Gift Cards Are NOT a Dying Trend

by Ben Jackson 0

A recent article on CNBC.com entitled “Why GiftCards May Be Dying Trend” suggests consumers are buying fewergift cards and retailers are selling fewer gift cards, despiteample evidence to the contrary. It provides as evidence lower mallcard sales, reduced in-store redemptions of cards, and consumeranecdotes.

While these individual points may hint at a localized stories, thebig picture is that gift card sales have continued to increase andredemption remains strong.

In an informal survey of retailers, Mercator has found merchantsacross categories all say their card sales are up when comparedwith last year’s holiday season. Though merchant discounts may haveled some shoppers to opt for merchandise over gift cards,nevertheless, the example of shopping mall cards may be the part ofthe market to use when considering the overall market. Shoppingmall cards have faced increasing competition from the prepaid cardmalls that are in many grocery and convenience stores.

Reduced in-store redemptions is interesting, but not necessarily asign that fewer people are using gift cards. Instead, based on ourpreliminary conversations with members of the industry, what lowerin-store redemption seems to show is that more people are takingtheir gift cards online. Initial redemption patterns seem toindicate that consumers are doing more shopping through the web, nodoubt encouraged by deals such as free shipping and freereturns.

Finally, while the person in the story says that fees have madeher and her family less inclined to give and receive gift cards,closed-loop cards have no fees in nearly every case. Additionally,gift cards remained at the top of consumers’ wish lists for thefifth year in a row according to pre-holiday survey informationfrom the National Retail Federation.

Although the gift card market is undoubtedly mature, it continuesto grow at a respectable rate. People still enjoy the convenienceand flexibility offered by gift cards of all kinds. Mercator hopesto compile and release data in the near future to further validatethese observations.