It was a very good holiday season for gift cards. According to the second annual Post-Holiday Gift Card Survey commissioned by Deloitte & Touche USA LLP, the number of gift cards received per adult increased more than 20 percent over last year, the redemptions of those cards have likely boosted retail sales by an estimated $18 billion, and consumers are interested in receiving cards for more occasions than just the year end holidays.
The survey found that adults received 3.2 gift cards during the holiday season just ended. This figure is up from last year’s survey, which found that 2.5 gift cards were received as presents. This year’s 3.2 cards had a total face value of $142.98.
More importantly, 61 percent of all gift cards received by adults in this latest survey had been fully or partially redeemed by the end of January. “While an estimated $18 billion has already been added to sales from consumers’ gift card redemptions, it’s important to note that consumers are likely still holding on to another $9 billion of unredeemed value on their cards,” said Tara Weiner, Vice Chairman and National Managing Partner of the Consumer Business Industries practice at Deloitte & Touche USA LLP.
If consumers continue to spend those unredeemed cards in a similar fashion as they did in December and January — that is, some consumers purchase more than the face value of their cards — then these unredeemed gift cards have the potential to add as much as $13 billion to retail sales. Additionally, that $13 billion encompasses only the gift cards from the 2004 holiday season. If the 1.9 cards that consumers told us they are still holding from prior holidays are added in, the benefit to retailers would be even higher.
Other findings from the survey include:
* 80 percent of adults received at least one gift card to a store such as an apparel or food store
* 33 percent received at least one to a restaurant/fast food establishment
* 14 percent received at least one gift card to a mall or shopping center
* 10 percent received at least one card that could be used at a variety of
stores/establishments (e.g., an American Express gift card) * 5 percent received at least one for a personal service, such as a manicure
* 5 percent received at least one gift card for an internet site – (e.g., eBay, Amazon)
For adults, the highest dollar amount received was nearly $78 for a bank card such as an American Express card, while the lowest was $32 for a restaurant or fast food establishment. Bank cards were the type most likely to have been used by the end of January. Nearly three-quarters (74 percent) of these cards have already been fully or partially redeemed.
JANUARY’S ACE: GIFT CARD REDEMPTIONS
Strong gift card redemptions in January likely gave an important lift to retail sales that month. Of the cards that were fully or partially redeemed, 59 percent were redeemed in January, while 35 percent of the cards were redeemed during the last week of December. On average, for those consumers who only partially redeemed their cards, they spent 60 percent of the value during this five-week period.
And as a further boost to retailers, many consumers are buying full-price merchandise with their cards. Among adults who purchased apparel with their cards, 70 percent bought at least some full-priced merchandise with their cards. On average, 57 percent of adults’ total apparel purchase using the card was for full-price merchandise. “These apparel results suggest that many consumers are willing to buy full-priced merchandise with their cards,” said Tara Weiner. “The ‘gift’ aspect of the card may mean that consumers are more willing to treat themselves to new full-priced merchandise. Retailers, as a result, are rewarded with higher profit margins from the sale of full-price merchandise.”
GETTING CONSUMERS TO SHOW THEIR CARDS
Some consumers are holding on to their cards, having simply forgotten about them, given that the holiday period has passed. Others may need a reminder or incentive to use them. The survey results indicate that 37 percent of the gift cards received during the holidays remain unused.
For those consumers who had already redeemed their cards, a majority (62 percent) spent more than the face value of the card. The unused cards, once redeemed, therefore have the potential to add another $13 billion or more to retail sales, based on the buying trends discerned from this survey. Unused cards represent a significant opportunity for retailers. “As mentioned in our November Pre-Holiday Survey, retailers will be well served by launching gift card redemption campaigns, as they are unable to report the sale until the card is redeemed,” said Weiner.
THE KING AND QUEEN OF HEARTS: GIFT CARDS FOR VALENTINE’S DAY
An additional important finding is that consumers favor gift cards for other holidays or celebrations beyond the traditional year end gift-giving period. Nearly two-thirds, 66 percent, of adults said they would like to receive a gift card for Valentine’s Day. More than three out of five males (61 percent) and 71 percent of females were interested in a Valentine’s Day gift card.
Deloitte & Touche’s analysis of its consumer surveys over the last two years has identified a discernable shift in preferences for “experience gifts” as a result of consumers being time-pressed. “People continue to focus more on ‘the art of living,’ rather than ‘the art of consuming,'” says Weiner. “Thus, Valentine’s Day represents the chance to give the gift of time by adding a gift card for a trip to a restaurant, spa or weekend getaway, in addition to that box of chocolates.”
A TRUMP CARD FOR TEENS
Gift cards are also becoming a big hit with teens, as they reported receiving 2.8 cards during the holiday period. Teens have been more eager to shop with their cards than have adults. More than half, 54 percent, of their cards were redeemed during the last week of December, compared to only 35 percent for adults. Further, by the end of the survey period, 76 percent of teens’ cards were partially or fully redeemed vs. 61 percent for adults.
A whopping 82 percent of teens would like to receive a gift card for Valentine’s Day.
“So what’s the deal on cards this holiday season? A gift card is the gift that keeps giving, especially for retailers,” says Weiner. “The cards are not only extending the important holiday season into January, they’re becoming popular as a year-round gift choice. In short, gift cards are here to stay.”
Methodology: Results are based on an Internet survey of 3,934 adults and 335 teens on gift cards respondents. The survey was conducted between January 28 and February 3, 2005. The survey has a margin of error of plus or minus 1.3 percentage points or less for adults and 4.5 percentage points or less for teens. Note: As used in this survey, the term gift card is synonymous with gift certificate. They include all prepaid retail cards, except phone cards.
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