The past holiday season didn’t just test consumer wallets—it revealed how dramatically shopping behavior is evolving. As inflation-weary shoppers searched for flexibility, value, and convenience, gift cards emerged as a central tool in how consumers planned, budgeted, and ultimately gifted. From promotion hunting to increased reliance on AI, the behaviors that defined the season are poised to shape retail for years to come.
In a recent PaymentsJournal podcast, Sarah Kositzke, Director of Research at Blackhawk Network (BHN) and Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research discussed the accuracy of holiday shopping predictions, evolving consumer gift card habits, and how brands, retailers, and issuers can prepare for a dynamic year ahead.
Navigating Affordability Through Promotions
One of the most closely scrutinized aspects of the season was how consumers—under sustained pressure from inflation would approach holiday gifting. While BHN’s post-holiday research indicates that budgets were largely flat year-over-year, shoppers adopted new approaches to strategies to stretch their spending.
“This past holiday, we saw about 90% of people—that’s nearly everyone—leveraging some sort of a promotion, whether it was buy-one-get-ones or percentages off of certain products, or even gift cards,” Kositzke said. “I feel like a lot of people started earlier. They were looking for those deals, that’s what was a motivating factor for starting earlier.”
“One of the most interesting things, which we nodded to in pre-holiday work that we had done, is we said: ‘I think folks who start earlier in the season also have a larger budget for gifting.’ And we found that to be true, it was nearly double those who started later,” she said. “Factor in all the promotions, factor in looking for those deals—even if it was starting in October—that’s where we saw the crux of people finding that momentum to get out there and shop.”
This focus on finding discounts further entrenched Black Friday as the official kickoff to the holiday season. BHN found that 31% of respondents identified Black Friday as the leading promotional period, beating out Cyber Monday.
At the same time, more shoppers bought fewer gifts this holiday season. This shift was driven partly by economic concerns and partly by how consumers are prioritizing and managing their many gifting and holiday obligations.
“Gift exchanges are fascinating because, anecdotally, I see it happening a lot,” Hirschfield said. “We’ve put COVID behind us and now it’s like, let’s just get together, but let’s do it in a way that’s fun and interesting, And instead of spending $10 on everyone, you’re amplifying that budget into one item, but you’re doing it in a fun and social way.”
A Haven for Last-Minute Shoppers
Even though more consumers started shopping earlier, many stretched their budgets to the very end of the season. Nearly three-quarters of respondents purchased digital gift cards as a last-minute gift on Christmas Eve or Christmas Day.
“They really became a safe haven this holiday season,” Kositzke said. “We saw this last year and we predicted that this would be the case, but digital was such a key factor. We saw 80% of people purchase a digital card for that specific occasion.”
“Whether it’s, ‘Oh, no, I got to the event and I thought nobody was buying gifts, now suddenly everybody bought a gift and I’m feeling left out’ or ‘I missed somebody’ or ‘I’m suddenly going have a night out or a dinner with somebody and I want to be thoughtful and get them something,’ we saw an incredible amount of shift to those digital cards,” she said.
For retailers and brands, this trend heightens the importance of a strong digital gift card offering. Retailers should also promote digital gift cards heavily through Christmas Eve to capture last-minute shoppers.
While digital gift cards served as a lifeline for last-minute gifting, they can play a much larger role in merchants’ overall gift card strategies.
“For a long time, people said digital will replace physical, and I don’t believe that’s true,” Hirschfield said. “Timing is a key factor of why those choices are made. People may prefer to give a physical gift because they want that tactile experience that includes unwrapping something, and you can do that with a physical gift card.”
“But when time gets short or when distance is a factor, digital becomes the gift of choice,” he said. “It fills a need when you can’t be there in person or they’ve just run out at the store, or you can’t get to the store. We also see that impacts the value of these cards. From 2024 to 2025, physical card loads on average went up $11; digital went up $15. When you don’t have to package it, mail it, and all those costs involved, you can say ‘I can spend $4 or $5 more.’”
In addition to the shift toward digital, the value loaded onto both physical and digital gift cards continues to rise. The average total gift card value reached $236 last year, up from $209 in 2024. Beyond this initial spend, gift cards also present a meaningful opportunity for merchants once they reach the recipient.
“What’s interesting is the fact that then I’m going to take that card and I’m going to overspend at the place of purchase, whether it’s a restaurant, whether it’s a store, or whether it’s a service I’m getting done,” Kositzke said. “On average, people spent about $108 over the value of the cards that they received.”
