What's on your Christmas wish list? If the National Retail Federation is right, gift cards are probably holding a respectable place toward the top of the list. These little pieces of plastic are requested most this time of year, and they have the added perk of allowing people to get what they want instead of money wasted on presents that sucks. This trend may give retailers a hand this year, as they'll be able to keep their inventories down.
If shoppers are slow with the cash, retailers won't have to resort to just slashing prices as they had to last year to move product out the door. When the stuff on the shelves is cheap, gift cards aren't as attractive because there's a deal to be had! This year, if inventories are kept down, gift cards are more likely to move.
Ralph Rolen, general manager of Stored Value Solutions (which processes gift cards for retailers), told USA Today, "If you have a choice between buying something at 70% off or a gift card, you're more likely to give something at 70% off."
Last year, gift card sales fell almost 6% to $24.9 billion, the NRF says, making it the first year gift card sales fell since tracking began in 2002. Fees and restrictions made them a bit less popular, as did the bankruptcies of several major retailers. Though it's unlikely that we'll see the same problems again this year, consumers still have their doubts.
A decline in consumer spending could push the average value of gift cards down to 11.5% this year, according to Archstone Consulting, but retailers are hoping to move more cards to compensate for the smaller face values.
To entice gift-card giving, some companies take the following steps:
1. Down with fees!
American Express (AXP) decided to eliminate monthly fees back in September. While this trims $2 a month in revenue from each card, it may help the company access the 13% of shoppers who don't turn to gift cards.
2. The human touch
Personalized gift cards are being offered by some retailers in order to make them seem more personal. For consumers who prefer to give gifts that make a connection with the recipient, this could be an option.
3. Here's a little something extra
To stimulate gift card sales, some companies are accompanying them with a free gift or discount with purchase. J.C. Penney (JCP) is tossing in discounts on seasonal items, and Target (TGT) is giving shoppers who spend $100 or more before noon on the day of Thanksgiving a $10 gift card.
Newspaper ad revenue of 28%, 8 quarters of double-digit drops
Closing Bell: Earnings working against stocks (BCRX, DELL, DHI, INTC, LEAP, PCS)
Chasing Value: E-Trade, a word of caution
Reader Comments (Page 1 of 1)
11-16-2009 @ 9:31AM
onocm0208 said...
Best bet is to go with bank cards, they don't charge you for them if you have an account there, and most likely your bank is not going to go under, and if they do change hands, the gift card would still be good. Its BS that they give you a year to use a gift card, HEY EXTORTION!
11-16-2009 @ 11:29AM
Leon said...
I don't get it. GM lost $1.2 Billion over the last 3 months and the banks say they are making a comeback and turning things around and it is great news.
I lost $2000 the past 2 months due to unemployment and the bank says I am all f**k*d up and need to address my problems better.
11-16-2009 @ 12:09PM
Bill said...
Having never messed with gift cards in the past, learned a disappointing lesson recently. Retiring in December 2007, two individuals gve me $50 VISA Vanilla debit gift cards. I put them in a drawer for a "rainy day." Well, traveling out of town a few months ago, took the cards. When I went to use them, both were "denied" when attempting to pay dining bills. Calling the 800 number on the back, shockingly discovered that VISA deducts a couple of bucks each month off the card--they expire 12/09. Each card had about $12 balance on them. Sad to say, VISA collected the $4.95 each on activation plus $38 each for not using the cards immediately. A real racket by the card companies. Will never purchase one of these cards as a gift for anyone. JMHO.
11-16-2009 @ 9:25PM
toylovercmh said...
Try buying your gift cards at the grocery store instead of buying directly from the retailer, you normally can gain the benifits from the grocery store frequent shopper discounts by buying your gift cards at their store instead directly at the retailer, for example if you buy a $50.00 gift card for example Kohl's, Best Buy, Home Depot etc from Giant Eagle, you get 20 Cents off a gallon of gas, yes not much but at least it is something more than you may get at the retailer, and who said you had to make a special trip to the Giant Eagle to just buy gift cards? Pick them up with your groceries, and help pay for that trip too LOL
11-16-2009 @ 10:53PM
alomba1328 said...
I will not buy gift cards ever since Fortunoff went under and refused to honor them or refund the money. Besides, gift cards come with all kinds of hidden restrictions. I just give cash instead.