Opening Slowly

Most states are at the stage where retailers can open up, but all have PPE requirements for both staff and guests. Disposable masks are being given out at a large number of higher end retailers for customers, and hand sanitizer and distancing rules (stickers on floors, sneeze-guards around registers, and regular cleaning schedules) are becoming the regular. There is guidance for 25% to 50% occupancy for restaurants and the overall impact is that the extra time for restrictions to lift have given retailers more time to react to the requirements being given by the CDC and state regulators.

The Ways Consumers Use Gift Cards Fits Uncertain Times

Gift cards are a reliable way for companies to promote themselves, as they are still the most popular gifting product in the retail industry. Consumers get their inherent value and hold gift cards to a higher standard than promotional coupons and offers.

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As our society continues to react to these changing conditions, gift cards—as a gift, as a donation, as a way to connect with other people—have become even more popular. The benefit of not having to guess where people are and what they need at any given moment in this time of uncertainty is very important.

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