Gift Card Popularity Up This Holiday: Survey

Gift card sales are expected to spike during the 2005 holiday season, according to a recent survey from First Data Prepaid Services’ ValueLink. Fifty-four percent of survey respondents who purchased gift cards this past year indicated that they have purchased gift cards for others at Christmas time. This is more than double the 2001 figure, when the survey showed 23% of those polled used gift cards for holiday giving.

Gift cards accounted for more than $17 billion in holiday sales in 2004, according to the National Retail Federation.

Approximately six out of 10 (59%) American adults, an estimated 131 million people, either purchased or received a gift card in the previous 12 months. Per the ValueLink study, consumers are buying and using gift cards across a more diverse list of retailers, food service and entertainment providers than five years ago. Major retailers continue to enjoy a dominant share (70%) of gift card purchases, while restaurants, food stores and entertainment-based stores have seen increases in volume. In 2005, restaurants accounted for 12% of gift card purchases, more than double the 5% reported just two years prior. Food stores accounted for another 6% of gift card sales in 2005 while entertainment-based businesses accounted for 5%.

The average value loaded onto gift cards has fluctuated over the past five years from a low of $41 per card in 2003 to a high of $59 per card in 2004, reflecting increased gift card sales at diverse retail, restaurant and entertainment locations offering lower average ticket goods and services.

“For the American consumer, gift cards are now planned purchases that have become an integral part of our holiday gift giving. But, just as important, they are a part of our year-round gift giving, general retail purchase activity, as well as, a growing factor in our corporate and customer incentive, reward and loyalty programs,” said Ed Labry, president of First Data Prepaid Services.

Other key research findings include:

• 25% of the consumers surveyed who purchased gift cards for themselves, did so because the cards offer a way to budget or control what they spend;
• 27% of those who purchased a gift card in the previous 12 months said they purchased gift cards at a store that offers gift cards from multiple retailers/merchants;
• Nearly three out of four respondents who purchased a gift card in the previous 12 months, (72%), said they purchased and gave gift cards as a primary gift.
• 50% of gift card receivers reported using up the value of their gift card within one trip, while another 21% used up the value of their gift card within two trips.
• 24% of those who received a gift card in the previous 12 months report spending the total value of their gift card within one week of receiving the gift. Another 29% said it takes one month to spend the total value on their card.
• The average dollar amount spent on all gift cards remained well above $200, coming in at $228 for 2005.
• 61% of respondents said they are likely to purchase a gift card in the next 12 months.
• Overall, respondents said they are likely to purchase an average of 5.5 cards in the coming year. That reflects an average of 1.5 more cards per year than when First Data began tracking consumer’s gift card behavior in 2001.
• 41% of respondents said they are interested in a spending card that is tied to a rewards program.

For more research findings click here.