The IRF Industry Outlook for 2021 is far more optimistic than might be expected.
The IRF Industry Outlook for 2021 reports that gift card activity has risen, merchandise activity has held steady and incentive travel budgets have not been cut as deeply as they might have been. Per-person spend on reward and recognition programs is unchanged, and the rate of program cancellations is no higher than the previous year.
The 322 survey participants included corporate buyers, suppliers, and third parties, such as incentive companies and consultants. A full 64 of respondents predict that their companies will have a strong financial performance in 2021. Regarding the overall U.S. economic outlook, exactly half still view it as strong. The positive response likely rests on the belief that vaccines will be widespread by late spring or early summer.
2021 budgets are expected to show more modest increases, and in a few instances, show small net contractions. Overall client budgets for reward and recognition programs, particularly merchandise spend, are expected to decrease slightly, although the main area where budgets are expected to decrease is in the administration area. The good news is on the gift card side: Gift card spend is expected to show a strong net increase.
Without question, the mix of incentive awards is shifting, with the use of gift cards and merchandise on the rise and the use of experiential rewards decreasing because of the pandemic. The hope is that this will change vaccine distribution and adoption progresses.
The current average per-person spend for non-cash reward and recognition programs was $764, which is comparable to spending estimates in the previous two surveys. For the third straight year, the reported average value of the merchandise reward was $160. Electronics and sunglasses remained the most popular merchandise items. The most common gift cards were from retailers (e.g., Amazon) and coffee purveyors (e.g., Starbucks).
Two-thirds of respondents changed their investment in merchandise, with 33 percent increasing their merchandise spend overall, 31 percent spending less and the rest spending about the same on merchandise. On the gift card side, 54 percent of respondents changed what they spent, with 64 of that group increasing their spend during the pandemic.
The incentive travel results could have been far worse: Only about half (51 percent) dramatically reduced or cut their incentive budgets.