October 20th, 2008 | 3 MIN READ

Gift Cards: Still Hot in 2008?

Written by author_profile_images Linda Bustos

Linda is an ecommerce industry analyst and consultant specializing in conversion optimization and digital transformation.

Gift card sales are desirable for both retailer and consumer for several reasons. As we mentioned last year, gift cards topped consumer wish lists with 53.8% of adults over 18 indicating they'd like to receive one (BIGResearch and the National Retail Foundation), and the average shopper purchasing 5 gift cards for others.

Gift cards are usually free to ship, and often recipients end up spending more or less than the full value of the card.

For online retailers in particular, electronic gift vouchers were a perfect solution for last-minute shopping - especially for out of town recipients!

But recent research by Archstone Consulting predicts the gift card market will shrink by 5% compared to last year.

I found this little chart interesting...it predicts the amount the average person will spend on gift cards this year (Holiday 2008) based on gender and age:

Chart credit: MediaPost. Research credit: Archstone Consulting.

Perhaps this data can be explained this way (please forgive my generalizations, this part of the post is meant to be a bit light-hearted):

  • Males under 35 are more likely to be single. As guys, they don't want to spend hours trolling the mall. It's convenient to buy gift cards - you can even get them in your grocery store checkout stand along with a TV Guide, AA batteries and a pack of Chiclets.
  • Women 35-65 are more likely to be married with children and responsible for gifts for their own family, in-laws, Hubby's extended family, nieces, nephews, teachers, neighbors and co-workers than their younger female counterparts. Meanwhile, men in the 35-65 age group have relinquished the bulk of their shopping duties to Wifey.
  • Once you're out of the workforce, you actually have time to shop therefore the propensity to spend more on gift cards goes down compared to other age brackets.

Of course, my analysis is just for fun - but this is real research, and here are some other interesting findings from the survey:

Gift Card Predictions 2008

  • Overall, consumers will spend about 5% less on gift cards in Holiday 2008 compared to last year
  • Consumers will shift spending towards more practical gift cards - gas, groceries and restaurants
  • Restaurant cards are expected to outsell other categories
  • Most desired by gift recipients will continue to be pre-paid bank cards like Visa, American Express and Master Card, as they were in '07
  • 24% of consumers plan to increase spending on gift cards over last year, teenage and post-college shoppers are most likely to spend more
  • 13-24 year olds will proportionately spend more on gift cards (least discretionary income) and will receive about 40% of all gift cards
  • Approximately 50% would consider purchasing a gift card from a retailer if it comes with an additional coupon/discount for them
  • Gift card sales through grocery, drug stores, banks and other "outside locations" is expected to grow 30% over last year

Despite the prediction of restaurants, gas and bank cards taking the lion's share of the gift card spend, we can expect gift cards to again be customer and retailer favorites in retail shops. If you offer gift cards (physical or electronic) through your ecommerce store, make sure you promote them on your home page, your email campaigns and as "no brainer" add-ons on your shopping cart pages. It's also becoming common practice to include a "Gift Cards" link in your main navigation:

You may also want to play around with "give some, get some" promotions - spend $X on a gift card and receive $X for yourself.

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