Finding the right gift is just as much of a challenge for the business owner as it is for the shopper. Offering the latest toys, gadgets and appliances isn't the only way to generate revenue during the holiday. A recent NPS study suggests that business owners can increase their product offerings without increasing overhead by buying new stock. According to the NPD report, nearly 40 percent of gifts are for services, rather than physical goods.
According to NPD's 2017 Holiday Purchase Intentions Survey, purchase intent is down across many general merchandise categories. In contrast there is a growing preference among consumers for gifts that provide a pleasant experience or service. NPD reports that 39 percent of U.S. consumers plan to purchase experiential gifts this holiday season, like wine tastings, concert tickets, and spa treatments.
"When store displays show off the same old sweaters, or the hot kitchen appliance is sold out in stores, consumers are faced with a gifting dilemma," said Marshal Cohen, chief industry analyst, The NPD Group. "Giving an intangible gift, an experience, can be more personal and more memorable for the gift-recipient, and in many ways easier for the gift-giver, making them an ideal holiday gift solution for many consumers."
The most common way to offer these sort of experiential gifts is to offer a gift card. Gift cards are easy for shoppers, who doesn't so much have to buy a gift as they have to decide how much they want to spend. They're also better for business owners, since gift card recipients usually spend more than the value of the card, and the value of the gift card is guaranteed sales for the retailer.
Though small, gift card purchases for holiday are increasing every year. According to NPD, nearly half (45 percent) of consumers anticipate buying a gift card this holiday season Only 25 percent of the consumers in the study told NPD that they did not plan on purchasing gift cards this holiday season, while the rest were unsure at the time of the survey.
The report also highlighted the demographics that were most likely to give experiential gifts. The NPD report revealed that "the purchase intent for experiential gifts and subscription services this holiday season is strongest among Gen Z and Millennial holiday shoppers, as well as households with children, and annual incomes over $75,000". Interestingly, though they are most likely to receive non-tangible goods as gifts, the members of Gen Z are the least likely to purchase experiential gifts for others. Though this has more to do with the limited finances of young adults more than a desire to not buy gift cards.
"Gen Z and Millennials think to give experiential gifts because that is what they seek - people like to give what they want themselves," added Cohen. "Whether shoppers are looking for more unique gifts in general, or reacting to current retail offerings, the popularity of intangible gifts poses a very real threat to traditional retail."
The newest trend in non-tangible gifts has come in the form of subscription services. The NPD survey found that 7 percent of shoppers plan to purchase a subscription box or service as a gift this holiday season. The researchers also found that food subscriptions top the list among consumers with an eye on these types of gifts, followed by beverages, electronics, health/fitness, fashion, and beauty/grooming subscriptions.
Giving customers the ability to decide for themselves what they want for a gift is a great way to boost sales during the holidays by keeping everyone happy. And with non-tangible gift being easy to set up and sell, business owners can still set up a means to sell service subscriptions and gift cards between now and Christmas.
For more recent research about the 2017 holiday season, read this article on the data from Black Friday and Cyber Monday.