Holiday Gift Cards Are More Popular Than Ever

Comdata® Stored Value Solutions recently conducted its fifth annual survey of gift card purchases by adults to gain insights into the upcoming holiday season, and, once again, the news is good for retailers.

Highlights this year include:

• For the 2007 holiday season alone, the average gift card purchaser expects to spend $203 on gift cards, up from $186 in 2006.
• The average amount per card increased from $46 in 2006 to $53 in 2007.
• 38 percent of those surveyed who have never purchased a gift card are very or somewhat likely to purchase gifts cards this holiday season, representing an 81 percent increase in new card users over last year.
• 53 percent of card users often or always spend more than the amount originally loaded onto their cards. They are also most likely to redeem their cards over two visits, increasing store traffic and the potential for sales over the value of the card.
• 85 percent purchase gift cards because they want the recipient to be able to select their own gift, while 57 percent don’t know what to buy.
• Department stores are still the most popular place to purchase a card, followed by clothing and book stores, then restaurants.
• There was a 40 percent increase in cash card purchases compared to last year.
• One-half of gift card purchasers are more likely to buy a gift card that comes in a box, with ribbon and tissue, or in a tin.
• 48 percent of gift card purchasers would be likely to buy a gift card that is a CD or DVD with multi-media content.

“It is clear that gift cards continue to gain popularity and are pervasive in the retail industry,” said Bob Skiba, executive vice president and general manager of Comdata SVS. “Consumers are finding more things to like about them, including the increasing availability of gift card malls, special packaging, and expanded uses, such as budgeting tools and discount opportunities. It all adds up to great news for retailers.”

The survey shows that the convenience of gift card malls is clearly a selling point for consumers.

• Last year, 94 percent of purchasers bought cards at a specific retail location. In 2007, only 88 percent prefer a specific location.
• Last year, 22 percent made purchases from gift card malls, and this year, that number increases to 27 percent.
• 53 percent of all recipients report spending more than the value of their cards, and one in five says they pay retailers to reload their cards. On average, they reload cards with $47, up from $32 in 2006.

“It is all about convenience and one-stop shopping,” Skiba said. “Consumers get a huge variety of cards for everyone on their list, but they can purchase them all in one place.”

“Others use gift cards as a budgeting tool—limiting themselves to the amount on the card. Valuable discounts, mostly on gas and oil, are real incentives for gift card purchases.”

• 22 percent of respondents have purchased gift cards as a budgeting/savings tool.
• 20 percent have used gift card purchases to get discounts on gas purchases.

For retailers targeting the Hispanic market, the news is especially good this year.

• 26 percent of Hispanic purchasers report giving gift cards to children as a budgeting tool or to use as an allowance.
• Hispanics received gift cards with the highest average value among all ethnic groups ($71 vs. $41 for Caucasians and $60 for African Americans), representing a $33 increase from last year.
• Hispanics are most likely to spend more than the value on their cards, making up the difference with their own money. 69 percent of Hispanics surveyed indicate they spend more, while only 52 percent of Caucasians and 44 percent of African Americans report this behavior.

“The Hispanic community is embracing gift cards and enjoying their broad range of uses,” Skiba said. “All indications are that there is exciting growth potential in this segment of the population.”

For many, the joy of giving and receiving gift cards is still enhanced by the presentation, and gift card givers are getting creative.

The survey results are based on 802 Internet surveys collected during September 12-18, 2007.