It's a good season for US and UK gift cards

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By: Wise Marketer Staff |

Posted on October 18, 2005

One third of holiday season gifts are unwanted by the recipient, and more than half of the UK's population will hide an unwanted gift in their cupboard after receiving it - all of which bodes well for gift card providers - according to research from mail order catalogue distributor Catalink.

Catalink surveyed more than 1,200 consumers' gift-giving habits, and found that one-third of people wanted to ditch their inappropriate presents, with 55% of these admitting to hiding unwanted gifts in a cupboard, while 26% donated them to charity shops, 15% were thrown in the bin, and 4% were cheeky enough to recycle them as gifts for other people. Worse still for the retailer, unwanted gifts that aren't treated quite so sneakily will often end up being either returned or exchanged.

Gift card growth
According to UK gift card provider Giftex, these findings confirm the company's earlier prediction that the demand for gift cards and vouchers will rise this holiday season, simply because the choice of final gift is made by a gift card's recipient - who always knows best what they really want. Tony Craddock, CEO for Giftex, maintains that retailers must actively promote the use of gift cards in order to reduce post-Christmas returns and exchanges, and all the retail costs associated with handling them.

Going electronic
Many leading retailers are already implementing electronic gift card programmes to make it easier for customers to buy them, whether in-store or online. Giftex's recent research into gift and stored value cards (the 'The European Guide to Gift and Stored Value Cards' report) forecast that there will be 300% more gift cards sold each year by the end of 2006 in the UK alone. It also predicts that the market for gift cards will grow by 1,000% over current levels by 2007. Already, in the USA, consumers spend some US$70 billion a year on gift cards.

Key UK findings
Data from Catalink's research and from Giftex's recent report show that:

  • Britons currently spend 16.8 billion a year on gifts, but a third of the presents are unwanted. The overall choice-based gifts market is expected to more than double from 1.9bn in 2004 to 3.7bn in 2007 and grow steadily throughout.
  • The UK's retail industry will see more than 300% growth in the number of gift card programmes in the next year, most in time for the critical Christmas gifting season in 2006. 50% growth in the number of gift card programmes by the end of 2005 is also predicted.
  • Of the 82 major UK retailer respondents that did not currently have a gift card programme, nearly 3 out of 5 are planning to adopt a gift card platform, either in addition to the current voucher system or as the only offering.
  • But more surprising than the 60% who were planning to offer cards is the speed with which they are migrating to such a platform: More than one-quarter of are planning to have gift cards in time for the 2005 Christmas season, while over 80% expect to be up and running within one year.
  • Retailers thought that gift cards/vouchers had "tremendous growth potential" (70% agreed, as opposed to less than 7% who disagreed).

American survey
And in the USA, an annual survey of adult gift card purchasers and recipients conducted by electronic gift card provider Stored Value Systems (SVS) revealed that consumers in the US intend to spend an average of US$248 on gift cards during the 2005 holiday season (a significant increase over US$223 in 2004 and US$183 in 2003). Additionally, the percentage of purchasers for whom a gift card is a planned purchase from the minute they make their list has jumped from 69% in 2004 to 84% in 2005.

Bob Skiba, executive vice president for SVS, said: "This survey reinforces a trend we've seen over the past two years. We continue to see a larger number of buyers who intentionally choose a gift card to ensure the recipient gets something they will enjoy."

This year's survey also found that the percentage of those who use gift cards in the US is remaining relatively steady, as 70% of consumers have either purchased or received a gift card, and of the 30% who have not, one-quarter said they are likely to make their first gift card purchase for the 2005 holiday season.

Key US findings
Other key findings from the survey include:

  • On average, the number of cards purchased in the past year has increased from 4.5 in 2004 to 6.5 in 2005.
  • The number one occasion for gift card purchases is birthdays (81%) and, second, the winter holidays (67%), which include Christmas, Kwanza and Hanukah.
  • The average value of gift cards purchased in the past year is US$40 (staying fairly steady over the past three years).
  • In terms of visual appeal, the importance of the appearance of the card saw an 11% increase.
  • Among those who have received gift cards, almost three-quarters use their cards up completely. Those who don't only leave "a few pennies" on it. More than 80% discard the actual card when its value is used up.
  • One-third of gift card recipients redeem the entire value of the card within one month of receipt. All except 6% redeem it within one year.
  • Department stores, restaurants and clothing stores are the preferred places to receive gift cards.

For additional information:
·  Visit Catalink at
·  Visit Giftex at
·  Visit SVS at