Departments - May/June 2015

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Merchandise & Gift Cards
Study Proves Programs on Upward Trend

By Deborah L. Vence

A recent study on trends in merchandise and gift cards revealed that budgets are trending upward, with experiences that reach all ages and a balance between necessity and luxury in demand.

The study, titled, "10 Trends for Merchandise and Gift Card Programs in 2015," by the Incentive Research Foundation, indicated that top performers, and preparing them to take over the reins during the next decade, is a top priority for most organizations. Plus, a key part of that process will involve merchandise and gift card programs that inspire and connect with future leaders, according to the study.

"The most compelling part of this trends paper (and much of the work that we do right now) is that changing market forces such as the influx of millennials into the workforce and a need for HR tools that can be as agile as organizations are making non-cash rewards and recognition a 'must have' tool in the next decade," said Melissa Van Dyke, president of the IRF.

The study identified 10 main trends, which are:

1. Positive Impact on Program Design. The study indicated that the number of organizations that believe economic conditions are having a negative impact on incentive programs continues to decline. Conclusion: Both the relative long-term buoyancy and the overall current positive state bode well for merchandise and gift card reward programs in 2015.

2. Budgets Trending Up. Nearly 50 percent of planners in the fall of 2014 had said they would be increasing their budgets; additionally, per-person spend is up. Conclusion: Barring unforeseen economic or extreme political changes, budgets will maintain a strong positive trajectory for the next few years.

To boot, anecdotal evidence showed that some of the initial increase in 2010 came from the use of card and merchandise programs to offset the lack of raises provided by employers or to compensate for cancelled incentive travel programs. This "replacement effect" then tapered off slowly for the following two years with more budgets increasing than decreasing, but at a slightly slower rate.

3. Experiences Lead the Way. A phase that has been called the "Experience Economy" involves robust experiences desired by different age groups. Conclusion: Suppliers of merchandise and gift card-based award and recognition programs must ensure the overall experience intended for each individual recipient is appropriate and rewarding—whether employee, salesperson or channel partner.

Moreover, the study revealed that many incentive travel program owners now forgo the standard merchandise pillow gifts and, instead, offer robust "fitting experiences" for a range of products while trip earners are on the property. This trend also is evident in the IRF's most recent Pulse study. For example, 21 percent of program owners had indicated that they would be adding experience-related products and gift cards (which offer a variety of shopping experiences) to their award portfolios heading into 2015.