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Shelley Hunter

Everything You Need to Know about Kids and Gift Cards

Survey results show best gift cards for kids (and teens!), plus reveal opportunities to make the gifting experience better.

shelley presenting at Gift Card Network Summit

Why Kids and Gift Cards?

Earlier this year, I had the opportunity to speak with Martha Weaver, Director of The Gift Card Network (GCN), about two of my favorite subjects–kids and gift cards. During our chat, I explained that kids between the ages of 8 and 15 are a unique but ignored group of gift card shoppers. I theorized that these kids receive and redeem a great deal of gift cards every year, maybe even more than any other age group except perhaps the older teens–kids ages 16 years old and up. The difference between the older teens and the group I mentioned, however, is that the younger set is not old enough to drive and they often need parental assistance (beyond just driving) in order to redeem their gift cards.

Having seen the joys (and the occasional sorrows) that come with helping kids redeem gift cards, I wanted to find it out if my experiences are reflective of a larger group of people. If so, Martha wanted to learn more about kids and gift cards in order to help merchants cater to their needs and/or create a more positive experience for both the kids and the adults involved in the gifting process. So we created a survey.

In this first ever “Kids and Gift Cards” survey, we uncover gifting frequency, most popular gift cards, reasons for giving gift cards to children and how parents feel about helping their kids redeem those gift cards. The questionnaire, completed by just over 300 consumers in June and July of 2015, showed that adults like giving gift cards to kids, kids like to receive gift cards and the redemption process mostly works. There are, however, opportunities for improvement.

2015 “Kids and Gift Cards” Survey Results

On September 24, 2015, I presented the results of the 2015 “Kids and Gift Cards” Survey at The GCN regional summit in Orlando, Florida. The most significant revelation of the survey is what we read between the lines–that merchants and gift card vendors focus heavily on gift card sales, but do little to bring unspent or outstanding gift cards back into their stores. While that issue exists for gift card spenders of all ages, it particularly affects kids who may not be able to get to the stores themselves.

Merchants would do well to focus on both sides of the gift card equation, making the redemption process as easy and as accessible as possible. While stores might not get the lift typically associated with gift card spending (kids are less likely to overspend the value of their gift cards), they do get two potential shoppers through their doors or landing on their websites. This creates an opportunity to convert both into buying customers. And since these kids will be adults soon enough, a positive experience now could turn into a lifetime of loyalty.

Download a .pdf version of the complete 2015 “Kids and Gift Cards” Infographic here.

Gift Card Spending is On the Rise

how many gift cards will you buy for kids

Over half of the people who responded to this survey intend to give the same number of gift cards to kids this year as they did last year. More than a third intends to buy more gift cards. In looking at gifts as a whole (not just gift cards), 95% of the people who responded will purchase presents of some sort for kids this year. The highest ranking group will purchase 5 to 10 gifts, and notably almost 20% of respondents will purchase more than 20 gifts for kids who are less than 16 years old. 80% will specifically buy gift cards. The highest ranking group will buy 1 to 4 gift cards, and nearly 30% will purchase up to 10 gift cards for kids this year. According to the National Retail Federation’s 2014 Gift Card Spending Survey, people will buy an average of four gift cards per year. Is it possible the majority of those cards are being purchased for kids?

One thing we wondered is whether people buy gift cards for their own kids or if the majority of their gift card spending is for other children (e.g. birthday present for a classmate’s party). We found a little of both. Where 80% of respondents are planning to buy at least one gift card for kids, just over 54% will buy at least one gift card for their own kids.

Birthdays Rock and Target Gift Cards Rule

most popular gift cards to get kids

Not surprisingly, a birthday is the number one reason to give a gift card to a child and religious holidays in December are the second most popular gift card-giving occasions for kids. These results match up with various statistics on gift card buying patterns overall.

However, we were surprised to find that nearly 25% of consumers also give gift cards for school-related accomplishments. Since these kids are less than 16 years old, we’re not talking about high school graduation which is a popular reason to give gift cards to teens. Instead, this category refers to elementary school promotions, middle school graduation, getting good grades, doing well on a test and so forth. More than 16% also give children gift cards for non-school related accomplishments such as making a sports team, advancing in scouts or performing in the arts. Some parents also give gift cards to their own children in lieu of cash (e.g. convert chore money to gift cards, send child to camp with a gift card instead of currency).

