1 in 5 Americans Will Receive This Popular Gift During the Holidays
This simple stocking stuffer is surprisingly popular, driving billions of dollars in revenue.
Key Takeaways
- One in five Americans will receive a Starbucks gift card this holiday season.
- As of late September, Starbucks held about $1.8 billion in unredeemed gift card balances.
- The National Retail Federation found that Americans will spend about $29 billion on gift cards this year.
Starbucks expects to receive one of its gift cards this holiday season, up from one in seven in 2015. The Starbucks gift card, a simple stocking stuffer, has become a billion-dollar billion revenue engine for the company close to the holidays.
Starbucks is already a top-selling gift card brand in the U.S., ranking No. 1 for quick-service restaurant and fast food brands, according to . The company estimates that December 24 will be its single biggest day for gift cards, with more than $60 million loaded onto new cards in the U.S. and Canada in just 24 hours. The surge in activity shows just how many shoppers lean on gift cards as a last-minute solution for people on their list, like teachers, coworkers and neighbors.
“We’re proud to be a beloved brand and honored that Starbucks Cards remain a go-to gift during the holiday season,” Tressie Lieberman, Starbucks’ global chief brand officer, told BI.
Related: Starbucks Just Experienced a 鈥楻ecord-Breaking Sales Week鈥 Thanks to One Line of Products
A by the National Retail Federation found that Americans will spend approximately $29 billion on gift cards this holiday season. Gift cards were the second-most-popular type of gift, after clothing. Roughly 43% of shoppers plan to buy at least one gift card, favoring widely available brands.
Financially, Starbucks gift cards are more than a gift; they are also a source of upfront cash. As of late September, Starbucks held about $1.8 billion in unredeemed gift card balances. That’s up from $1.7 billion a year prior, per BI. The company holds that stored value until customers spend it.
In some cases, they never do. A portion of those balances will never be redeemed, generating what is known in the industry as 鈥渂reakage鈥 revenue. According to its , Starbucks had roughly $200 million in breakage from company-operated stores. Forgotten gift cards become pure profit for the company.
Related: Starbucks CEO Tells Employees to 鈥極wn Whether or Not This Place Grows鈥
Even when customers do spend their balances, Starbucks still profits. Gift cards are a source of repeat visits and often pull new customers into Starbucks stores. If customers choose to register a gift card with Starbucks Rewards, they can earn points for free drinks and snacks. The registration spurs repeat purchases and spending beyond the gift card鈥檚 original value.
Starbucks introduced its first reloadable gift card . Close to 25 years later, the Starbucks gift card has become one of the most popular presents in the country. The company now sells gift cards in 45 markets worldwide, and the product has become a year-round source of revenue.
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Key Takeaways
- One in five Americans will receive a Starbucks gift card this holiday season.
- As of late September, Starbucks held about $1.8 billion in unredeemed gift card balances.
- The National Retail Federation found that Americans will spend about $29 billion on gift cards this year.
Starbucks expects to receive one of its gift cards this holiday season, up from one in seven in 2015. The Starbucks gift card, a simple stocking stuffer, has become a billion-dollar billion revenue engine for the company close to the holidays.
Starbucks is already a top-selling gift card brand in the U.S., ranking No. 1 for quick-service restaurant and fast food brands, according to . The company estimates that December 24 will be its single biggest day for gift cards, with more than $60 million loaded onto new cards in the U.S. and Canada in just 24 hours. The surge in activity shows just how many shoppers lean on gift cards as a last-minute solution for people on their list, like teachers, coworkers and neighbors.
“We’re proud to be a beloved brand and honored that Starbucks Cards remain a go-to gift during the holiday season,” Tressie Lieberman, Starbucks’ global chief brand officer, told BI.
