Payments News from Glenbrook Partners
Glenbrook   Book   Education   Views   Archives   Store   Advertise   About         SUBSCRIBE:

2009 Gift Card Trend Report from Archstone Consulting

Archstone Consulting has announced the results of its 2009 Gift Card Trend Report examining the performance of the gift card market, consumer and retailer trends, and government action.

"Gift cards are still the gift of choice among consumers, but gift card purchases reflect the challenging economic times; values per card are down, and the focus (similar to last year) is on the pragmatic not frivolous," commented Dave Sievers, Principal and the Consumer Products and Retail Practice lead at Archstone Consulting.

  • Recent research suggests that the number of gift cards purchased had increased in the six months leading up to April 2009.1
  • Consumers are buying gift cards that have less value (the average value of cards is down by $6, or 11.5% to $46) and are generally buying cards that can be redeemed for necessities and practical purchases (e.g., big box retailers, restaurants, department stores) versus discretionary items.2
  • "Given that the average card price has already trended down by 11.5% and the general strain on consumer buying, Archstone Consulting anticipates that the 2009 Holiday Gift Card market will range between staying flat at $24.9 billion and decreasing by 5%," commented Sievers.
  • "A secondary market for gift cards continues to survive via numerous websites (such as eBay, cardavenue.com), so card recipients have an "out" if they don`t want to use the card or would simply prefer the cash," commented Sievers. Depending on the site, consumers can swap gift cards or sell their cards for cash.3

Retailer Trends

  • "Aggressive gift card innovation is continuing in tough times," commented Sievers; for example, two prepaid companies (Wired Benefits and InComm) are collaborating to establish a "medical services" gift card through Visa that will be redeemable for services across some of the nation`s largest health networks.4
  • Gift card purchasing and distribution online is an emerging trend, with retailers such as CVS having recently adopted online platforms (powered by third party company CashStar) that can be used to customize and send gift cards via e-mail. "Despite the increase in cards available for purchase online, there is currently a lack of standardization in redemption settings (i.e., online vs. in-store vs. both) and in distribution methods (i.e., via e-mail, shipped via U.S. mail) across retailers, which could cause consumer confusion," noted Hanna Hamburger, Director in Archstone Consulting`s Consumer and Retail practice.

Negative Press and Retailer / Government Action

  • Negative press about gift card restrictions such as expiration dates, fees for balance inquiry have compounded by concern over bankrupt retailers not honoring cards continues.5
  • To combat negative consumer impressions about gift cards, both retailers and the U.S. government have responded with initiatives to create a more consumer friendly / less restrictive environment for gift card use.
  • Nine preeminent retailers formed the Retail Gift Card Association (RGCA) in late 2008 to promote and implement consumer-centric practices in their gift card programs.6
  • The forthcoming Credit Card Accountability, Responsibility and Disclosure (CARD) Act will impose some restrictions to make gift cards more consumer friendly (e.g., cards cannot expire for 5 years, dormancy fees can only be charged if cards have been inactive for 12 months, and all fees must be fully disclosed at the time of purchase), but will not eliminate all fees. The Act permits a one-time "service fee" at card issuance, which will likely cause prepaid debit gift card providers (e.g., AMEX, Visa) to shift to more of an "up-front" fee model to satisfy revenue targets.7

For more detailed information relating to Archstone Consulting`s 2009 Gift Card Trend Report, please contact: David Schutzman, Chief Marketing Officer at Archstone Consulting.

Notes on Methodology

This assessment was created by Archstone Consulting between July - September 2009, using Archstone Consulting analysis and secondary source content. Significant analytical and research contributions to the assessment were made by Archstone Consulting Director, Hanna Hamburger, Associate, Stacie Caine Bogdan and Senior Analyst, Andreas Apostolatos.

1 The Hartman Group, April 2009; National Retail Federation/ BIG Research, November 2008

2 The Hartman Group, April 2009

3 Bankrate.com

4 Payments News, June 2009

5 The New York Times, November 2008; ECT News Network, January 2009

6 Retail Gift Card Association, December 2008

7 The White House, May 2009; Philip Keitel (Payment Card Center), August 2009

Add your comment... (note that all comments are reviewed before they're published)

Feed You can follow this conversation by subscribing to the comment feed for this post.

The comments to this entry are closed.