More consumers struggling to find perfect gifts are choosing gift cards to end their shopping woes, according to a new survey. And more cards in 2005 are decked out with all kinds of bells and whistles to catch the passing eye, in what one consultant termed as the “war of the gift cards.”
Some 68% of consumers said they bought gift cards because they didn’t know what to buy for their friends or family, according the survey by Accenture, a San Francisco, CA-based management consulting and outsourcing company.
Of those surveyed, 42% of respondents said they prefer receiving a gift card compared to a gift; 26% of consumers said they had no preference. When it comes to redeeming gift cards, 56% of respondents said they treat themselves to something they normally wouldn’t buy and 38% of consumers polled said they buy something for which they were saving. Nearly half of all respondents (45%) said they spend more than the face value of the gift card when shopping.
“Giving a gift card is something that will always bring a smile to someone’s face,” said Janet Hoffman, managing partner, Accenture’s North American retail practice. “It’s easy for the gift-giver to be able to get something they know will be appreciated.”
Consumers buy gift cards in a variety of categories, but often in apparel and entertainment, including music, books and movies and food. More than 80% of respondents said they purchase gift cards for convenience. Some 49% of consumers surveyed said they give gift cards because they are more convenient than buying gifts, whereas 38% said they buy gift cards because it is easier than mailing gifts.
Creative packaging also plays a role in gift card giving. Retailers try to entice consumers to buy gift cards with innovative packaging to extend the gift card experience, Hoffman said.
“There’s a lot of creative packaging, like a pop-up card and cute promotions in-store, things that are going to generate enthusiasm about one card over another,” Hoffman said. “[Retailers] make it much more of a fun gift to give.”
Wal-Mart Stores, for example, is leveraging its photo departments to sell personalized gift cards. Shoppers can customize gift cards with a photo, business card or greeting for 88 cents (plus the dollar value of the card) at Wal-Mart’s One Hour Digital Photo Centers. Users can scan a photo or import one from their own CD, edit the image and print their card. Shoppers also can create gift cards online and pick them up in-store.
“Gift cards are an ideal gift-giving idea but many people hesitate as they’re concerned that a gift card may appear too impersonal,” said Wal-Mart senior VP-Divisional Merchandise Manager Ronnie Hoyt in a statement. “By using all the available technology within our company, we are once again evolving with our customers’ needs by providing a quick and affordable way to spice up the traditional gift card.”
Meanwhile, Target Stores offers a range of tricked-out gift cards, from a card with the Target Dog barking out “Jingle Bells” to another with blinking lights, or scratch-and-sniff candy canes.
Gift cards sales are projected to reach $18.48 billion this holiday season, up 6.6% from last year, per the National Retail Federation.
“We characterized this year as the ‘war of gift cards,’” Hoffman said. “Retailers try to [offer] the card you buy this Christmas. With increased accessibility or cross retail marketing, there is just a whole creative venue of options in terms of increasing commercial activity.”
The Accenture survey also found that 75% of respondents said they spend the same amount on gift cards as they would a gift, while 17% said they spend more on gift cards than on a gift. The majority of consumers surveyed said they either gave or received a gift card, with Christmas and birthdays topping the gift-giving occasions.
Nearly half of respondents (44%) spend their gift cards within one month of receiving them, the survey found; another 38% said they spend their gift cards within three months. Most respondents (94%) said they spent gift cards in stores as opposed to online redemption.
Other key survey findings include:
- The gift card category is expected to grow. Most respondents give and/or receive one to three gift cards per year, yet more than 40% of consumers polled said they prefer a gift card over a gift.
- The majority of gift card purchases are valued at $50 or less. Some 81% of consumers surveyed bought gift cards for amounts ranging between $11 and $50; 12% of consumers spent $51 or more on gift cards.
- Consumers typically spend gift cards in a single visit. Two-thirds (66%) of respondents said they would use a card in one store visit, while 32% said it would take two or three visits.
The Web-based survey polled 513 U.S. consumers in September and October.