As I cleaned up from the holidays, I uncovered a couple of forgotten gift cards… from 2009.
It had me wondering how much gifted debit goes unused. To my surprise, financial services advisor CEB TowerGroup predicts just 1% of the value from 2014 gift card sales is expected to go unused, a relative pittance compared to the nearly 10% that went unused only a few years ago.
However, that unused toll could add up to a staggering $1 billion or so considering gift card sales are estimated by CEB TowerGroup to have jumped to about $124 billion last year.
Retailers don’t book sales against gift cards until they are redeemed. And many don’t get to keep unused gift card deposits required by several states to be surrendered as undeclared assets.
So, it’s good policy for all vested parties to take extra steps to make sure gift cards don’t get buried and forgotten in the depths of a kitchen drawer.
The potential benefits to retailers of soaring gift card sales extends far beyond the face value of the easy cash they promise. They are traffic magnets.
About two thirds of gift card redeemers, by some accounts, spend more than the face values of their cards; and three quarters of those overspend face value by as much as 60%. Plus, it has been reported more than half of gift card recipients require multiple shopping visits to redeem the cards.
Is it any wonder Walmart is inviting consumers to trade in gift cards from other outlets for Walmart credit? Look for other big retailers to try to take more control of the burgeoning gift card exchange business as a way to drive web and store traffic.
Starbucks, which claims the equivalent of one of every seven Americans received a Starbucks gift card during the holidays, has been particularly successful at converting its gift card recipients into its loyalty program.
As retailers seek more incentives to drive gift card redemption, that’s a cue for the housewares industry to become more proactive to capture in-limbo gift card spending. Think of every unused gift card dollar as a dollar that could have been directed to housewares with a little creative promotional coaxing.
January can be a surprisingly solid month for housewares, and not just for clearance. Moreover, the Super Bowl’s evolution into a high-throttle home entertaining “holiday” sets up another bigger play for housewares marketers to tackle all those gift card recipients.
Gift Of Convenience
The gift card business will continue its steep ascent, especially with the advent of e-cards. Gift cards satiate the convenience desired by time-strapped shoppers and the growing preference among today’s consumers to pick out their own gifts.
That’s helped shrink unused gift card value to a mere 1%. But there are still too many cards getting lost in the clutter. And it doesn’t have to be that way.