IE 11 is not supported. For an optimal experience visit our site on another browser.

Gift Cards Are an Untapped Opportunity for Local Businesses

The huge majority of retailers own just one store but consumers have few options for local gift cards. There is a big unmet demand.
/ Source:

Have you ever seen one of those gift card displays in your local chain drugstore or grocery? Notice who they’re for? Other national brands!

It’s one of many examples that show how the “cards” have been stacked, both online and offline, against true local merchants in favor of national retailers.

Local businesses have spent years trying to even the odds through various digital promotions like Groupon and LivingSocial. But those services over-extended themselves, forcing cutbacks on their local outreach efforts. Consumers, meanwhile, grew wary of being forced to make purchasing decisions over short time periods.

Related: How to Compete with the Big Chains? Think Locally

One thing we do know is that gift cards, unlike such businesses as daily deal sites, are a growing business. They accounted for $118 billion in sales in 2013 and are projected to reach $138 billion by 2015, according to research by CEB TowerGroup.

Take a look any day at StreetFight, the news bible of the hyper local industry, and you’ll see that everyone from Google to Bing to Yahoo to Amazon, and a host of others, is struggling to help local retailers, and to help themselves in the process.

Why? According to the   National Retail Federation : “When you factor in that 95 percent of all retail companies operate just one location, ‘small’ businesses are unquestionably a big force in the American economy.”

We have thousands and thousands of  “Main Street” retailers across the country while the mobile revolution keeps promising GPS and geo-marketing will connect every consumer with nearby offline products and services at the touch of a screen. But that magic connection has yet to materialize. Everyone’s still waiting for a monetization miracle.

Related: New Study Shows What Makes Shoppers Buy Local

Perhaps gift cards are an answer. Sure, I run an online gift card company but we don’t have any magic formula when it comes to mobile or local merchants. Like the gift card trees in your chain pharmacy, most of our business comes from national brands. If Joe in New York wants to buy Aunt Martha in Dayton a gift card for a local clothing store based on her zip code, he is out-of-luck. Indeed, if he wants to choose from a wide selection of local gift cards for the new high school graduate next door, he is also be out of luck.

For local retailers who are looking to offer store-branded gift cards, here are some things to be mindful of.

Costs. Contrary to popular belief, implementing a gift card program does not have to be expensive. Look for a program that offers minimal upfront setup costs, ease of use with major credit cards like Visa, Mastercard, Discover, etc.

Design. Look to a service that offers flexibility in customizing gift card designs and will allow for placement of a store-branded logo.

Marketing. Look for a service that will not only promote your local gift cards through a national network and be able to distribute it to millions of online consumers, but also offer a dedicated URL for the gift card.

Local retailers who want to grab their fair share of this expanding pie versus the big guys will need to tackle such important issues as personalization and presentation. But first, a variety of stakeholders, ranging from app developers, database companies, etc., will need to work together to build a national network of merchants who refuse to look a gift horse in the mouth.

Related: Five Low-Cost Local Marketing Ideas