Cypress Sun - News
To give, or not to give: The dilemma of giving gift cards during a rough economy
By VAL CLIFTON
Members from both the retail and gift card industry differ sharply in their views on gifting the plastic presents this holiday season.
While some forecasters foresee a steady increase in their popularity, others predict a sharp decline due to the uncertainty of businesses in the shaky economy.
A survey of 1,000 conducted by the Network Branded Prepaid Card Association, which was created to advance the success of gift cards bearing the American Express, Discover, MasterCard or Visa logo, shows that this line of gifting will remain popular this holiday season.
The survey, conducted October 22-28 with a 1,000-adult sample found that 52 percent of Americans plan to give more practical gifts this year.
Of those who had given or received a branded gift card in the past, 17 percent planned to give more this year and 43 percent planned to give the same number, while 22 percent planned to give fewer this holiday season
“I think that it’s become even more attractive in a tighter economy because it’s allowing the purchaser to budget and it’s giving them peace of mind that when they give the card to the recipient, there isn’t going to be any wasted money and they can get exactly what they want,” said NBPCA Board Member Talbott Roche.
With some businesses declaring bankruptcy and others shutting closing the doors on under-performing stores, speculation surrounding the gift card purchase has increased.
But Roche said the decision of that retailer to shut some of its stores doesn’t necessarily indicate bankruptcy.
“Every year we see some kind of overreaction around gift cards,” Roche said. “There have historically been e-mails about that were erroneous and they are very counter-productive right now because they aren’t based on any fact; it’s full speculation.”
She said if a retailer declares bankruptcy, they will still accept the gift cards because they want to maintain their customer base throughout the proceedings. Roche named Sharper Image as an exception to the rule.
Retail Consultant Jeff Green, president and CEO of Mill Valley, Calif.-based Jeff Green Partners, gave a different perspective.
NRF’s sixth annual Gift Card Survey, conducted by BIGresearch, found that gift card sales will fall nearly six percent this holiday season to $24.9 billion, down from $26.3 billion last year.
But Green predicts that the number will be closer to 10 percent because retailers are discounting merchandise early this year, resulting in a decrease in last-minute gift card purchases.
“Cards got a bad wrap last year as folks went into bankruptcy right after Christmas and didn’t honor their gift cards, like Sharper Image,” Green said. “When you look Circuit City, which has already declared bankruptcy, who’s going to get a gift card from there?”
He believes there will be a shift in the types of gift cards that people buy, with more looking to purchase cards of necessity from solid stores such as Wal-Mart, Target and Costco.
The restaurant industry, he said, could go either way in sales.
“Part of me wants to say that maybe they will do OK because people will want to get others a night out, especially in this kind of economy,” Green said. “But they are more likely to give them a necessity card than a luxury card.”
While some forecasters foresee a steady increase in their popularity, others predict a sharp decline due to the uncertainty of businesses in the shaky economy.
A survey of 1,000 conducted by the Network Branded Prepaid Card Association, which was created to advance the success of gift cards bearing the American Express, Discover, MasterCard or Visa logo, shows that this line of gifting will remain popular this holiday season.
The survey, conducted October 22-28 with a 1,000-adult sample found that 52 percent of Americans plan to give more practical gifts this year.
Of those who had given or received a branded gift card in the past, 17 percent planned to give more this year and 43 percent planned to give the same number, while 22 percent planned to give fewer this holiday season
“I think that it’s become even more attractive in a tighter economy because it’s allowing the purchaser to budget and it’s giving them peace of mind that when they give the card to the recipient, there isn’t going to be any wasted money and they can get exactly what they want,” said NBPCA Board Member Talbott Roche.
With some businesses declaring bankruptcy and others shutting closing the doors on under-performing stores, speculation surrounding the gift card purchase has increased.
But Roche said the decision of that retailer to shut some of its stores doesn’t necessarily indicate bankruptcy.
“Every year we see some kind of overreaction around gift cards,” Roche said. “There have historically been e-mails about that were erroneous and they are very counter-productive right now because they aren’t based on any fact; it’s full speculation.”
She said if a retailer declares bankruptcy, they will still accept the gift cards because they want to maintain their customer base throughout the proceedings. Roche named Sharper Image as an exception to the rule.
Retail Consultant Jeff Green, president and CEO of Mill Valley, Calif.-based Jeff Green Partners, gave a different perspective.
NRF’s sixth annual Gift Card Survey, conducted by BIGresearch, found that gift card sales will fall nearly six percent this holiday season to $24.9 billion, down from $26.3 billion last year.
But Green predicts that the number will be closer to 10 percent because retailers are discounting merchandise early this year, resulting in a decrease in last-minute gift card purchases.
“Cards got a bad wrap last year as folks went into bankruptcy right after Christmas and didn’t honor their gift cards, like Sharper Image,” Green said. “When you look Circuit City, which has already declared bankruptcy, who’s going to get a gift card from there?”
He believes there will be a shift in the types of gift cards that people buy, with more looking to purchase cards of necessity from solid stores such as Wal-Mart, Target and Costco.
The restaurant industry, he said, could go either way in sales.
“Part of me wants to say that maybe they will do OK because people will want to get others a night out, especially in this kind of economy,” Green said. “But they are more likely to give them a necessity card than a luxury card.”
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