Sales of Gift Cards Slump

Stamford, Conn. Results of the 2008 Holiday Gift-Card Survey, released on Monday, predict that consumers will spend less on gift cards in the 2008 holiday season and will likely shift their purchases to gift cards for necessity items such as groceries and gas, or small indulgences such as restaurants.

The survey, which was conducted by Archstone Consulting, Stamford, Conn., and evaluated the shopping habits of 1,000 consumers, concluded that gift-card sales would be approximately 5% lower this holiday season than last, dropping to $25 billion.

Additionally, the survey found that pre-paid bank cards such as Visa, MasterCard and American Express are the most desired gift cards because of the flexibility they offer in purchasing options.

However, Dave Sievers, principal and the lead of the consulting firm’s Consumer Products and Retail Practice, noted, “Retailers can increase the purchase of their [branded] cards through the creative use of incentive programs, as approximately 50% of respondents said they would consider purchasing a gift card from a retailer if it comes with a coupon/discount for the purchaser or the recipient.”

The survey also determined that the restaurant/fast-food category would likely sell more gift cards than any other retail category this season and the bulk of any increase in gift-card purchases would likely be in the 13- to 24-year-old demographic.

Sales of branded gift cards at synergistic retailers is also expected to grow significantly this year, up 30% compared to 2007 sales.