For the first holiday sales season on record, gift cards are expected to sell better than gifts of toys, games, music and movies, rivalling even apparel as the "in gift" this year, according to the new 2006 American Express Gift Card survey.
Gift cards are an increasingly popular gift. For example, the survey found that two-thirds (66%) of shoppers plan to purchase them this year, up from 57% in 2005 and 55% in 2004. But those planning to purchase apparel remained steady at 68% in 2006 and 2005, only a slight increase from 66% in 2004.
Gift card appeal
As the appeal of gift cards among consumers grows, employers are also increasingly using them to reward and provide incentives for staff. One-third of employees (32%) surveyed said that they would like to receive a gift card as a reward for a job well done, although cash and cheques were still more sought-after gifts from an employer.
More than one in four consumers (28%) said that they had a gift card in their wallet (or at home) when surveyed. The survey found that holiday shoppers' acceptance of gift cards has also had a major effect on the retail landscape, particularly in the all-important fourth quarter of each year.
In fact, its rise has had an impact not only on what shoppers plan to buy, and when, but also on when they plan to redeem the gift cards they receive as gifts - a factor that is already extending the once-finite holiday sales period well into the first quarter of the following year.
By allowing consumers to get what they want, gift cards have changed the dynamics of post-holiday shopping. According to the survey, more than half (56%) return fewer gifts when they receive gift cards.
One-third (32%) said they would redeem their gift cards within 1 month of receiving them, and 23% said they would redeem their cards within 6 months. A surprisingly high 7% said they planned to redeem any gift cards they receive immediately, during the post-holiday week.
Delayed redemption drivers
So what, the survey asked, were the reasons for not redeeming gift cards immediately? Well, gift card receivers said they are "waiting for time to go shopping" (32%), waiting for "the perfect item" or "something special" they want to buy (28%), or for a "sale at my favourite store, or tax-free shopping" (18%). When gift cards are finally redeemed, one-third (34%) said they would use them to buy something for someone else (34%).
And gift cards even make good gifts if they're not directly wanted, as 8% said they would be happy to re-gift the card by giving it to someone else.
According to Valerie Soranno Keating, president for American Express Travelers Cheques and Prepaid Services, "While the post-holiday shopping season is traditionally dominated by gift-exchangers and bargain-hunters, retailers should expect to see a growing number of consumers armed with gift cards and shopping with a different mind-set. Gift cards come with the unspoken permission to buy something special, and consumers will be looking to use gift cards less on close-outs and more on luxuries: the latest fashions, a just-released CD, hard-to-get tickets, or even a day at a spa."
Gift card sales drivers
Among those planning on purchasing gift cards, two thirds (66%) want the receiver to choose their own gift, and more than half (57%) feel that the option of giving gift cards has changed how they think about shopping.
Most consumers (73%) said they finish shopping faster than before, and with less stress, thanks to gift card purchases. Shoppers also said they would go to the mall and to retail stores less often, including Thanksgiving weekend (60%). Some are also likely to get their holiday shopping done earlier (59%), although others plan to start later because they know they can always get a gift card (45%).
Respondents said the people they are most likely to get a gift card for are aunts, uncles, cousins and other relatives (58%), a friend or acquaintance (56%), a child or a friend's child (54%), someone who has provided a service in the past year, such as a babysitter, teacher, housekeeper, or postal worker (43%), or a parent (40%).
One in four consumers, it seems, is given gift cards each year because they are considered "hard to shop for", while 20% thought they were likely to receive a gift card in combination with another gift.