This Holiday, Will Gift Cards Make A Comeback?

by , Oct 15, 2010, 1:43 PM
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With retail sales expected to rise modestly this holiday season, many experts are keeping a close eye on gift cards, wondering just how card-weary people are.

Accenture recently predicted that 56% of Americans would buy at least one gift card this season, down from 59% last year.

On the one hand, this Christmas, experts say people want convenience, and cards certainly play to that pragmatism. "They aren't the most creative gifts, but they're easy to buy and people like to get them," Sue Golden, SVP/Client services for MARS Advertising, tells Marketing Daily. "It's just one more indication that this holiday, shoppers -- who will be buying fewer gifts this year -- are looking at everything through this lens of practicality."

On the other, "this is likely to be a very promotional holiday, so if shoppers can get a great deal on a product, they may choose to give that over a gift card," Frank Badillo, VP/senior retail economist for Kantar Retail, tells Marketing Daily. "That way, it can look as though they spent more than they really did."

The National Retail Federation says the dollar amount Americans spend on gift cards has been falling -- peaking at just under $160 prior to the recession, and receding to $140 last holiday season. The main reasons for the decline, it says, include the sense that gift cards are too impersonal (22%), concerns about expiration dates or added fees (12.6%) and shoppers' preference for buying items on sale (9.1%.)

But for 27% of the population, they are the No. 1 gift choice. And those who buy them are heavy users -- purchasing an average of 3.5 cards, spending $39.80 on each. Restaurants are the most popular card choices, says the NRF, with a 31% share, followed by department stores, with 29.3%, and bookstores at 14.7%.

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