Cost of Living 2023 Update: Consumers Turn to Gift Cards Amidst Budget Cuts

The Gift Card and Voucher Association (GCVA) has released new research highlighting the growing impact of the cost of living crisis on gifting habits.

In a bid to navigate the ongoing financial strain, nearly 44% of UK adults are tightening their gift-buying budgets, with just under half of households feeling the pinch compared to last year. With the rising costs of food, energy, and mortgages, a nationally representative survey of over 1,000 UK adults has unveiled a significant shift in spending patterns, affecting everything from presents to daily essentials.

The GCVA's research paints a clear picture of how the cost of living crisis is affecting consumers. A staggering 69% of households have adjusted their spending habits. Alongside reducing expenditure on gifts, 57% of respondents have implemented stricter budgets, while 53% have cut back on luxury items, and 46% have trimmed their allowance for essentials.

In response to these financial challenges, some consumers are turning to gift cards as a practical solution. Approximately 14% of adults plan to increase their spending on gift cards to better manage their gift budgets and avoid wasting money on unwanted presents. Additionally, 17% are ramping up their purchase of gift cards for personal use, allowing them to access exclusive discounts or maintain control over spending on significant purchases or indulgent treats, such as online streaming or gaming services.

The shift towards gift cards is especially pronounced among Gen Z and Millennial consumers, with 28% of those aged 16-34 expressing a stronger inclination towards giving gift cards due to the cost of living crisis.

Gail Cohen, the director general of the GCVA, commented on these findings, saying, "Our 'One Year On' report underscores the lasting impact of the cost of living crisis on people's finances, prompting them to reassess and adapt their spending habits.

"Gifting is an area where consumers are scaling back their expenditure while altering the way they give. Concerns about wasting money on potentially unused gifts are on the rise, leading more individuals to opt for gift cards, which provide recipients with the freedom to choose. With38% of respondents planning to reduce fuel costs by making fewer journeys, the emphasis has shifted away from physical gifts towards digital or easily deliverable presents."

The changes in spending behaviour may persist even as financial pressures ease. A notable 41% of respondents intend to maintain a stricter budget, and more than half of those currently reducing gift expenses plan to make this adjustment a permanent fixture in their lives.

Gail Cohen further remarked, "It's evident that there'sbeen a significant shift in consumer behaviour, and the gifting sector is notimmune to its effects. Nevertheless, gift cards are uniquely positioned toassist individuals in adapting their spending habits, offering a convenientsolution to reduce waste, access discounts, and adhere to budgets."