Pamela N. Danziger is an internationally recognized expert specializing in consumer insights for marketers targeting the affluent consumer. She is president of Unity Marketing, a marketing consulting firm she founded in 1992. In a recent blog post, she discusses gifting strategies for the “experience economy.”
Gifting can be a powerful retailing strategy that will build customer loyalty and repeat business, not to mention the exponential potential it offers retailers to reach out to the gift recipient to come to the store when they also need a gift.
Throughout the year people celebrate holidays, occasions, life events and milestones by purchasing and giving gifts. Christmas and birthdays are the two biggest gifting holidays and occasions, and there are five other major gifting holidays, with Valentine’s Day, Mother’s and Father’s Day taking the lead, followed by Easter/Passover and Halloween. Then there are numerous additional gifting occasions, such as weddings, anniversaries, housewarming, hostess, new baby, graduation and so on that occur throughout the year.
Giving gifts is deeply embedded in our DNA. As social creatures, gift giving bonds people together and is used to show affection, appreciation and love for one another. So, the gift itself is a totem expression of deeper meaning and emotional significance.
There’s reciprocity in the gifting process. Gifting bestows rewards to the gifter in sharing and building an emotional connection with the recipient. And the gift receiver benefits from the gift through its utility and sentimental significance — and the bond with the gifter is deepened.
All told, Unity Marketing estimates that about $1 out every $10 spent in the typical GAFO retail store, (defined as general merchandise, apparel, furnishings and other retailers) and now increasingly with online retailers, is spent to buy a gift. That translates into approximately $128 billion spent on gifts in 2017.
Even more significant, retailers find great rewards in developing marketing and merchandising strategies to grow their gifting business because it offers an exponential upside in terms of touching two target consumer markets at one time. As a result, retailers can make a personal connection with the gift giver who makes the purchase as well as the recipient. To say that gifting is important to retailers is an understatement. Gifting is an exponential marketing strategy.
The Science of Gifting
The act of gifting is typically meant to communicate feelings for and with another. In psychological terms gifting “fosters stronger social relationships.” An important new study on gifting sheds light on what kinds of gifts build deeper personal relationships. It was conducted at the Wharton School, University of Pennsylvania by Cassie Mogliner Holmes, UCLA Anderson associate professor of marketing and noted as the ”world’s leading authority on consumer happiness,” and Cindy Chan, Assistant Professor of Marketing, University of Toronto who specializes in consumer relationships.
In their study, they asked a simple question that is increasingly relevant today in the new experience economy: Would giving something to do or something to keep forge a stronger social connection? or in other words, is giving an experience or a material thing better?
The researchers set out to study how the gift improves the relationship between the gift giver and the recipient. Existing gifting research focuses on how much gift recipients appreciate, value or like particular material gifts. This study, however, focuses on how gifts create emotional connections, specifically measuring the impact of material versus experiential gifts. The researchers conducted a series of three experiments to tease out some of the nuances in gift giving, and all focused on how connected the gift made the recipient feel to the gift giver, not simply on how much the recipient liked the gift.
Because emotions are evoked during the gift exchange and by using the gift, the researchers separated the two. They studied the effect of sharing a gifted experience between the recipient and the giver as well as the recipient enjoying the experience alone. Plus they investigated the difference between a static material gift and gifts that have a more experiential aspect, such as wine or chocolate.
Their findings are clear. Despite gift givers’ tendencies to give material possessions, material gifts do less to foster meaningful relationships between gift givers and gift recipients. The researchers report, “Experiential gifts, in contrast, make recipients feel closer to the person who gave them the gift, regardless of whether the experience is consumed together with the gift giver. Experiential gifts have this effect because of the emotion they evoke when consumed, particularly when the emotion is shared.”
One purpose of presenting a gift is to bind the person receiving the gift more deeply to the person giving the gift. Heightening the emotions of the recipient is the key. “Our findings demonstrate that giving experiential gifts is more effective at fostering closer relationships, and therefore implies that gift givers should feel happier as a result of giving an experiential gift compared to a material gift,” they write. “This research offers simple guidance: Give an experience.”
That pretty well leaves traditional retailers out in the cold. But here are some ways retailers can make their material gift offerings more of an experience in order to grow their share of the gifting market in today’s experience economy.
Create a Gift Department
I recently consulted with a department store about how to get a greater share of the gifting market and advised them to add a gifting department. The traditional department store model arranges merchandise by type, rather than function. Typical shoppers have to know what they are looking for before they can even find it. But gift shoppers are often not sure what they are looking for in the first place, so the retailer can make that easier for them by creating a prominent, inspirational area where great gift ideas are displayed. Signage is critical. Make a visual splash to call out this gifting area of the store.
One of the primary pain points for gift shoppers is feeling secure about making the right selection. By stocking a wide variety of gift ideas in a range of different product categories, each gift can be presented by its value and appropriateness. Use storytelling to create a narrative for each gift. Add a small greeting card selection with cards that speak to the psychographics of the store’s clientele. Revitalize the lost art of gift wrapping with creative packaging. Everyone has heard chefs say. “You eat with your eyes first.” This is a truism that any retailer who that wants to enhance their gift marketing needs to embrace.
Stock Experiential Gifts
In Mogilner’s and Chan’s study, the best material gifts are ones that also incorporate an experiential aspect which make them more emotionally evocative. “When recipients of a material gift focus on the emotion they feel consuming the gift, they exhibit equally high improvements in their relationship as recipients of an experiential gift,” they write. Select products that have an experiential hook or have a wow factor that makes them compelling for shoppers to pick up and touch, explore, sniff and smell, play with and interact with in a personal way.
In merchandising the experiential gift selections, pick items that can be consumed, e.g. eatables, drinkables; or used in an engaging way, e.g. toys, books, candles, gadgets; or just things that demand the recipient to touch, feel and experience them, e.g. luxurious cashmere or other high-touch fabrics, boxes to open. No matter what the retailers’ vertical product specialty, one can find unique experiential selections from the available stock that would make a great gift.
And in Unity Marketing’s research, the optimum price point for a gift is in the $25-$35 price range.
Make Shopping for Gifts an Experience
By creating a special full-service gift department, any retailer can make the store top on any gift shopper’s list as a place to go every time they need to buy a gift, which Unity Marketing’s research indicates is quite often. Given the revolving calendar of gifting holidays and people’s need for gifts throughout the year for personal gifting occasions, retailers can count on customers needing to buy a gift every one-to-two months.
Gifting therefore can be a powerful strategy that will build customer loyalty and repeat business, not to mention the exponential potential it offers retailers to reach out to the gift recipient to come to the store when they also need a gift.
And finally, making the store a true destination for gift shoppers where the retailer fills a real need, not just sells a product, is the answer to the growing incursion of ecommerce retailers in the gift market. Sure, people can go to Amazon or another online retailer to buy a product, but a store that is personalized with great gift ideas and makes shopping there for gifts a fun experience can’t be beat.
The key to success in retail today is not just to be a place for people to buy things, but a destination for people to have experiences. Buying and selecting a gift is an experience that challenges most people, yet it is important for them because the gift carries so much more emotional weight than just another thing to put on the shelf or hang in the closet.
A gift binds people together and likewise binds the retailer together with the customer. It is a win-win. In the end, retailers can give their customers a gift by making the entire gifting experience easier and more emotionally rewarding.