First Data Prepaid Services' Survey Profiles Canadian Gift Card Market

Just like their neighbors to the south, Canadian consumers have opened their eyes and their wallets to electronic gift cards, according to a survey commissioned by First Data Prepaid Services’ ValueLink unit. It is ValueLink’s first gift card study to focus exclusively on the Canadian consumer and their awareness, purchase and use of gift cards.

The survey of 1,015 Canadian adults aged 18 or older revealed nearly universal awareness of gift cards (91%) with well over half, 55 percent, of adult Canadian consumers indicating they had purchased and/or received a gift card in the previous 12 months.

Citing flexibility, convenience and value in giving and receiving gift cards, the study mirrors First Data Prepaid Services’ five-year tracking of the U.S. consumer market in several measurable categories.

Highly satisfied with gift cards, ranking them 9.1 on a 10-point scale, Canadian consumers purchased an average of 4.8 cards in the previous year. While the average dollar value was $67 per card, the most common dollar value loaded onto gift cards was $50, with one-third (33%) of purchasers stating that as their typical amount. Just over one quarter (27%) of those who purchased gift cards in the previous 12 months did so in the $20-$25 range. Purchasers spent an average of $205 on gift cards for the year.

Traditional retail stores accounted for approximately three quarters (77%) of all gift cards that were purchased. However, restaurants and entertainment-based business accounted for another 16 percent with a split of 8 percent each. Nearly nine in 10 gift card purchasers (87%) buy their gift cards in person at a retail or restaurant location while 13 percent of purchasers tend to visit a retailer’s Web site, purchase by phone or via a company catalog or make a purchase in some other manner.

Holiday Season a Key Occasion for Gift Cards
When asked about the different opportunities for giving a gift card, Canadian consumers who have purchased a gift card cite birthdays as the number one occasion (71%). And, like their counterparts in the U.S., Canadians should be busy in the coming weeks as the Christmas holiday season is recognized as the number two gift card giving occasion by 51 percent of gift card purchasers. Anniversaries came in a distant third with 19 percent and the numbers slip into the single digits for weddings, 8 percent, thank you gift, 5 percent, baby shower, 4 percent, and graduation, 3 percent.

Asked about preferences for giving and receiving gift cards, cash or paper gift certificates, purchasers preferred plastic gift cards (47%) over cash (31%) and paper certificates (22%).

“It is very exciting to see such strong acceptance and use of gift cards in Canada so quickly after the product was introduced to the mainstream retail market just under a decade ago,” said Ed Labry, president of First Data Prepaid Services. “This research helps us better understand the progressive nature of the Canadian retail and restaurant industries as well as the sophistication of the Canadian consumer.”

Additional Findings

• Of the 44 percent who received a gift card in the previous year, more than half, 53 percent, spent more than the initial value of their gift card;
• Nearly half (46%) of those who received a gift card spent the entire value or more within one trip to the store;
• Nearly all purchasers, 93 percent, intend to buy a gift card in the next 12 months;
• Eight in 10 receivers (79%) intend to buy a gift card in the next 12 months; and
• Respondents who plan to purchase gift cards in the coming year intend to buy approximately five cards (4.9).

“Similar to what we’ve seen in the United States and some of the other 22 countries where we are currently doing gift card business, it is strong awareness and acceptance of gift cards by the Canadian consumer that will help drive opportunities for new and creative uses of prepaid products for retailers, restaurants, entertainment-based companies and so many others in the months and years ahead,” said First Data Prepaid Services’ Vice President of Marketing, Karen Larsen. “We are seeing a consumer-driven transformation in the prepaid industry and it is quickly extending beyond geographic borders.”

Data for ValueLink’s Canadian Consumer Insights Survey was collected Aug. 8-11, 2005, by TNS’s Canadian Facts Omnibus. TNS is the second largest market information company in the world.