Consumers to Spend 11.5% of Holiday Budget on Gift
Washington, DC, November 23--Though retail shelves are filled with toys, clothes and the latest DVDs, pocket-sized items at the checkout counter will also be in high demand, according to the findings of a new National Retail Federation (NRF) survey.
The second annual NRF Gift Card Survey, conducted by BIGresearch, found that the average consumer will spend $80.45 on gift cards this year, 11.5 percent of their holiday budget.
"There's no end in sight to the popularity of gift cards," said NRF president and CEO Tracy Mullin. "From nephews to nannies, gift cards are a great option for almost any name on a holiday shopping list."
Once considered the "lazy man's gift," gift cards have soared in popularity with both gift givers and receivers. This year, more than half of consumers (50.2%) in an earlier NRF holiday survey said they would like to receive gift cards from the holiday season, up nearly ten percent from just two years ago (41.3%).
Companies have also caught on quickly to the popularity of gift cards. "Retailers have hit the jackpot by capitalizing on the gift card craze with a variety of innovative card designs and packaging," said Phil Rist, vice president of strategy for BIGresearch. "Stores will continue to promote their cards during the holiday season as a perfect gift for the person who has everything."
The study also found that:
This year, 74.3 percent of consumers will purchase a gift card during the holidays, up from 69.9 percent last year.
Consumers will spend $17.34 billion on gift cards this holiday season, up $100 million from last holiday.
The average person purchasing a gift card this year will buy 3.38 cards for a total of $108.28.
Gift card facts:
Retailers do not count a gift card as a sale when it is purchased—instead, they wait until the gift card is redeemed and merchandise is exchanged. As a result, some of the $17.34 billion spent on gift cards this holiday may not show up in "holiday" sales, but instead as sales in January or February, when the gift card is redeemed.
Most of today's gift cards differ from traditional gift certificates because they are "stored value" cards. When a consumer spends $25 from a $50 gift card, the card automatically updates the balance. This is more efficient than the retailer reissuing another gift certificate to the consumer for the balance.
Retailers have different policies for gift cards. Some stores' gift cards expire over a certain period of time (usually 12 months or more) and some stores' cards depreciate month-by-month if a card has been inactive for a certain period of time. NRF recommends that consumers understand individual retailers' policies before purchasing gift cards.
Service fees and expiration dates are more common with mall-issued and bank-issued gift cards than retailer-issued cards.
Due to improved technology, some retailers are able to reissue a lost gift card if consumers have kept the original purchase receipt. Some retailers also encourage gift card recipients to register their card through the store's website, which enables them to check their balance online and receive a new card if they lose or misplace the original card.
Another convenience factor is that many stores are able to carry gift cards at their check-out counters because today's gift cards are not active until scanned. Also, many retailers like grocery stores and drug stores carry a variety of different gift cards at their registers--for movie theaters, coffee shops, and clothing stores.
NRF continues to forecast that holiday sales will increase 4.5 percent this year to $219.9 billion.
