New Report Says Gift Cards More Popular Than Ever

Gift cards have come of age, according to "Holiday Retail Strategies 2004: How Christmas Shopping Trends Will Shape the 2004 Season," a study recently released by Packaged Facts, a publishing division of MarketResearch.com. According to the report, gift cards continue to increase in popularity: They accounted for 10 percent of the $226 billion in holiday sales for 2003, double the 2002 figure.

Considering the fact that chain bookstores all offer gift cards -- and not just during the holiday season -- this is just "one more thing [independent booksellers] need to be aware of and jump on," said Annette McEvoy, the report's author and an independent expert with senior level management experience in the retail, consumer products, and advertising industries. "And [gift cards] will drive traffic to [booksellers'] stores, there's no question."

The Packaged Facts study found that nearly three-quarters of U.S. consumers would like to receive monetary gifts during the holiday season. Furthermore, nearly 70 percent of holiday shoppers would like to give these types of gifts as well, usually in the form of cash, gift cards, or gift certificates, the study reports.

In the study, McEvoy writes: "Gift cards and gift certificates are essentially the same in terms of how they are utilized. However, there are meaningful, convenience-related differences between gift cards and gift certificates to the gift recipient. Gift cards are inherently more convenient as they have the durability of credit cards and can be transacted more easily. Additionally, for the teen recipient, they are collectible items if the graphics are 'cool' enough. Gift certificates are the older, traditional version of monetary gifts and skew to baby boomer customers and behind-the-times retailers. (Gift certificates are now estimated at only approximately 20 percent of the monetary category.)"

"[The gift card has] come to be seen as a more personal item than it used to be -- one that allows for more personal choice, minimizes the potential for returns and boosts the season' s business potential for retailers," said Tara Weiner, national managing partner of the Consumer Business Practice at Deloitte & Touch, as quoted in the Packaged Goods report. "People often spend more than the value of the card."

Additionally, the report found that in recent years there has been a slower start to the Holiday season because consumers are expecting discounted prices the closer it gets to December 25. As such, the week leading up to Christmas has become the most important sales period for retailers. Moreover, the week following Christmas has increased in significance, partly due to gift cards.

The study notes, "[A]stute merchants are now planning this week to capture higher margin sales due to the 'found money' attitude produced by gift cards…. Even Christmas day will start being an important retail day for the Internet and retailer Web sites, where gift cards will be redeemed. Retailers will win by touting after-Christmas deals online on the 25th."

McEvoy stressed that books are still a popular gift option, but, she said, "There's a time that you don't buy a book because you are not sure if the reader will like it. A gift card takes the risk out of the purchase." She added that, while the Holiday Retail Strategies study concentrated on holiday trends, gift cards' popularity over paper gift certificates is a general trend that simply surges at the holidays.

"The Packaged Facts' Holiday Retail Strategies report clearly states what we have been saying all along -- consumers would rather have gift cards than gift certificates," noted Jill Perlstein, ABA marketing director. "As this and numerous other studies show, retailers who do not offer gift cards to consumers will lose sales to those that do."

Perlstein added that booksellers should not to wait until the next holiday season to add gift cards to their product mix. "Mother's Day is less than two months away. And it takes a minimum of three weeks for booksellers to receive their cards from the time their order is placed," Perlstein said. --David Grogan