Dealing in Cards

At a New York Target store, one gift card among the many is dye-cut in the shape of a red shopping basket, filled with three little white puppies sporting red circles around one eye, spitting images of Target’s canine mascot.

Over at a Connecticut Starbucks a rack includes a gift card dressed and ready for Valentine’s Day with pink and red hearts, along with a winter-themed card. And at Wal-Mart Stores, shoppers can customize gift cards with a photo of Aunt Jenny or brother Paul

Since gift cards have now staked their claim as a “must give” in the world of giving—gift card sales were projected to hit $18.5 billion over the holiday season, up 6.6% from last year, according to the National Retail Federation—the challenge for suppliers is how to stand out in a very crowded market.

Wal-Mart, one of the leaders in gift-card innovation, caused a stir over the holidays with its “huge” fixture that showed off a whole variety of coordinated packaging for its dozens of gift card designs. For example, shoppers could pair a holiday-themed gift card with a matching tin and greeting card. “Gift cards are not thought of as the impersonal gift they were four years ago, so now its up to each individual supplier to differentiate themselves and make that gift card stand out to the consumer,” says Nancy Serrato, director of corporate gift cards for Safeway and the president of the Incentive Marketing Association’s Incentive Gift Card Council.

Safeway has come out with new “skins” for its cards to keep them fresh and topical. It is also developing cards targeting convenience: the shopper in a hurry, running in for a sandwich or a cup of soup. The grocery store chain plans a mid-year launch likely themed around the deli and bakery areas.

Harry and David is up to something new: this spring it will begin wrapping its, or its clients, gift cards with one of its confections (which the client can brand) as corporate incentives. “The gift provides instant gratification, as well as a gift that can be used later,” says Karen McNeilly, regional sales manager Harry and David Corporate Incentives & Promotions.

Starbucks Coffee Co., a kind of superstar in the gift card arena, has others watching its program and marveling at its innovations and the loyalty of its cardholders. Since Starbucks launched its gift card program in November 2001, more than 62 million cards have been activated totaling more than $1 billion, according to Starbucks spokesperson Nick Davis.

Starbuck’s customers receive the card in a sophisticated envelope that includes a welcome message and information on how to register their cards. It collects personal information at registration and then markets to its customers with special offers and other benefits.

Starbucks routinely updates the skin on its cards with designs that are sought after on eBay and are collected by coffee lovers. In one recent eBay.com posting, a $3.25 bid was placed for a 2005 Starbucks gift card that the seller claimed was a limited-edition, collector’s item sold only in Hawaii.

Gift cards ranked third on consumer’s holiday wish lists last year with 52.3% saying they would like to receive one. More than two-thirds (75.5%) said they planned to buy at least one card. Over the holidays, the average consumer was expected to spend $88.03 on the cards, the NRF said.

Another loyalty builder are reloadable, limited-edition gift cards that consumers run to purchase that then become collector’s items.

National Amusements did just that with its collector’s series gift card built around the Universal Studios box-office smash King Kong. The card is accepted at multiple theaters and can be purchased in values of $5 to $100. The card is good toward any movie ticket or concession purchase.

Burger King had a similar plan with its Star Wars-themed gift cards that were available in six designs, each featuring two Star Wars characters—one good and the other from the Dark Side. It launched the program specifically to build loyalty among customers and drive trial. Starbucks has a limited-edition gift card, themed around its first store in Pike Place in Seattle, WA, which can only be purchased at that store.

Safeway considers its gift cards—which can be used for food, gas or to buy other brand gift cards sold at its stores—walking billboards that encourage loyalty among its shoppers. “When somebody opens up their wallet and they see the card, it reminds them to come back to Safeway, that they’ve got money to spend and they come back and spend it,” Serrato says.

Driving Trial

If consumers aren’t attracted to all the tricked-out gift cards, suppliers are connecting with them in other ways.

Last November, McDonald’s officially launched its first reloadable gift card, the Arch Card, by seeding $22 million worth of cards to Southwest Airlines passengers, its own customers and via a partnership with American Express. Rival Burger King launched its Have It Your Way gift card just weeks before McDonald’s.

McDonald’s launched the card with four designs and plans to roll out different designs tied to events and seasons, including one to the Olympics, says Gina Pfeifer, VP-business integration McDonald’s USA. “Customers like to have change, new fresh designs tied in with things that are important to them,” she says. “What we’re seeing is customers get a card that they particularly like and they stick with it and then we see others that like to collect cards. It’s very individualized.”

Pier 1 Imports recently conducted a test in the Las Vegas and Los Angeles markets, putting gift cards on door hangers, along with an invitation to come to the store.

“It’s a great way to get incremental traffic, it just gets people in the door,” says Julie Goodman, gift card programs manager for Pier 1.