What’s the “go to” gift card for kids? Exactly half of the people who responded said they buy mass merchant gift cards for kids. Within that category, 35% selected Target gift cards which is more than double the next closest competitor of Walmart at 16%. Toy or game store gift cards are the next most popular (41%), then entertainment gift cards (32 %), followed closely by online retailers (29%) such as Amazon.com, Google Play and so forth. Specialty apparel store gift cards (24 %) are the next most popular. Though flexibility appears to be a key factor in selecting a gift card for kids, bank-issued gift cards (such as Visa®) that can be used almost anywhere, are given less than 20 % of the time. Bookstore gift cards (14%) and restaurant gift cards (10%) which are some of the most popular gift cards for adults, are at the bottom of the list for kids.

Fifty is the Limit

how parents feel about kids getting gift cards

When it comes to kids, gift card spending tops out at $50. Nearly 60% of respondents to the survey said they would spend between $25 and $50 dollars on a gift card for kids and just under 25% said they would spend less than 25 dollars. This dollar value matches various statistics that say the average gift card dollar amount in general is $50. I guess kids are no exception.

In addition to the gift card itself, consumers are willing to spend up to five dollars more for gift card packaging such as greeting cards, small items to bundle with the gift card or a gift box or tin. Many are satisfied with a free store-issued gift card envelope.

Why Buy Gift Cards for Kids?

what's the shopping experience like

In the true spirit of giving, almost half (49%) of the people who buy gift cards for kids do so because they want the children to be able to pick out their own presents. Beyond convenience for themselves (13%) or for the parents (6%), the primary motivation is simply flexibility. 16 % buy gift cards because they don’t know the preferences (including style, size or interests) of each child. A few contributors also remarked that they buy gift cards because that’s what the kids asked for or because gift cards are cheaper and easier to mail than traditional presents.

Why not buy a gift card for a kid? Well, the largest response (29%) to this question said it does not apply—in other words—there is no reason not to buy a gift card for a kid or they weren’t planning to buy gift cards anyway. 26% said they prefer to pick out a gift and deliver it themselves because doing so is more personal. And 23% of people who answered the survey said they want kids to have something to open immediately rather than wait to redeem a gift card. Nine % said they would just rather give cash.

Despite the increasing trend towards digital gift cards, the respondents to our survey primarily intend to buy plastic gift cards for kids. I believe the nod towards the physical cards is mostly because people want to bring a physical gift to a birthday party or celebration. Some participants also said they weren’t sure if kids would check (or even have) email accounts in order to receive digital gift cards.

What Do Parents Really Think?

what will you spend on gift cards for kids

Our last questions referred to helping kids ages 8 to 15 years old redeem their gift cards. We were pleased to learn through the survey that most parents like it or love it when their children receive gift cards. They appreciate that their kids get to pick out their own presents and the redemption process is typically a good experience. Over 38% said gift cards enable kids to learn how to make good purchasing decisions and 24 % said they enjoy the outing as a whole. Less than 8% had a negative experience.

When probed further for redemption issues, 15% of the respondents said that sometimes the kids can’t find merchandise within the gift card limit and another 15% said the kids either lose the card or forget to redeem it. A few parents remarked that they don’t like when their kids get a gift card they can’t use because the parent either gets stuck with the card or has to drive an inconvenient distance in order to use it.

Merchant Opportunities

The “2015 Kids and Gift Cards Survey” revealed a number of opportunities that merchants could explore to create an enhanced gifting experience for this young generation of gift card holders. From considering the number of birthday parties kids go to each year to looking at how kids might use eGift cards for more than special occasions, below is a list of opportunities for merchants to consider:

Birthday Parties

Elementary school-age kids are often invited to a number of birthday parties requiring parents to purchase an equivalent number of gifts for kids they may not know all that well. Busy parents may struggle to meet the demands of the birthday-driven social calendar and may overspend on gifts when rushing to buy them in a hurry. Savvy parents often stock up on sale-priced gifts such as books, toys and other activities so they can “shop the closet” for presents when the invitations start to arrive. Merchants have an opportunity to help busy parents purchase gift cards in advance rather than bulky merchandise that has to be stored and may not ultimately be suitable for the birthday boy or girl. Some suggestions include the following:

  • Designs. Offer multi-pack gift cards in kid-friendly dollar amounts ($25 to $50) and kid-friendly designs.
  • Promotions. Consider promotions such as “Buy three $25 gift cards and get a $5 discount,” “Free birthday balloon with each gift card purchased,” or “Matching greeting card 50% off when purchased with a gift card.”
  • Train. Train cashiers to ask shoppers if they have birthday parties or other celebrations coming up? Offer gift cards as a solution.
  • Incentives. On the redemption side, make birthdays more exciting with offers such as, “Redeem gift card (store or bank-issued) on your birthday to save 10% off on your purchase” or “Redeem a gift card during your birthday month for a $5 savings.” (Note that I’m not limiting the offer to closed-loop gift cards. Merchants should be welcoming and luring bank-issued gift card spenders into their locations as well.)

