Gift Card Sales Will See 25% Increase
According to estimates made by Archstone Consulting, the 2007 holiday season will see $35.0 billion in gift card sales, a 25% increase from last year’s $27.8 billion figure. Retailers have used more creative techniques to make their gift cards more popular and pervasive.
Many consumers are probably well aware of this trend, but more retailers are selling their gift cards at places where they are not redeemable. It may sound counterintuitive, but for retailers like iTunes the logic is pretty clear. Just like phone cards, the place where the sale happens is almost irrelevant, since the service/product rendered will happen outside of the store regardless.
Retailers are also making gift cards that will serve as more than just a redeemable slab of skinny plastic. They “are innovative in their use of gift cards, making them double as DVDs and CDs and offering them in bags, boxes and tins,” according to Jeffrey Grau, senior analyst at eMarkter.
American adults who use the Web still choose to purchase the vast majority of their gift cards during the holiday season at a retailer’s location. Seventy-eight percent of respondents to a survey conducted by The Marketing Workshop, Inc. for Comdata in February 2007 said that they purchased their gift cards during the 2006 holiday season at a specific retailer’s location. Only 26% said they purchased gift cards online, while 22% said they purchased gift cards at a gift card mall.
There is an obvious opportunity here. Logically speaking, Web users should love nothing more than to avoid a trip or two to busy shopping centers and order gift cards from the comfort of their homes.
Despite the expected increase in gift card sales, Archstone foresees a small increase of 3% in holiday retail sales this year. Revenue derived from gift card sales cannot be recognized as such until they are actually redeemed.
