Think that gift baskets are a trend that has gone away? Think again. It’s still a multi-billion dollar industry. Like many industries, thinking outside of the basket is helping them create innovative products that are allowing for steady levels of demand.
According to 2014 data from Packaged Facts [the latest to be released for the industry], the gifting industry has been seeing consistent growth levels of 5%. This has created an industry value of an estimated $3 billion.
Many gift baskets, especially the ones which involve food, used to be all about the candy. Food baskets have always been strong, sometimes seeing growth as high as 9% per year. Now consumers are finding that a gift basket is a great way to give other gifts, including high-end technology products, which adds to the satisfaction this gift can provide. The days of a fruitcake harder than your grandmother’s are now officially gone.
Please Note: Comprehensive data about the gift basket industry has not been extensively collected since 2001. This data reflects information collected from licensed gift basket retailers from multiple sources, including a widely cited report from a survey of 3,600 retailers conducted by Sweet Survival.
The State of the Gift Basket Industry Today
- Pre-designed baskets have always been a staple of the gift basket industry, with some retailers reporting up to 70% of their sales coming from these products.
- Pre-designed baskets are also becoming a starting point for consumers to be able to create their own twist on a gift. Many gift baskets have a couple items in them that people don’t want. By giving them the opportunity to swap them out, there is a better chance to gain a sale.
- 40% of the estimated gift basket industry revenues originate from the corporate sector and B2B relationships.
- In the past, gift basket companies would target specific industries to provide their services. Because real estate and property management companies were their primary source of business, the bubble burst effects in 2007-2009 caused major declines.
- Now gift basket companies are targeting all service industry sectors for diversification. Offering products through e-commerce solutions to households has also helped to create stability within this industry.
- Many gift baskets, even those containing premium items, have a retail price between $50-$250, which makes it affordable to purchase multiple baskets for B2B customers.
- Yet there are also certain industry factors that are forcing many companies to consider a merge. JDW Distributors, according to the Los Angeles Times, has supplied gift basket designers for more than 23 years and has seen a 35% hike in the wholesale price for wicker baskets.
- California maintains the highest concentration of gift basket retailers, followed by New York and Florida.
- Southern states collectively lead all sales, followed by the northeast, west, and Midwest, respectively.
- The overall state of the gifting industry is worth an estimated $200 billion in the US alone. This means gift baskets make up less than 2% of total gift industry sales.
- According to Statistic, global B2C e-commerce sales are expected to reach $1.92 trillion for EOY 2016.
- Many sales occur during three major holidays: Christmas, Valentine’s Day, and Mother’s Day. Other holidays, such as Easter, also have a minor influence on industry revenues.
- 75% of retailers currently operating within the gift basket industry report annual sales of $50,000 or less.
- IBISWorld reports that ecommerce industry revenue has grown an annualized 10.3% to $297.9 billion in 2014, with an expected increase of 4.3% in 2014 alone.
For some years, the goal of the gift basket industry was to simply survive. From the concepts used to reach out to customers to the contents of the basket itself, the times of having over-the-top products being gifted are gone. People are looking for value. Companies are looking to improve brand recognition. More companies are using their own branded products in gift baskets, something that was frowned upon in the past, simply because it is more affordable. When retailers can find a comfortable balance between pre-designed gift baskets and some customization, there is the chance to thrive in the good times and survive in the down times.
Hot Trends and How They Affect the Gift Basket Industry
- Hot trends can mean hot sales for the gift basket industry. Many retailers point to the successes of bacon-flavored products as one of the ways they’ve been able to promote higher levels of sales.
- Themes are also a consistent trend within the industry that can provide revenue supports, but themes must also evolve with consumer preferences. A decade ago, coffee-themed gift baskets were one of the most popular. Now retailers report wine and tea gift baskets have more popularity.
- To take advantage of these themes and trends, there must be concepts that are wide enough to be attractive to a consumer, but not so narrow in scope that only specific consumer niches would be interested in the product.
- Balancing high-end products with high quality filler products will continue to provide the best opportunity for a sale.
- David Porat, as reported by SpecialtyFood.com, recommends up to 3 high value items within a gift basket that are supported by theme-related filler items.
- The design of the gift basket can also help to support trend attention, especially if the package can be displayed horizontally or vertically.
- Firms at $1 million and $5 million in sales increasing in quantity, although 1 in 5 retailers within the gift basket industry reports sales of $200,000 or less.
- Women are more likely to purchase gift baskets when compared to men. This is a consistent trend that has a long history of evidence. Even though men are becoming more involved, women will continue to make up the majority of customers for retailers.
- The one issue that holds trends back: overestimation. Overestimating sales “can lead to product surpluses so costly that many gift basket business owners are loath to boost their supplies until orders are received.” [LA Times]
Everyone has their own strategies when it comes to the creation and marketing of gift baskets. In the same article from SpecialtyFood.com, another gift basket retailer recommended offering 7 premium products minimum in a gift basket. Following trends is important, as is the establishment of a theme, but local or regional influences must also be considered. Giving a gift basket is a very personal experience, even if someone is purchasing the item for themselves. You can’t just package up your leftovers and call it good. For retailers to be able to thrive, they’re going to have to get to know their customers on a deeper level.
The Quality of a Personal Order Means Everything
- Because Millennials prefer items that are individualized, customization within the gift basket industry may unlock a lot of doors to new revenues in the next 5-10 years.
- This means the quality of the personal interview before the gift basket is created will become the foundation of success or failure as the gift basket industry evolves.
- Here’s an example: 1 in 133 people in the United States are believed to be affected by Celiac Disease. Up to 7% of the population may have non-Celiac gluten sensitivities. 1 in 4 Americans is actively avoiding gluten products right now. Gift basket retailers that can provide products that meet these needs can take a small, but important share of the expected $6.6 billion gluten-free industry in the coming years.
- The quality of the actual basket for the gift basket can’t be ignored either. Many retailers are looking at how they can provide a “gift within a gift” by creating a basket that has multiple functions. For example: a lidded gift basket could then become a picnic basket.
- The barriers to entry in this industry are low, which does encourage the start of a small business. Estimates range from $4,000-$15,000 for start-up costs.
- The costs of starting an e-commerce platform are also going down. Using PayPal or Square for a business, the industry can take advantage of the small transaction or swipe fees so that multiple forms of payment can be accepted with simple pricing and mobile solutions. On Square, every card accepted has the same rate, and fees are taken out of the total amount of each transaction, including tax and tip.
The gift basket industry has seen a number of challenges over the past decade. In many ways, those challenges are going to continue. After the economic recession of 2007-2009, households and businesses are more conscious about how they are spending their money. This means fewer expensive gifts, but the chance to promote economical options for the industry. Personalizing these gift baskets offers the biggest opportunity the industry has seen for awhile. When combined with the other gift basket industry trends, there is a lot of revenue potential to be found. It’s going to be up to local retailers, however, to find what is available.