No time like the present
Over the next month, the Pragmatist will explore an area that cuts across several retail sectors: the gift market.
The act of giving gifts is engrained into human DNA; it is used to show affection, appreciation and the reciprocity in the gifting process builds a shared emotional connection. Furthermore, gifting is a unique marketing opportunity to touch two target consumers at once in the buyer and recipient. Entrenched in human nature and a powerful marketing tool, gifting will remain an opportunity as a growing part of the retail landscape.
Gift specialist retailers include Oliver Bonas, Not On The High Street and new UK entrant Neon Sheep (seen above) recently launched by outdoor retailer, Mountain Warehouse. There are also several gift shop formats in travel locations and leisure attractions, but much of the gifting market is transacted through general retailers so the trends and dynamics in gifting is important across the whole retail sector.
Types of gift
The rise of Marie Kondo minimalism, increasing environmental awareness and a desire to create memories, is moving consumers away from material objects to experiences. This is key for the gift market as consumers are increasingly looking for evermore creative ways to gift.
As well as a shift to experience gifts, sustainability in gifting is a key trend. This is manifesting in new gifting product ranges e.g. reusable coffee cups and innovative companies such as Growing Greeting, who produce cards that come with a package of seeds and a hemp mat, allowing the receiver to plant, grow and eat their own micro greens.
Consumers continue to demand product personalisation and customisation driven by a desire for originality and in gifting, proof of a deeper thought process; Coca Cola, Nutella, Marmite and Heinz have all driven sales with customised product options with price premium benefits for retailers.
While Christmas is a highlight of the retail calendar in many economies (Deloitte found that UK consumers planned to spend an average of £299 on gifts last Christmas) other holidays and celebrations are becoming more prominent.
The Ramadan economy in the UK is worth at least £200m annually, much of which is comprised of gifting and retailers such as The Body Shop, with its Ramadan Calendar, have launched ranges to tap into this. Self-gifting also presents opportunity for retailers; according to research from streaming player Roku in 2018, almost half of Brits will self-gift.
Like retail more generally, gifts are multichannel. In 2017, 83% of consumers purchased Christmas gifts in-store while 81% bought them online with growth in the proportion buying through both channels from the previous year.
Another specificity of the gift market that operators, landlords and retailers must heed and react to is gift cards. These have increased by 11% year on year despite some uncertainties around validity in cases of liquidation.