Gift Card Frenzy
By Chris Blasinsky
Scientific and not, recent surveys reveal that gift cards turned out to be pretty nice packages during the holiday season.
By now, most of us are hopefully over our holiday "hangover," however you define it. Personally, it took a few weeks after January 1, but it's finally back to normal in my house, and I finally used up my stack of gift cards. Some of them took a while, because I can't drink $50 worth of Starbucks coffee in one store visit, but I had no trouble using up my remaining gift cards to purchase DVDs, clothes, food, shoes, books and movie tickets. Yep, I got 'em all, and I'm not alone.
I love receiving gift cards and think they are perhaps the best gifts anyone could give me. I also disregard sentiments that they are merely "impersonal" pieces of plastic or an "afterthought" thanks to last-minute holiday gift shopping.
When I moved into my first home, I received home improvement and home décor gift cards from friends and family who know how fast gallons of paint, brushes and tools can add up at the register. Because I am an avid runner who can't sit still for more than 10 minutes, I look forward to receiving gift cards for outdoor sporting goods stores. And when my aunt turned 60 years old in December, we gave her a branded gift card worth $60 from the local convenience store she frequents each morning on her way to work.
This past holiday season, and more so than in 2005, I was particularly attuned to gift card displays. At my local grocery store, more than 20 different types of cards from retail stores to restaurants to movie theaters and online music stores were on display near the high traffic store entrance. I also noticed gift cards positioned next to batteries and disposable camera displays and at the register above magazines and mini-cookbooks. At my neighborhood convenience store, gift cards were the first thing I saw when I walked through the door, as they were given a prime position in the first aisle and at the register.
I know I received a handful, but exactly how much holiday shopping resulted in the gift of a gift card?
According to Retail Forward's January 2007 ShopperScape* report, 57 percent of households received gift cards during the 2006 holiday season. On the giving end, mystery shopping firm Corporate Research International's survey of 3,000 holiday shoppers shows that more than 70 percent of respondents said they gave at least one gift card in 2006, while 37 percent said they gave more gift cards this holiday season than in 2005.
Furthermore, the fourth annual National Retail Federation (NRF) Gift Card Survey, conducted by BIGresearch, indicated that gift card sales would total $24.81 billion during the 2006 holiday season, a $6 billion increase over 2005 when gift card sales hit $18.48 billion. Tracy Mullin, NRF president and CEO, commented that consumers love gift cards "because they take the guessing out of holiday shopping and retailers love them because they are easy to stock and take up minimum shelf space."
And clearly some of those cards were sold in convenience stores, perhaps fueled by the December 22 article in USA Today quoting NACS that suggested convenience stores are a perfect place to pick up "last-ditch gifts," prime among them gift cards. The story kept us busy at NACS, as we conducted last-minute interviews with radio, newspaper and television reporters on the perfect last-minute gifts available at convenience stores, especially for procrastinating shoppers.
Whether or not the NACS staff is representative of consumers across the country, I used them to gauge my assumptions on gift card sales. Out of 40 respondents to my informal poll, 82 percent said they received at least one gift card, while 63 percent said they gave at least one gift card.
In my survey, gift cards were received and given for retailers such as Target, The Home Depot, Best Buy, Starbucks, Crate and Barrel, Sephora, Borders, Nordstrom, Ann Taylor, Gap, Whole Foods, Sheetz, FasMart, 7-Eleven and Wawa, as well as movie theater and iTunes gift cards. The most gift cards were received and given for restaurants and coffee shops, followed by clothing specialty stores.
On a side note, only one of the respondents, who received six gift cards, went online at GiftCardBuyBack.com to "sell" her unwanted cards and receive a check worth about 60 percent to 80 percent of the value of each card.
While I only sampled a handful of folks, the big retail winners of my survey also appear to be on par with Retail Forward's top 10 retailer gift cards received during the 2006 holiday season (see chart on this page).
The obvious exception from my survey is Wal-Mart's lack of presence. Only one person in my survey received a Wal-Mart gift card, while more than one out of five households surveyed for Retail Forward's ShopperScape report received a Wal-Mart gift card.
The next time you're scratching your head hoping to come up with the perfect gift, think about the multitudes of ideas this growing category has to offer. The long-term question is whether gift cards have the legs to evolve from a retail trend to an industry profit center. Retailers don't turn significant profits from gift cards, but those pieces of plastic can create loyalty and drive sales in other categories. I'm the type of shopper who goes into a convenience store for, say, a pint of ice cream. But what I usually walk out with is five additional items - and on some occasions - a gift card.
Chris Blasinsky is the managing editor of NACS Magazine. She can be reached at (703) 518-4296.