Gift cards come in many varieties, providing convenience stores the flexibility to generate more sales.

By Jeffrey Steele, Contributing Editor

Technology is increasingly impacting the way convenience stores sell gift cards. As a result, c-store retailers are changing their marketing approach to meet this merchandising metamorphosis.

Specifically, the technology that’s spurring a new era within the category is the advent of the electronic gift card. Sometimes called e-gift cards, digital gift cards, mobile gift cards or virtual gift cards, they are actually gift codes communicated through mobile phone text messaging, email, mobile device apps and social media.

E-gift cards are making the whole concept of gift cards more attractive to consumers. That in turn is presenting convenience stores with the daunting task of remaining top of mind among consumers when it comes to this niche segment.

REMAINING RELEVANT
As electronic gift cards become more common, convenience stores should assess the best use of their limited floor and shelf spaces, said John Spicknall, director of package goods and services for Atlanta-based RaceTrac, a convenience chain of more than 700 locations throughout the Southeast.

“This can be done by regularly evaluating each area of the store to determine what is successful and what is falling flat with guests,” Spicknall said. “Are the extra facings of gum failing to generate a lift? If so, you may consider replacing that sales position with gift cards to better spotlight the offering and grow the segment. New trends and technologies like electronic gift cards are always emerging, but keeping a close eye on current sales as well as technology and other emerging trends can serve as inspiration as you shift in-store offerings.”

In exploring these emerging segments or new products and services, convenience store leaders should not be afraid to test new ideas on a small scale to determine what does or doesn’t work, Spicknall said.

“At RaceTrac, we champion our many small-scale experiments, whether they fail or succeed, as we can apply those learnings to achieve greater success moving forward,” Spicknall said.

For her part, Shelley Hunter, blogger and spokesperson for Pittsburgh-based GiftCards.com, predicts that despite the rising popularity of e-gift cards, the digital version will not replace the plastic version any time soon.

“When people are crunched for time and need a gift on the fly, many will turn to gift cards because you can purchase and deliver them in a matter of minutes,” Hunter said. “But some people still want a tangible product, something they can physically hand to the recipient. By keeping a wide selection of gift cards on the rack, convenience stores can be the destination people turn to” on those occasions.

BOOSTING CARD SALES
One of the best ways to increase gift card sales in today’s rapidly changing market is to treat them just like any other traditional consumer packaged goods item.

“Don’t be afraid to promote gift cards, especially during peak seasons,” Spicknall said. “Like many other products and services, the way a store merchandises a gift card can dramatically impact how much it sells. Be sure to keep in mind adjacencies, signage and location within the store.”

Tony Huppert, CEO of Team Oil Travel Center in Spring Valley, Wis., is of like mind.

“I say they should be out in front,” Huppert said. “Ours hang on the walls behind the cashiers. [Customers are] going to buy something on gift-giving occasions. Gift cards are the easiest way to go. Another thing I’ve found out is that many parents of college students like to give rechargeable gift cards so they’ll know how much their kids are spending. The c-store should have displays near checkout.”

Maintaining an accurate inventory of gift cards is key to ensuring a merchandising fixture is not full of holes. “It’s hard to sell what isn’t on the shelf,” he said.

C-stores should also use proprietary gift cards to spur sales, Spicknall said. These cards can be an effective branding tool and attractive offer in generating sales.

“C-stores should consider branded card artwork, which can elevate your c-store brand and even boost awareness of other in-store offerings to drive those sales,” Spicknall said.

Hunter reasons the optimal strategy to boost sales is to stock a wide selection of gift cards in varying denominations.

“Where possible, sell high-dollar, bank-issued gift cards such as Visa or MasterCard, plus popular department stores’ [cards] as well,” Hunter said.

According to the GiftCards.com blogger, providing more options to customers helps keep the niche category fresh.

“As people are also increasingly turning toward reloadable prepaid cards in lieu of bank accounts, you’ll want those cards handy as well,” Hunter said. “Gift cards that are category restricted—for example movie gift cards, dining gift cards—might be a good second choice for someone who intended to buy a gift card to a particular restaurant but can’t find it in your store.”

OTHER CONSIDERATIONS
There are several emerging trends likely to become more important in coming years.  Among them is the growth in use of reloadable cards, both open-loop and closed-loop, Hunter said.

“People are looking for ways to get rewarded for their loyalty,” she said. “Reloadable prepaid cards—though not gift cards—that offer cash-back rewards will be enticing. Closed-loop gift cards that come with free packaging or are on sale are also of interest to consumers because they can get a little extra for their dollars.”

Gift cards can also be used by convenience stores to boost good will in their market areas, as Huppert has discovered.

“All the revenue from our RV park is donated to the Spring Valley Cancer Fund,” said Huppert, who noted that gift cards ease some of the expenses less well-off cancer patients would have to fund out of pocket. “My daughter-in-law’s mother had cancer, and got an envelope in the mail and it had several gas gift cards,” Huppert continued. “It shows someone cares. They send it out anonymously to cancer patients in our area.”

The advent of electronic gift cards is just one more element in the increasing digitization of the convenience store—a trend reflected in initiatives like that of Dallas-based Koupon Media. The company provides a mobile technology platform to 28,000 c-stores and dollar stores nationwide that enables retailers to deliver personalized offers based on geolocation and consumer preferences.

Whether it’s electronic gift cards or other digitized platforms, look for on-the-go consumers to continue to demand more and more offers delivered through mobile phones.

Doing that right could be a real drawing card for savvier c-stores.