Packaging

With people being willing to spend up to five dollars on gift card packaging and others objecting to gift cards on the basis that they’d rather buy something more personal, merchants should understand that consumers don’t come into their stores to buy gift cards–they come in to buy gifts. Gift cards are one way to meet their needs. Offering packaging that turns a card into a gift-ready product may satisfy more consumers and could provide additional sales to the store. Below are some kid-friendly packaging suggestions:

  • Mail-ready. People who responded to the survey said one reason they buy gift cards for kids is that it’s cheaper and easier to mail a card than a physical product. Stores could offer mail-ready packaging both in stores and online. Providing mail-ready packaging may be as simple as placing greeting cards near the gift cards or making sure gift cards ordered online are delivered in a nice envelope with a custom message.
  • Gift-ready. When you buy a gift card at Sephora, you get a mirror compact to hold the gift card, a designer handle bag and accordion-folded tissue paper. Though you may only have purchased a gift card, you walk out of the store with a wrapped present that can be taken straight to the party. Other merchants should take note and create a similar process.
  • Instant Gratification. When asked why people wouldn’t buy a gift card for a kid, 23% said they wanted kids to have something to open and play with immediately. Merchants could put small games or toys near the gift card display or show gift card combinations bundled up as a complete gift so the child receives a gift card to be redeemed later as well as a small gift to play with now. Promoting gift cards that can be redeemed digitally (e.g. download a new game from XBox, get music from iTunes) also allow the recipient to use the card quickly.

Year-Round Activities

Though merchants often focus gift card advertisements and incentives around major holidays, birthdays (and birthday parties for kids) are year-round events, and kid-related accomplishments equate to more than just graduation. Effort could be made throughout the year to capture gift card spending on kids and to help kids redeem their gift cards once they are received. Some suggestions include the following:

  • Everyday Designs. Consider creating kid-related gift card designs that reflect year-round activities such as “A+ Student!,” “You Did it!” and “Birthday Boy.” If space in stores is limited, make sure designs are available online. Digital gift cards make it even easier to get kid-specific. You might not print a plastic card that says “Break a leg!,” but you can certainly make an eGift card that can be sent to the little actress just before showtime.
  • Promotions. Krispy Kreme gives kids a free donut for every A on a report card. What does your store offer kids? Perhaps you could give kids their “GPA off” (e.g. 3.8%) if they bring in a report card when shopping with a gift card. Or you allow them to overspend the gift card by one dollar for every A.
  • Socialites. Create promotions that kids on phones are prone to see such as “Tweet what you’re going to buy with your GameStop gift card, then come into the store for a 5% discount when you use the card.”

Gift Card Reminders

I’ve noticed that merchants work hard to get gift cards into consumer hands, but seem to drop out of the relationship entirely once the purchase has been made. There’s no reminder service, no incentive to use the cards, no VIP offers for gift card users, no nothing. While gift card laws used to promote this type of behavior (stores historically could make more money on breakage than on gift card redemption), that is no longer the case. In fact, statistics prove that people shopping with gift cards will overspend the value of their cards. Merchants should be courting gift card holders instead of ignoring them.

  • In Stores. Train cashiers and store personnel to ask if a customer is shopping with a gift card. If so, offer product suggestions within dollar value.
  • Online. Website batters, customer emails and other advertisements should remind customers to use their gift cards. Promotions might include product suggestions within typical gift card ranges or incentives for redeeming a gift card on a particular day, for a range of products or for a discount.
  • Balance Check. Got a check balance page on your website? When a customer enters a gift card number, return the gift card balance along with product suggestions.
  • Permission to Remind. When a customer registers a gift card or activates an eGift card on your website, include a check box asking permission to send reminders if the gift card has a remaining balance after a few weeks, months or more. The reminder service could also include product suggestions.

