The Gift That Keeps On Giving–Well Past Peak Season

Dec 08, 2005 1:40 AM  By

Expect your operation’s peak season to last longer this year as consumers redeem a plethora of those gift cards—this holiday season’s third most-wanted item, according to a survey of 7,128 consumers conducted by the National Retail Federation. Gift card sales will total $18.48 billion this year, a 6.6% increase over 2004, when holiday gift card sales hit $17.34 billion. The average consumer will spend $88.03—15.6% of his or her holiday gift budget—on gift cards. And both givers and receivers will benefit: More than two-thirds (75.5%) of consumers polled say that they plan on purchasing at least one gift card, and more than half (52.3%) would like to receive gift cards this holiday season.

The NRF offers the following guidelines for merchants and shoppers:

1. To ensure that a recipient receives the card’s full value, shoppers should buy gift cards only from reputable retailers. Gift cards on online auction sites are more likely to be counterfeit or obtained through fraudulent means. Additionally, consumers should keep their original receipt with the value of the card that they purchased in case there are any problems with the card when it is redeemed.

2. From the retailer’s point of view, the gift card is not a sale when it is purchased—it is counted as a sale only when exchanged for merchandise. As a result, some of the $18.48 billion spent on gift cards this holiday season may not show up as “holiday” sales, but instead as sales in January or February, when the gift card is redeemed.

3. Offering a “stored value” card—one that automatically updates the balance each time it is used—is more efficient than the retailer reissuing another gift certificate to the consumer for the balance.

4. Retailers have different policies for gift cards. Some expire over a certain period of time (usually 12 months or more) and some depreciate month by month if a card has been. But most retailers are moving away from expiration dates and depreciation fees in response to customer requests. Service fees and expiration dates are more common with mall- and bank-issued gift cards than with gift cards from retailers.

5. Technology now enables retailers to reissue a lost gift card if customers have kept the original purchase receipt. In some cases, gift card recipients can register their card on the store’s Web site and check their balance online, as well as receive a new card if they lose the original one.

6. Another trend is for stores to carry gift cards (often for a variety of products and services) at their checkout counters because the cards are not active until scanned.

For more information, visit http://www.nrf.com.