“And people on average—so this has stayed the same—have received about three cards,” she said. “We’re not seeing a huge shift in the number of cards, which means the value of each is going up.”
Generational Gaps in Loyalty and AI
In addition to spending trends, one of the most closely watched aspects of this shopping season was the impact of artificial intelligence. While overall AI usage increased among all consumers, a growing generational divide is emerging: nearly three-quarters of younger consumers used AI for holiday shopping, compared to roughly 31% of older consumers.
What’s more, the number of Gen Z and millennial consumers using AI grew 8% year-over-year, compared to just 1% for Gen X and Baby Boomer shoppers. This overall rise in AI adoption is likely to have lasting effects.
“We saw a lot of people using it for looking for promotions, they’re looking for the best cost, or they’re looking to try to figure out the most creative gift ideas,” Kositzke said. “Especially if it’s somebody who they’ve been gifting to a long time and they just need some new fruitful ideas of, ‘What could I bring?’”
Understanding this growing preference for digital and AI-driven solutions is critical for merchants and gift card issuers seeking to develop deeper engagement with the new generation of consumers.
In addition to AI integration, younger consumers are increasing motivated by rewards and are willing to adjust their shopping behaviors to maximize value.
“The loyalty era is here,” Kositzke said. “People are looking to exchange any points that they have, wherever those programs might be for gifts. We found that younger consumers, about three-quarters, exchanged loyalty points for gifts, compared to 57% of older consumers.”
“What kind of gift did they exchange it for?” she said. “Almost half exchanged for gift cards, some exchanged for physical gifts, and about 10% exchanged for some sort of experience. So, loyalty points and programs can provide the gamut of what people are looking for, especially dependent upon who that end recipient is. It’s important to add these programs into any sort of messaging or ties that you have.”
Diversifying Marketing Channels
Another important consideration for merchants is the evolving array of channels through which consumers seek guidance and make purchases.
“Those traditional channels—whether it’s emails, word of mouth, maybe it’s a print in-store flyer—those are all still heavily leveraged,” Kositzke said. “However, we find that they’re more so leveraged by older generations. Nearly two-thirds are seeking those sources compared to only maybe about half of younger shoppers.”
“Younger people are looking for these promotional deals across their Cash Apps, any sort of shopping discount channels that they might be on,” she said. “There are some programs out there where you can input information about your purchases and you’re then earning power there as well, which goes back to that whole points and exchange for gift cards as part of a program.”
This diversity of channels makes it essential for merchants to diversify their marketing and promotional strategies. For example, retailers should expand their approach to include price comparison tools like Google Shopping and deal forums like Slickdeals and Reddit.
To stay relevant, merchants must also continually reevaluate the impact of social media channels.
“TikTok Shop is really driving purchases,” Hirschfield said. “In my N=1 study of my Gen Z daughter, the number of times I hear her mention TikTok Shop purchases for her or her friends, it’s really one of their main sources of purchases. My daughter is a freshman in college, there are 400 young women living in her dorm, and I guarantee you that she is not alone.”
“These are significant populations of people who are using things like TikTok Shop rather than a traditional retail outlet,” he said. “So, utilizing TikTok and things like that where these younger generations are gathering to be influenced to find deals, it’s a meaningful driver of business and you have to be hyper-aware of what’s next—beyond what you might be comfortable with for the people who are making these business decisions.”
Watching Your Consumer
In addition to these impactful consumer trends, gift cards remain a dominant choice. Last year, roughly 65% of employees received a gift from their employer, and nearly nine out of 10 of these gifts were gift cards.
This highlights the increasing prevalence of gift cards—not just during the holidays. Leveraging promotions, integrating AI, bolstering loyalty programs, and diversifying marketing efforts are all critical lessons from the holiday season that can be applied year-round.
“What I would say is, going into 2026, really watch where your consumer is,” Kositzke said. “Watch where they’re researching, watch the way in which they’re speaking to AI about what it is that they’re looking for, and find a way to be present. We talked about TikTok, YouTube, Cash App, and all these different sites. It’s making sure you’re staying relevant where the consumer is, that’s going to be very important in 2026.”
To learn more, check out BHN’s 2025 post-holiday gift card report infographic, How holiday shoppers adapted to affordability challenges. Just click here.
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