With high costs continuing to strain consumer wallets, many shoppers are adjusting their 2024 holiday spending plans. According to the Q3 Gift Card Gaugefrom Fiserv, one third of consumers are planning to spend more on gifting in 2024, compared to only 14% who anticipate spending less. This marks the third straight year consumers are planning for increased holiday spend, up from 27% in 2023 and 21% in 2022.

Specifically, inflation is reshaping how many are planning for the holidays. Sixty-six percent of those who plan on spending less say it is because of inflation and higher costs. To that end, consumers are doing what they can to stretch their buying power – 48% plan to get a head start on shopping and take advantage of promotions and discounts, while 47% are shopping throughout the year to spread out their purchases.

In addition to adjusting when they shop, many consumers are planning to tap into gift and loyalty programs at their favorite retailers. Here are a few reasons why:

Consumers increasingly turn to gift cards for everyday necessities, driven by convenience, budgeting needs, and rewards programs. With inflation putting pressure on personal finances, consumers are using gift cards as a practical tool to stretch their budgets and secure essential items. According to the Gift Card Gauge, 49% of consumers consider a gift card more valuable than a traditional gift, and 60% use gift cards to purchase necessities such as milk, bread, soap, and other everyday staples.

Gift cards also offer benefits beyond simple convenience to consumers. One advantage is the role gift cards can play in budget management, offering a structured way to manage finances, helping individuals allocate funds for specific needs. By loading a specific amount onto a gift card, many consumers can better control their spending and stick to a predetermined budget and prevent overspending. 

Consumers enjoy cashing in loyalty points because it feels like getting something for free or at a reduced cost, which adds value to their buying experience. Over half (52%) of consumers surveyed plan to use their points to purchase gift cards this holiday season. The act of earning and redeeming points taps into the psychology of reward, where consumers feel a sense of accomplishment. This emotional boost reinforces positive feelings toward the brand, increasing the likelihood of repeat business.

Incentivized spending is another way for retailers to spur consumers into spending. Loyalty programs that offer points for purchases incentivize consumers to shop more frequently or spend more to earn enough points for desirable rewards. Incentivizing consumers creates a positive feedback loop where consumers feel motivated to continue shopping with a brand to reap these benefits.

With the world becoming increasingly digital, more consumers are using digital wallets to store gift cards and earn rewards points – and incentives are increasingly driving them to use digital. Eighty-three percent of consumers say they could be swayed to store gift cards in a digital wallet. Of this group, 39% would be incentivized to use a digital wallet if they receive a gift card with each gift card upload. Twenty-three percent of consumers would be incentivized to go digital for additional loyalty points and 13% would go digital for early access to promotions.

The 2024 holiday season will once again be marked by increased consumer spending despite concerns over inflation. Gift cards are becoming an essential tool for consumers trying to maximize their budgets, not only for gifting but also for essential day-to-day items. The intersection of gift cards, loyalty programs, and digital wallets provide a potent combination for retailers to create more value for their customers.