Report: Even Gift Cards Get The Blues

gift cardsIt looks like gift cards--the much-sung heroes of Christmas past--will not be able to escape a beating this year. Not only are consumers buying fewer cards, they're putting less money on the cards they do buy, according to a report just out from the Hartman Group, a consumer insights firm based in Bellevue, Wash. 

The survey, which included just over 3,000 adults, finds that one-third of consumers spent less this year than last on gift cards, and one-third are consciously planning to cut back on gift-card spending this holiday season. (About 30% of consumers who buy or receive gift cards are planning to buy fewer gift cards this holiday season, and 33% say they will spend less.) Declines in gift-card purchase plans are steepest among consumers with the least to spend.

"That means that stores are going to have to work harder to make their gift cards stand out," says Blaine Becker, Hartman's director of marketing and communications. "Now, these branded cards are going to have to compete just like brands in the real world. When consumers walk by a rack offering cards from dozens of stores, they're overwhelmed. What does your card have that's different?"



Gift cards are still the gift of choice for many shoppers, and the report finds that 60% plan to purchase at least one card this season, with the average expected purchase of four cards. Women, those between the ages of 18 and 24, and parents with kids under the age of 18 are the most likely buyers. And more affluent shoppers (those with incomes of $150,000 or higher) plan to buy 5.64 cards, versus those who earn less than $75,000, who expect to buy 3.98 cards.

People still love getting them, Becker says: "Over three-quarters of consumers enjoy receiving gift cards." Still, he says, there is a bit of a lag, with only two-thirds of consumers reporting that they enjoy giving them. That 14%, he says, represents the many people who still feel a little guilty, as if they haven't put enough thought or effort into something as generic as a gift card. "To some shoppers, cards still feel like they're taking the easy way out," he says.

For retailers, gift cards have been an important part of holiday sales strategies, since more than half of those who redeem gift cards overspend when they take the cards shopping. (Most redeem them within three months.)

This year, the report says, cards represent an increasingly golden opportunity for discount stores. Already, 42% of those who buy gift cards bought a discounter's card over the last 12 months. (Restaurants, clothing, department and electronics stores are the next most popular.) And while Hartman predicts that restaurant and gas card sales will gain this year, discounters will again be popular, because they allow recipients to either splurge on things like electronics and clothing, or buy needed groceries and gas.

Just under a third of those surveyed say they typically use gift cards to cover such necessities, while 43% regard cards as "treats."

Hartman, which conducted the research with A National Research Network, part of General Growth Properties, which builds and operates shopping malls, says it plans to revisit all respondents in January, to compare actual purchases with projections.

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