October 18, 2005
(After October 26, 2005, this article will only be available to eStat Database subscribers.)
About 70% of US consumers have purchased at least one gift card in the past, and about one-quarter of those who haven't expect to make their first purchase of one this holiday season.
It looks to be another good year for gift card sales, according to a survey conducted by Stored Value Systems (SVS), a gift card manufacturer. US consumers are planning on spending an average of $248 on gift cards this holiday season, a big increase from past years. They're also buying more cards on average, 6.5, compared to 4.5 in 2004. The average value of each planned card purchased is $40, a level consistent with past years.
The SVS survey found that gift cards have become an item people specifically plan to buy for others. Almost 85% of those surveyed said they included gift cards on their list of planned present purchases, up from 69% last year.
And gift cards are not just popular during the holidays. In fact, 81% of those who purchased gift cards got them for a birthday, compared to 67% who bought them for Christmas, Hanukah or Kwanza.
It's difficult to say whether the increased popularity of gift cards is particularly good for retailers. A gift card purchase could be made in lieu of a merchandise purchase, and not end up making the retailer any more money. The profit on a gift card could potentially be higher if the card is not used or used only partially (though SVS found that only 6% have not redeemed the full value of a card within a year). Gift cards may also expose the gift recipient to a merchant they were not familiar with, or entice them to spend more in a store since they are getting a discount. Gift cards also give retailers an opportunity to integrate their in-store and online spheres more closely by allowing the card to be used online as well as in person. Quite a few merchants have done this, according to a shop.org and Forrester study from earlier this year.
To learn more about gift cards and other aspects of the upcoming shopping season, read eMarketer's Online Holiday Shopping Preview.
About Me
- Jeffrey Summers
- I am the expert you call when you need to learn how to increase top line sales, lower your operating costs, increase your profit margin, hire and train better managers and staff, evolve your operation into more and better ways of doing business, buy or sell a restaurant, improve your service, engineer (or re-engineer!) your menu, market your business better and less expensively, keep yourself from going nuts because you have no life anymore, open more and better restaurants, don't want to have to give up your first born child to pay a consultant and have more fun! My mission is to enhance the quality of life for my clients by providing the best products and services to help them achieve their personal and professional goals. I take great pride in my clients, my company, my commitment to service and the products I sell. I am a recognized expert in the hospitality industry with over 24 years of success at planning and executing strategies for delivering dramatic results, a former "GM of the Year" for 2 major, full-service, franchises, an Award winning Multi-Unit Executive with 2 of the largest restaurant chains in the U.S., published author, husband and father of two.