Retailers Add Content – and Value – to Gift Cards
Quite a few article have been published recently, before and after the holidays, about gift cards. Below is a sampling of the most interesting ones:
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- Retailers add content – and value – to gift cards - The next weapon in the war for retail
differentiation may not be traditional
advertising, marketing, merchandising, pricing
or product selection. Instead, value-added or
content-rich gift cards could revolutionize
retail sales.
Already a $76 billion business worldwide, sales
of pre-paid cards continue to grow exponentially
as more consumers accept them as a valued gift
option, rather than as a gift of last resort.
Moreover, the card business is growing at an
annual rate of between 10 and 20 percent,
according to some estimates.
Traditional cards may soon mature, however:
optical or digital cards that double as DVDs,
CDs and even videogames represent the next level
of thinking and a huge new opportunity to
increase sales.
- Gift Cards More Popular Than Ever - As gift cards become increasingly convenient, more personalized and
more sought after, retailers can expect to see an increase in gift card
sales this holiday season. Gift card
sales will total $26.3 billion this holiday season, compared to $24.8
billion in 2006. Additionally, the average consumer will spend more on
gift cards than they did last year ($122.59 vs. $116.51 in 2006). Gift cards will be the one of the most popular gifts this
holiday season as 56.6% of consumers plan to buy them, compared
to other top selling gift items like clothing, toys and books. And with
popularity rising among consumers of all ages, 87.7% of shoppers
said they will purchase two or more gift cards this holiday season.
- Growing Network of Cash Card and Gift Card Purchasing Locations - Purchases of cash cards increased 40% from 2006 and are now the third most preferred type of card
to receive after restaurant/fast food and department store cards, with
the total number of cash cards received increasing
from 4% last year to 21%. While only 14% of adults
purchased cash cards for others this year, 39% prefer to receive a cash card. The survey also revealed that while 48% of adults prefer to
purchase gift cards through the normal check-out process within a
retail location, 19% prefer to purchase a gift card using a
self-dispensing kiosk. Conversely, 33% have no preference for
either purchase method.
- Gift Cards – Blessing, Mixed Blessing or Curse? - I
understand why consumers love gift cards. By some accounts, they’ve become
the gift selection of choice for 50% of gift givers and recipients.
Most of them never expire, and fees are relatively inconsequential,
especially when weighed against the time that could be spent shopping
selecting a specific gift or returning said gift when it turns out to
be “not exactly” what the recipient had in mind. But
I have a harder time understanding why retailers love them.
- $8 Billion Gift Card Gift - Consumer gift cards were the
hottest item of last year’s holiday season. Naturally, stores are
pushing them again this holiday season—but maybe for a reason few
consumers suspect. Although many people appreciate the convenience of gift cards, others are frustrated by gift card fees and expiration dates. There are actually a number of ways consumers risk receiving
less than full value for their cards. Unused cards topped the list - it is estimated that, in 2006, the value of unused gift cards in the US was $8 billion and 7% of the 2006 holiday season card receivers had not used one or more of the cards nearly a year later.
- Gift Card Spending to Top $50 Billion by 2012 - Spending on gift cards is expected to hit $52.2 billion by 2012, up
from $40 billion this year, and some
67% of people are expected to buy at least one gift card by 2012
compared to an estimated 62% this year. Gift cards are convenient thanks to the prevalence
of gift card malls, or in-store kiosks that sell dozens of cards from
brand-name companies. More online retailers are also accepting the
cards as payment. “Gift
cards clearly have been accepted by the mainstream for an increasing
variety of events in which gifts are normally exchanged and for an
increasing variety of ways to spend those gift card funds”. Close
to 35% of people who bought gift cards over the last year said they
planned to spend more on them over the next 12 months, the report said.
Of that group, nearly 10% said they expected to spend “significantly
more.” Just 5.5% said they would spend less.
- Gifts Cards A Phenom in The Hispanic Market - as successful as gift cards have been in the overall market, it seems that they are even more successful in the Hispanic market. Hispanics received gift cards with the highest
average value, $71, compared to $41 for Caucasians and $60 for
African-Americans, and 26% of Hispanics report giving
gift cards to children as a budgeting tool or in lieu of an allowance. Other interesting facts - 40% of Hispanics report buying cards for themselves vs. 30% of Caucasians and 24% of African-Americans, 69% of Hispanics say they spend more than the amount of the card,
compared with 52% of Caucasians and 44% of African-Americans, and 38% of Hispanics buy cards via the internet, 31% at gift card malls and 6% at charity fundraisers and other events.
- Gift Cards Coming With Fewer Strings - Gift cards are more popular this year and are easier to use, thanks to key rulings by the Federal Trade Commission and efforts by a number of states to regulate them, several retail experts said. Many retailers have responded to consumer complaints that gift cards are too laden with fees and expiration dates, experts said. In its fifth annual gift card survey, Montgomery County's Office of Consumer Protection found that 18 of the 22 retail cards examined had no fees and no expiration dates and could be replaced if lost or stolen or had scratch-off PINs for security.
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