2006 Gift Card Study
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Gift cards still growing
Americans are preparing for the holiday season -- the busiest spending
season of the year -- and they are expected to spend $457.4 billion,
according to the National Retail Federation. For years, apparel
has been the No. 1 holiday gift. This year, though, the gift card
is going to give that paisley tie or green sweater a run for the
According to the 2006 American Express Gift Card survey, 66 percent of shoppers plan to give a gift card this year, compared with 57 percent last year. (Apparel-givers are holding steady at 68 percent.) Another holiday survey by Deloitte & Touche showed that consumers are buying more gift cards, 4.6 cards per person compared with 3.9 last year. So whether you're on the giving end or the receiving, chances are there will be a gift card in your pile of holiday gifts.
For businesses, this means big bucks. Sales of open-loop
gift cards (those from the major credit card companies that can
be used anywhere the credit cards are accepted) are projected to
reach $2.14 billion, up 60 percent since 2005, according to Tim
Sloane, director of the Debit Advisory Service at Mercator Advisory
Group. He expects closed-loop gift cards (those that can be used
only at the retailer where they were purchased) to top out at $53.4
billion this year, a modest increase of 3 percent from the previous
If the post-holiday shopping season of 2005 is a guide, merchants
will be busy well into January. A survey by Accenture conducted
in January 2006 showed that 81 percent of gift-card recipients had
already used their cards by the time the survey was conducted, and
43 percent planned to use them within a month of receiving the gift
"Kids are getting gift cards, and they have no
other income," says Dan Horne, a gift card expert and marketing
professor at Providence College. "They're going out to consume."
Retailers also benefit because recipients typically spend more than the gift card total. "At lower-end retailers, such as Target, customers spend 110 percent of the face value of a card," says Horne. "And it's 200 percent of the face value at the high end, at places like Nieman Marcus."
The great drawback of gift cards has been the fees associated with them. "The consumer is buying these cards, and they hand the card to someone else, and (the recipient) is the one who is bearing the cost," says Horne.
On some cards, there are maintenance fees if the card isn't used
after a year, or an expiration date. There is a fee for replacing
a lost or stolen card. There is a fee to cut a check if the cardholder
wants the balance refunded. There is a fee to check available funds.
But this may be changing.