Retailers Should Take Advantage Gift Certificates Being the Hot Item This Holiday Season

by Ben Jackson 0

Two surveys from the National Retail Federation show thatspending on gift cards will be up this year, and this presents atremendous opportunity for retailers. Gift cards give consumers alicense to spend, which can only mean more business for retailers.The majority of consumers (57 percent) say that they want toreceive gift cards this year, and shoppers are reporting that theywill spend on average $145.61 on gift cards, according to theNational Retail Federation.

The most obvious benefit is that these gift cards mean funds arecommitted to retailers’ stores. (Only about 24 percent of shoppersexpect to buy a network-branded gift card this year.) So, retailerswill have consumers coming back in after the holidays to make useof those cards.

The second main benefit is uplift. We all know thatshoppers with gift cards burning holes in their pockets typicallyspend more than the value on the card at the time of redemption.(For a more detailed discussion on this phenomenon, please see myresearch note: “License to Spend: Going Beyond Breakage and Gettingthe Maximum Benefits from Gift Cards” at:

Now is the time retailers must make sure that employees know therules around gift cards and how to handle split tender transactionsand the like.

The third benefit depends entirely on how stores handle theirgift card customers. But, with every gift card is the opportunityto create a loyal customer. Pairing gift cards with loyaltyprograms, promotional offers, and sales can increase theirperceived value to the customer. Giving consumers the opportunityto turn their gift cards into something more can help increase thevelocity of their redemption and provide an opportunity to directtheir spending towards inventory that needs to be moved or itemswith better margins.

One thing all retailers should consider is making sure thecustomers know that their gift cards are in compliance with theCARD Act, which means that they do not expire for at least fiveyears and that there are no fees on cards that have been activewithin the past 12 months. Many retailers have eliminated fees andexpiration dates all together and they should not be shy abouttelling their customers. Consumer research shows that shoppers arestill worried about losing money to fees and expiration dates evenafter the CARD Act. Turning regulatory compliance into a marketingmessage is a good strategy here.

For more ideas on how retailers can make the most oftheir gift cards please see my report “New Market Opportunities forClosed Loop Gift Cards” at

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