How To Compete With Big Box Stores Without Discounting (YES… YOU CAN!)

Written by Lauren Chatman for Retail Minded.

You know those people that start their holiday shopping before there are even any leaves on the ground? They’re the ones who start putting up decorations while still wearing shorts and a tank top and have all of their shopping done by Halloween.

Big box stores are starting their holiday advertising earlier and earlier every year, and soon enough, customers looking for a holiday sale are going to have to start shopping on July 5th. They start with sales, then slash the sale price in half, and by the time Black Friday comes around, the prices at big box stores are unbeatably low and small retailers simply can’t keep up.

But what local retailers aren’t considering is the digital space. Online gift card sales are growing by 29% each year, allowing small retailers to compete with the big guys on a serious level. The problem? While 97% of the top big box stores and restaurants are selling their gift cards online, less than 3% — no, you don’t need to get your prescription checked, it really does say 3% — of local businesses allow their customers to purchase gift cards online.

These local retailers are missing out big time. Not only do gift cards appeal to those of us who hate shopping for the holidays before it’s even technically holiday season, but recipients prefer gift cards to any other type of gift. By a lot. For example, a recent American Express study shows that ⅔ of affluent women want gift cards, but less than a fifth of their significant others will give it to them.

Translation: A whole lot of men are getting the silent treatment this year as their present.

So why aren’t these guys — and customers in general — getting the recipients what they really want? It’s caused by a little something called gift card guilt. Customers perceive gift cards as impersonal gifts, which is why they most often  choose to go the clothing and jewelry route.

This is where the problem of gift card guilt meets the problem of gift card wants: If the customer won’t purchase a gift card but the recipient only has gift cards on their list, how does a small retailer satisfy everyone while competing with the big guys?

And… we’re back to square one: Personalized digital gift cards.

The Customer Needs Personalization

When it comes to guilt associated with buying gift cards for the holidays, customers say they prefer to purchase physical gifts, as they seem more personal than a simple dollar amount. But if they have the ability to customize the gift card to make it unique to the recipient, 38% say their guilt is reduced when they can choose their own wrapping, and 28% feel less guilty sending gift cards when they can add their own text, photos or video.

Recipients Want Choice

Gift cards continue to be the number one requested gift every year. But while 37% of Americans prefer them over cash, clothing, books, etc. as holiday gifts, gift cards only account for 18% of holiday purchases. Digital gift card technology allows for customization, thereby reducing gift card guilt and increasing sales.

More Money for You

When a locally owned boutique in NYC implemented a digital gift card strategy, they saw a 250% increase in monthly gift card sales (not including holiday sales). Small retailers that sell customizable digital gift cards online via a third party marketplace or on their own ecommerce sites allow customers to buy and send gift cards instantly at any time of day, especially if they can be sent to the recipient via email or text. That’s a 24/7 stream of revenue — not discounted.

Digital gift cards are the fastest growing trend in retail and give small businesses a huge competitive edge against the big guys.

The stats speak for themselves.

Contributed by Lauren Chatman, the VP of Merchant Services at, a curated digital gift card (mobile, email, print) site that exclusively powers the gift card programs for over 750 high-end local boutiques, spas and services in the country. Giftbar gift cards appeal to the affluent customer, driving them in-store where local retailers can up-sell instead of discounting. That’s the competitive advantage.

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