• Christmas

    The billion dollar reason you shouldn't buy gift cards for employees

    October 21, 2022
    5 min read

    Are gift cards for employees a bad choice? Compelling new research suggests you could be flushing money down the drain.

    Did you know that there’s more than $21 billion sitting on unused gift cards. It’s a staggering amount, isn’t it? We have to ask ourselves why, especially in a time of record inflation. Why are people failing to use the gift cards they’ve been given? And why are people’s attempts to show appreciation through giving gift cards missing the mark? 

    survey conducted by YouGov on behalf of CreditCards.com found nearly half (47%) of people in the US have one unused gift card. And here in the UK, around £300 million goes unspent each year, according to the UK Gift Card and Voucher Association. On average, a person has around £156 in unspent gift cards, vouchers and store credit. It’s a reasonable sum, and likely that at least some of it has come from employers. 

    Buying gift cards for employees is a popular choice. In fact, they’re one of the most prevalent award types, with UK companies spending more than £2.5bn annually on gift cards. But if this survey is anything to go by, giving staff gift cards might not actually be the smartest choice. 


    Just keep holding on‍

    The research delved into the reasons why people have so much cash languishing on gift cards, with the main cause being that they’ve simply decided to hold onto them (29%). In some cases, they’ve had the gift card for so long that it has expired or the business issuing the card has closed down.

    In fact, 71% of those with unused gift cards have had at least one longer than a year, and 23% have at least three gift cards that are more than a year old. There are several reasons why people might hold onto a gift card rather than go out and spend it:

    1. They don’t live near the business where the gift card can be redeemed

    2. They don’t like/have no requirement for the products or services offered by the business

    3. It’s inconvenient for them to use the gift card, for example, if they’ve received a gift card for a spa and they have to find a free day to go, arrange a babysitter etc

    In addition to these practical reasons, people might think about saving a gift card ‘for a rainy day’. Perhaps they can’t think of anything they want to buy and will therefore just keep it in their wallet until there’s something they particularly want. After all, the card was given as a gift so they don’t want to spend it on a mundane everyday item. 

    …And yet, by the time they do come around to spending it, it’s been so long, they’re unlikely to link the purchase to the gift giver!

    Easy to give, just as easy to lose

    Although most retailers offer digital gift cards, traditionally, they’re physical, which means gift cards given in real life are easy for the recipients to misplace. 

    According to the study, misplacement of gift cards happens with high regularity; 25% of people said they have cards but just don’t know where they are. What’s sad about this - aside from the fact they’ve missed out on their gift - is that it leaves the recipient feeling cross with themselves for losing it. 

    When you give employees a gift, the idea is to make them feel seen and appreciated. Whenever they think of that gift in the future, you want them to have a positive memory and associate it with your organisation. But if it’s a lost gift card they’re thinking of, unfortunately, all they are going to feel is recrimination and regret!

    The worst choice for young employees and high earners 

    Young employees are often among the lowest paid, so you might think they would especially appreciate a gift card from their employer. But the data suggests the opposite because Gen Z (aged 18-25) and Millennials (aged 26-41) are more likely than other demographics to let gift cards go unused. 

    More than half of Gen Z have at least one unused gift card around, with an average of $149 (£133) in credit. While 52% of Millennials also have forgotten gift cards, storing an even greater $226 (£201) in credit. 

    Meanwhile, a lesser 43% of Gen X (aged 42-57) and 42% of Boomers (aged 58-67) have an unused gift card. And these hold an average of $180 (£160) and $133 (£118) respectively. However, the survey also found that there is a correlation between how much money a person makes and how much they have in unspent gift cards. 

    That means that higher earners are more likely to not use a gift card given them by their employer. This is what the data looks like:

    Infographic showing how much money is left unspent on gift cards across a number of different income brackets

    These figures starkly highlight why it’s a bad idea to buy gift cards for employees in the higher income bracket - it’s simply an unfulfilling reward for individuals who already have enough disposable income to go out and spend a couple of hundred on themselves.  

    The bottom line: why gift cards for employees are not the best reward

    Buying gift cards for employees remains a nice gesture that anyone would be pleased to receive - there’s no argument about that. But… as an employer you want to get the most bang for your buck when rewarding staff, and this is where gift cards fall down. 

    This research shows that - for whatever reason - 47% of gift card owners eventually lose out on the gift money. Do you want to give a gift that won’t get used? No, of course not - that’s like throwing money down the drain! 

    The solution: fabulous alternatives to gift cards!

    Here at Huggg we offer the number one alternative to gift cards: our gifts with choice. Empower your people to choose their own gift from a selection of brands; ranging from a bottle of wine or spirits of the recipient’s choosing or a meal kit they can cook at home with their family, to customisable wellness packs. These are gifts that show you care and, crucially, give employees a choice in what they receive - something we think is really important (find out why).

    So next time you want to reward your staff, don’t get gift cards for employees, give them a Huggg instead. Take a look at our range.