Gift cards popular, but sales could fall

Gift cards popular, but sales could fall

November 27th, 2009 by Amy Williams in Businesstopstory

Staff Photo by John Rawlston Gift cards are displayed for sale at the Target store in Hixson.

Staff Photo by John Rawlston Gift cards are displayed...

There's no better stocking stuffer than a gift card loaded with cash or store credits and nearly endless opportunities.

That's why this year gift cards are yet again the most requested Christmas gift, according to the National Retail Federation.

While they're still popular, the retail group expects sales of the little plastic cards to fall this year as shoppers cut back on expenses.

"In a year when many people have pulled back on everything but the necessities, people love the idea of receiving a gift card to select something they've had an eye on," said Tracy Mullin, the federation's chief executive, in a statement. "Though gift cards never go on sale, many retailers are offering incentives on these popular items to help bargain-hunters stretch their budgets even farther."

Shoppers are expected to spend on average about $140 on gift cards this year, about 5 percent less than last year, when consumers spent $147, according to the retail group's survey.

Ooltewah resident Rebecca Halling plans to spend about $250 on gift cards this year. She finds loading a Visa card with cash for her loved ones in other cities to be convenient.

"I'm putting them in the mail, and it's cheaper postage to mail a gift card than a package," she said.

The economy could drive more people to buy gift cards instead of a traditional wrapped gift this year, said Jim Winsett, president of the local Better Business Bureau.

"You don't want to give them cash, so the gift card is the next best thing," Mr. Winsett said. "I think it is a matter of convenience without giving cash."

More than 77 percent of people responding to the federation's survey said they planned to buy at least one gift card this year. But the gift cards will experience a drop this year as consumers buy cards with lower values than they have in the past. The average value of a gift card this year will be $39.80, compared to $40.54 in 2008, according to the survey.

Mr. Winsett said consumers should remain vigilant this year and only buy cards from retailers they trust. Shoppers should also beware of cards sold on racks near the checkout.

"Consumers should inspect cards before they buy them, and make sure the sticker has not been removed," Mr. Winsett said. "If you find cards that have been tampered with, report them to management."

Department store gift cards will be the most popular this year, with 38.4 percent of shoppers planning to give at least one such card.

Gift cards to restaurants are expected to be a close second with 33.4 percent of consumers buying them. Gift cards to bookstores, electronics stores and discount stores were also popular, according to the survey.


Consumers are expected to spend $23.63 billion on gift cards this year, a report shows.