Forget that pretty sweater or fancy hat, it was all about gift cards over the holidays.
Gift cards replaced apparel as the holiday gift of choice, growing into a $35.3 billion industry, according to The U.S. Prepaid and Gift Card Market, a new report from market research publisher Packaged Facts, a division of MarketResearch.com, a provider of industry-specific market research reports.
The market is only expected to get larger.
Packaged Facts projects that the overwhelming popularity of gift cards across generations will continue to drive card sales upwards of 5% annually to surpass the $47 billion mark by 2010. Holiday season sales of gift cards alone jumped from $17.34 billion in 2004 to approximately $18.48 billion in 2005, and sales are expected to continue to climb as consumers turn to them as the perfect gift for all occasions.
Universal gift cards that a consumer can use anywhere, like Visa, MasterCard or American Express, were the most popular. Department and clothing stores, dining, electronics, entertainment and bookstore gift cards also rank high among consumers.
“Clearly gift cards have been accepted by the mainstream as evidenced by their growth and popularity in virtually every imaginable retail outlet,” said Don Montuori, the publisher of Packaged Facts, in a statement. “However, even with the success of gift card kiosks (mini gift card ‘malls’), there are still some hurdles— as dormancy fees, the devaluing of cards over time, and customer awareness of hidden fees attached to bank gift cards— need to be overcome in order to assure continued consumer trust and satisfaction in this wide open market.”