Incentives to Shop

Merchants should incorporate kid-friendly redemption offers into their overall gift card strategy. This unique set of gift card recipients is likely to get multiple gift cards throughout the year, but need parental help in returning to the store to redeem the gift card. Incentives to buy might reward the giver (e.g. buy 5 gift cards and receive a $10 cash back coupon), but incentives to redeem should be age-appropriate for the child and convenient for the parent. Some examples include the following:

  • Free Shipping. My kids love Amazon.com, but until Grandma signed up for Amazon Prime, their gift card experiences suffered. After scouring the site for a present that fit the gift card amount, they’d freqently discover they didn’t have enough money to cover the cost of the product plus shipping. Then I, as the parent, had to decide if I would cover the cost myself or force the disappointing child to lower his price threshold to find something that could be purchased and shipped for less money. Frustrating for everybody. Merchants might consider offering free shipping to customers paying with gift cards so recipients don’t have to pay for their presents to be delivered.
  • Off-Season Promotions. Still have a gift card from the holidays? Redeem it in August for 20% off on back-to-school items. Wrapped up in March Madness? Redeem your Sports Authority gift card during the tournament and get $10 off on basketball gear. You get the picture. Merchants could use off-season promotions to bring holiday gift cards back into their stores.
  • Parental Rewards. While redeeming gift cards with kids can be a wonderful experience, it can also be a lengthy one that requires patience. Merchants should consider ways to make the experience more pleasant for parents such as offering a free beverage to dad when he brings his son into Barnes & Noble to redeem a gift card. Employees could help with the product selection process helping kids know what the best buys are for the dollar amount available.
  • Kid Discount. If I have a gift card for $50 and my total bill comes to $55, I happily reach into my wallet and use cash or a debit card to pay the difference. But when my kids overspend the value of their gift cards, the decision to use their own money to cover the difference is more difficult. They have a hard time parting with money earned through chores or babysitting. Merchants might win over youngsters by offering discounts to kids who are shopping with gift cards or forgiving the overage if it’s less than a couple of dollars.
  • Cash Out Policy. Just like parting with two dollars is difficult, getting cash back is a treat. In California, consumers can cash out a gift card that has a remaining balance less than $10. Merchants could create a store policy to offer similar cash outs to kids who are shopping with gift cards.

Digital Gifting

Although digital gift cards are reported to be the fastest growing segment of the gift card industry, most of our survey participants are planning to buy plastic gift cards. While I wouldn’t expect a kid to show up at a birthday party without a physical gift, eGift cards are terrific for sending gifts out of town and for sending impromptu presents such as an eGift card to Jiffy Lube with a note that reads “good luck on your driving test tomorrow!” Merchants that recognize and promote this type of eGifting can get ahead of other retailers. Here are some ways to make eGifting kid-friendly:

  • Right Technology. Most eGift cards are deliverable via email but kids are more likely to be checking text messages, Twitter feeds, Instagram and Snapchat than anything else. Make sure your eGift card can be delivered via kid-friendly technology.
  • Designs. As already mentioned above, digital gift cards create a wonderful opportunity to get very specific with gift card designs and messages. When I reviewed and ranked the top store eGift cards, I found several eGift cards in foreign languages and less generic messaging than is typically found in stores. Merchants can use eGift cards to hit a wider range of celebratory emotions or they can test out card designs to see which ones are worth converting to plastic.
  • Can I get a CC? I wonder if merchants would explore adding an optional carbon copy message to eGift cards as a back up method of communication. The second notice wouldn’t have the card information on it, but would say something like “Junior just received an eGift card to his email address: jsmith@yourmail.com.” Having this option would allow someone to send an eGift card to a kid and a notice to the kid’s parent. This function could even be used to send an eGift card to someone who has multiple addresses. Not sure which email address your brother checks most often? Send it to both.
  • Mobile Wallet Before my daughter and I started to share a mobile wallet, I sent eGift cards to help her pay for purchases when she was out with her friends. I sent her an eGift card to Starbucks and an eGift card to the movies. In both cases, I sent it from home and she received it in time to pay for her activities. Merchants might consider other ways to help parents and kids connect financially.

Finally, we asked parents if there is anything else they’d like to share about their experiences with kids and gift cards. In this open-ended section of the survey, several people pointed out that they use gift cards for more than just gifting. Gift cards, they said, can be used to teach responsible shopping, how to budget and can help kids feel more independent and mature. Some parents also admitted to setting up “gift card swaps” with their kids, allowing them to trade certain cards for cash. I actually do the same. My kids know I’ll trade cash for a Target gift card because that’s a store I shop regularly, but I won’t trade cash for a toy store or game store gift card. Though swapping doesn’t happen often, there are times when my kids are saving for something in particular and they just want to have cash. I’m willing to help as long as I don’t get stuck with a card I can’t use.

Do you have any other questions regarding gift cards and kids? I plan to repeat this survey again next year and I’m thinking about ways to talk to the kids themselves. But you don’t have to wait until next year if you have questions. Use the comment section below or reach out to me on Twitter (@GCGirlfriend) and tell me what’s on your mind.

Happy Gift Carding!

~Shelley Hunter, Gift Card Girlfriend

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