Christmas loyalty redemptions offer more cheer
In a bid to save money and stretch household budgets, more Canadian consumers than ever before said they plan to redeem their hard-earned and carefully hoarded loyalty points and miles for Christmas gifts this holiday season, according to the BMO Annual Holiday Spending Outlook.
While credit cards (at 64%), debit cards (at 57%), and cash (at 56%) remain the three top payment preferences among consumers, the increasingly popular practice of redeeming loyalty rewards as a fourth option suggests that they are looking for ways to stretch their budgets. But the good news for retailers is that this growing thriftiness does not come at the expense of in-store and online purchases.
"Canadians consider loyalty rewards a bona fide gift-giving currency," explained Su McVey, vice president of customer communications and marketing for BMO Bank of Montreal. "More than 85% of respondents said they do not think that using rewards for gifts is tacky; in fact, the intention to use rewards as an alternative to cash or credit to purchase holiday gifts increased by 6% to 20% in 2011 (up from 14% in 2010)."
Canadians, who plan to spend the equivalent of US$1,397 - on average - this holiday season, are being both frugal and generous, as 26% said they intended to use the savings generated by redeeming loyalty rewards to buy additional gifts.
LoyaltyOne, owner and operator of the Air Miles Reward Program, has reported that redemptions in all of the Air Miles reward categories tend to spike during the holiday shopping season, but electronics and toys typically show the largest increases. But there has also been a marked spike in flight redemptions, with 13% of Canadians planning to use loyalty rewards for holiday travel. Sun destinations remain the most popular travel choice, with the top five holiday destinations for Air Miles collectors being Mexico, Cuba, Dominican Republic, Jamaica, and the Bahamas.
In terms of regional preferences, people in Ontario were the most likely to use rewards for gifts (25%), while people in Quebec were the least likely (14%). Those in British Columbia were the least likely to say using rewards for gifts is tacky (7%), while people in the Atlantic Provinces were the most likely to put money saved from using rewards toward additional gifts (34%).