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09.17.2008

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Gift Cards Purchase & Redemption, Pre-Holiday Outlook 2008 This report is the authoritative marketplace report for companies currently involved with or planning a gift card-based incentive or loyalty program. Order your copy today!

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08.25.2005 "Costco vs. Wal-Mart: Getting Beyond Utility"

05.19.2005 "The Myth of One-Stop Shopping"

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Archives »
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“Paper” or Plastic? Gift Cards and the Changing Face of Gifting

Environmental issues may be forcing grocery stores and other retailers to rethink and replace one type of plastic (the plastic bag), while plastic of another kind, the prepaid gift card, is quickly supplanting “paper” as the gift of choice for a majority of American consumers.

The gift card market is a multi-billion dollar industry. Prepaid gift cards have seemingly become the perfect answer to the age-old question of “what to give” for any occasion. Extending beyond other old-fashioned forms (e.g., cash, checks, paper gift certificates) and morphing to include diverse categories (retail, phone, books, movies, music, debit/credit) gift card buying and giving continues to gain in popularity.

According to Gift Cards Purchase & Redemption, Pre-Holiday Outlook 2008, a report by The Hartman Group, Inc. and A National Research Network (NRN), nearly three-quarters of Americans have either purchased or received a gift card over the past year. Gift cards change how consumers shop for any number of gift-giving occasions, the most important of which is the holiday shopping season.

That gift cards can be purchased just about anywhere, from gas stations to supermarkets, department stores to bookstores and restaurants to online, means that shoppers can now find a gift card for nearly any occasion in nearly any location. This poses a significant challenge for marketers as they struggle to find ways to draw attention to their brand’s gift card hanging among many other brands aggregated on a gift card end cap display.

Standing out from competitors in the gift card marketplace is a high stakes game. On average, consumers who purchased gift cards within the past year bought 5.3 gift cards, spent $262 at an average of $52 per card.

As our report indicates, with over half of consumers planning to purchase at least one gift card this holiday season, one has to wonder what the ubiquitous nature of gift cards in a one-stop shopping setting such as the local grocery store really means to harried shoppers: Is it really a "mini-mall" of retail brands, or simply another collection of SKUs among tens of thousands?

Gift Cards: Better to Receive than Give?

To answer the question about the relevance of many of today’s multi-brand card displays, many consumers find such cards lacking in personality. As a consequence, a discrepancy exists in consumers’ opinions about gift cards. While three-quarters of consumers like to receive gift cards, only two-thirds (66%) like to give them. As a result, 14% of consumers like to receive gift cards, but not give them.

As noted in a Brandweek article on The Hartman Group and NRN joint Gift Card Purchase & Redemption report, gift cards are a “practical gift-giving alternative.” Yet, with the dramatic expansion of prepaid gift cards across the vast retail landscape (including online), marketers and retailers are faced with the daunting question of how to stand out in what has become a very crowded space. As our report points out, personalization is a key factor.

Over half (58%) of those who do not like giving gift cards feel guilty doing so because they feel it looks like they didn’t put a lot of thought or effort into buying the present. As one consumer told us:

“I think they [gift cards] are more impersonal unless you don’t know the person you are giving it to very well. I prefer to go shopping and buy something that I know the person will like.”

Addressing Gift Card Impersonality: Enhance the Purchase Experience

The impersonal aspect of gift card giving for many consumers is a significant impediment toward purchasing gift cards. The overall experience of buying a branded card would benefit greatly from personalization, customization and a more thoughtful emphasis on how to avoid fees or expirations. Consider the following remedies:

• Reminders (probably email or text message) of card expiration dates or ability to recharge the card
• Personalizing cards with giver/recipient names
• Personalizing the occasion: Christmas, birthday etc.
• Marketing to specific occasions outside of Christmas or birthdays (which are the most popular by far)
• Enhance the tangible gift purchase and giving experience: It is a much more meaningful gift in premium packaging
• Marketing to age groups: College age Millennials are tracking much higher for planning to buy this season, so much more edgy, ironic marketing, card presentation
• Marketing to the trend: Cards are now seen culturally as gifts...enforce that connection in consumers minds — compare cards to common holiday gifts (slippers, pots and pans, gloves, wrench set)

While as old as the 1970s’s when closed loop college meal plan cards and transit system cards first made their appearance, today’s prepaid gift market is a veritable Klondike of opportunities to connect with shoppers and reinforce the core substance of retail brands. The Gift Card Purchase & Redemption, Pre-Holiday Outlook 2008 report shows the challenges and opportunities for marketers, advertisers, retailers, financial services, entertainment, foodservice, restaurants and any other organizations within the gift card market.

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About the Report

Gift Cards Purchase & Redemption, Pre-Holiday Outlook 2008 takes a deep dive behind the scenes of the multi-billion dollar gift card industry, examining it through the eyes of the consumer. The report explores the most popular types of gift cards given, occasions for giving cards, planned redemption of cards, how much consumers plan to spend on cards, as well as providing an accurate profile of gift card givers and recipients. The quantitative findings in the Pre-Holiday Outlook report are based on the results of an online survey fielded through a National Research Network in August 2008 with 3,007 respondents. The report contains over 20 charts and tables.

For more on the Gift Card Purchase & Redemption, Pre-Holiday Outlook 2008 report click here >>

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