Exploring business opportunities in the gifting sector
Mark Lumsdon-Taylor · December 21st 2023 · read
In the dynamic landscape of retail, understanding market trends and challenges is pivotal, especially when navigating the financial intricacies of the industry. In this article, we delve into the gifting market, shedding light on its present status and future prospects. As accountants, we recognise the unique challenges within the retail marketplace and aim to provide insights that resonate with those operating in the sector.
Unveiling the gifting market landscape
Although subject to fluctuations, the UK, the Netherlands and Ireland all-year gifting market boasts an estimated value of around £60 billion.
Despite grappling with persistent inflation, the aftermath of COVID-19 and world-regional conflicts, the market witnessed a significant increase in 2023. An impressive 94% of consumers confirmed their participation in the gifting experience during the year, highlighting the enduring importance of gift-giving even in challenging times.
Key segments and emerging trends
The gifting market encompasses diverse segments, including birthdays, Christmas/seasonal occasions, spontaneous gifting, weddings/engagements, pregnancy/new baby, religious, life achievements, retirement and expressions of gratitude. Notably, shopping for wedding gifts and souvenirs experienced a surge in 2023 as people capitalised on the opportunity to travel and celebrate post-pandemic.
Personalisation and brand association
Looking ahead, two prominent trends are poised to shape the gifting landscape in the near to medium term: personalisation and brand-association.
Personalisation, driven by technology, is gaining traction, according to findings from Roland DG and Censuswide, shoppers are willing to increase their spend by circa 7% when buying gifts involving an element of personalisation.
Brands such as Etsy, Moonpig.com and Notonthehighstreet have been instrumental in driving this forward – enabling cost efficient and cost-effective personalisation for single-piece gifting. Moonpig claim that the personalised gift experience segment is growing at a faster rate than total gifting.
The segment is estimated to be valued at circa £1bn, with younger shoppers leading the charge, spending around £30 more per gift than their older counterparts which is most interesting from a future growth perspective
Brand-association on the other hand, is a trend with a dual presence both online and offline. Major retailers offer brand-associated gift ranges incorporating cosmetics, alcoholic beverages, personal clothing and various other branded products. This trend gains significance as consumers, facing financial constraints, seek solace in ‘trusted brands’ signalling growth in brand driven gifting collaborations, particularly targeting younger demographics.
This migration to ‘trusted brands’ sends a positive signal to businesses operating in this space. We predict an increasing proliferation of brand-driven gifting both online and off-line.
Financial considerations and the future outlook
However, amidst the positive trends, concerns arise from data indicating an increasing reliance on finance options, including credit cards and buy-now-pay-later financing, to sustain spending on cards and gifts.
Navigating future opportunities for your business
To conclude, as we navigate the intricate landscape of the gifting market, it’s evident that personalisation and brand-association are key drivers for growth. For CFOs in the retail sector, understanding these trends is crucial for strategic financial planning. The migration to trusted brands signals opportunities for lower cost collaborations and a proliferation of brand driven gifting both offline and online. If you’re keen on exploring forward-thinking strategies in this space or optimising existing opportunities, please get in touch with us at MHA.
In times when good news is a rarity, gifting stands as a genuine source of joy and connection.