Holiday Gift Card Giving Shifts to Necessities
Gift cards, whether holiday-related or not, are a huge market. No surprise then that the topic generates so much interest among the consumers, retailers and the media alike. After all, "the gift card is a no brainer for almost any company. They take very little space, so the revenue in terms of square footage is tremendous. And they are low maintenance. It's a terrific way to extend the brand."
Here's a round up of four recent surveys on the subject (although I'm sure you can find a few more if you look for them...):
- According to Deloitte's holiday survey, gift cards will be the top gift purchase this holiday season for the fifth straight year. Although 66% of consumers plan to buy them, they plan to buy less of them compared to last year (5.3 vs 5.6) and spend less money on each card ($28.43 vs $36.18). Even when it comes to gift cards, people focus on the necessities. Case in point, the popularity of gift cards for gasoline
increased to 17% from 13%.
Despite the convenience of gift cards, consumers have 5.9 unused cards on average (vs 3.7 last year) and 14% are unlikely to ever redeem all their cards. 23% are concerned about the store closing before they can use a card and 24% have had at least one card expire before they could use it. "...Retailers have an opportunity to capitalize on this important revenue stream by implementing more creative and aggressive gift card redemption programs."
- The NRF survey had similar results - they expect gift card sales to fall nearly 6% as some people pass them up in favor of holiday bargains. Fewer people will purchase them (53.5% vs. 56.6% last year) and when they do, they will spend less ($147.33 vs.
$156.24). The biggest spenders will be men and those over 45. They suggest that retailers
may want to "make minor adjustments to holiday plans as fewer people may
be hitting the stores in Jan. to redeem gift cards.”
Interestingly, although gift cards will be the most requested gift this year (followed by books, CDs, DVDs, videos, video games, clothing & accessories), those on the buying side aren't as enthusiastic about them. The main reasons are that they feel the cards are impersonal (22.7%), they would rather stretch their dollar by buying merchandise on sale (10.9%), and they do not want to buy a card with expiration dates or added fees (9.8%). - Yet another gift card survey, this one from the National Research Network (covered by BrandWeek), showed that while they continue to be a popular and practical alternative to gift-giving, retailers need to better understand what appeals to their target markets in order to make them more personalized. "The
perception that gift cards are impersonal is the top inhibitor for
consumers purchasing gift cards, with nearly half of respondents citing
that as a factor."
Despite the financial state of the market, over half of consumers plan to purchase at least one card. And although half of recipients typically spend more than the gift card amount when redeeming it, 15% of them spend less than the total gift card amount, giving the card issuer a benefit either way. Discount stores are the most popular gift card benefactors, with 42% reporting purchasing a discount store card in the past year, followed by restaurants (26%) and clothing (21%). - One final survey from Archstone Consulting expects sales to dip 5% with only 24% of
consumers planning to increase their spending on gift cards. Consumers will also shift their spending towards
household necessities such as groceries, and gas, or small indulgences
such as dining at restaurants. But retailers can increase card purchase by creatively using incentive
programs, such as coupons or discounts for either the purchaser or the
recipient.
Sales of cards through outside locations (grocery, drug stores, banks and kiosks) are expected to grow by 30% vs 2007. Pre-paid bank cards are still the most desired gift cards because of their flexibility, with restaurants/fast food selling more cards than any other category. Surprisingly, while the 13-24 year-old group has the least discretionary income, they spend more on cards than any other demographic on a relative basis, and receive almost 40% of them.
Posted by Universal Ad
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