BHN research finds consumer increase in gift card purchases helps preserve generous gifting while managing rising costs

Shoppers are strategically shifting toward more gift card purchases to maintain holiday gifting traditions amid economic pressures, according to new research from Blackhawk Network (BHN), a leading global provider of branded payment solutions.

BHN's annual holiday forecast, which surveyed over 2,100 U.S. consumers, reveals that while 13% are purchasing gifts for fewer people due to financial constraints, overall holiday gift spending continues to rise and gift cards will represent 39% of total holiday budgets—a 12% increase over last year.

The increase comes as economic concerns intensify heading into the holidays. Seventy-two percent cite inflation as a primary worry—up significantly from last year. Additional key findings from the research include:

Price concerns drive category-specific shifts

Consumers plan to purchase gift cards instead of physical gifts due to concerns about price increases in key categories, especially among younger generations. Nearly half of Gen Z and Millennials (46%) plan to purchase gift cards for clothing and accessories instead of physical items due to price concerns, as well as with grocery purchases (41%), toys (32%) and electronics (31%).

"Holiday shoppers are becoming strategic in how they maintain generous traditions despite economic headwinds," said Brett Narlinger, chief revenue officer at BHN. "Rather than cutting back on gifting entirely, consumers are embracing gift cards as solutions that allow them to give meaningful presents while staying financially responsible."

Gift cards deliver budget control and peace of mind

The research reveals the dual appeal of gift cards: 74% of consumers agree that purchasing gift cards helps them stick to their holiday budget, while 59% report that receiving a gift card eases their own financial stress.

When considering gifts for themselves, budget-conscious consumers report that receiving practical gift cards will help cover essential expenses. Grocery store cards top the list at 67%, followed by mass merchant cards at 47% and gas or charging station cards at 39%. Subscription services for music and entertainment are also gaining traction at 37%, particularly among Gen Z and Millennials.

The stakes for getting gifts right have never been higher. The study found that one in three consumers reports receiving a bad or mismatched gift negatively impacted their relationship with the giver—with the most common mistakes being fit and fashion fails, lifestyle mismatches, and obvious regifts.

"Gift cards help shoppers avoid these pitfalls while giving recipients exactly what they want or need," added Narlinger.

AI’s influence over holiday shopping as consumers hunt for best prices

Artificial intelligence is influencing the holiday shopping journey, with consumers increasingly turning to AI tools. The research shows 68% of Gen Z and Millennials now use AI tools for holiday shopping—an 18-point jump from last year—with 20% using it to generate creative gift ideas and get product recommendations. Even Gen X and Baby Boomers have embraced AI assistance, with usage rising 14 percentage points to 38%.

AI is even reshaping the gift card experience itself, with platforms suggesting tailored gift card options when shoppers search by person, occasion or interest. A prime example is the Giftcards.com AI search bar, which helps consumers navigate the variety of gift card choices to find the perfect match for each recipient.

This AI adoption is part of a broader trend of consumers deploying sophisticated strategies to stretch holiday budgets. The research shows 77% bought holiday gifts on sale or through promotions in 2024, and shoppers plan to leverage 10 or more different types of promotional offers this season—from traditional discounts (86%) and coupons (84%), to loyalty point offers (80%), fuel discount programs (73%) and cashback apps (65%).

Gen Z and Millennials are particularly savvy deal-seekers, turning to third-party sources at significantly higher rates than older shoppers—including social media posts for deals (36%), cashback apps (28%), and deal forums (18%).

Early shopping is also significant, with 34% of consumers planning to start their holiday shopping before November. Deals and savings rank as the number one reason consumers begin their holiday shopping.

"What we're witnessing is consumers refusing to let economic challenges diminish their holiday spirit," said Narlinger. "They're shopping smarter and leveraging every tool at their disposal—from AI to cashback apps—to make their budgets work harder. Gift cards have become central to this strategy, offering a way to give generously while maintaining financial control."

For more findings and actionable insights to maximize the holiday shopping season, download the ebook.

About Blackhawk Network (BHN)

Today, through BHN's single global platform, businesses of all kinds can tap into the world's largest network of branded payment solutions. BHN helps businesses grow revenue, increase loyalty, motivate and reward their teams, disburse funds and engage consumers. Branded payment solutions include the issuance and distribution of gift cards, eGifts, corporate payouts and rewards, along with the technology to deliver these products in seamless, integrated ways. BHN's network spans the globe with more than 400,000 consumer touchpoints. Learn more at BHN.com.

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