Holiday Gift Card Sales Reach All-Time High, According to NRF

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Holiday Gift Card Sales Reach All-Time High, According to NRF
--Consumers to Spend a Total of $24.81 Billion on Gift Cards This Holiday--

Washington, DC, November 17, 2006— As their popularity continues to rise, retailers can expect to see a surge in gift card sales this holiday season. The fourth annual National Retail Federation (NRF) Gift Card Survey, conducted by BIGresearch, found that gift card sales will total $24.81 billion this holiday season, an impressive $6 billion increase over 2005 when gift card sales hit $18.48 billion. Furthermore, the average consumer will spend more on gift cards than they did last year ($116.51 vs. $88.03 in 2005).

“The popularity of gift cards has increased at a remarkable rate,” said Tracy Mullin, NRF President and CEO. “Consumers love gift cards because they take the guessing out of holiday shopping and retailers love them because they are easy to stock and take up minimum shelf space.” 

With their popularity soaring among consumers of all ages, gift cards will be making an appearance on the lists of both gift givers and receivers.  According to the survey, more than two-thirds (79.7%) of consumers polled said that they plan on purchasing at least one gift card this holiday season and more than half (52.8%) said they would like to receive a gift card this year. 

“Gift cards have taken a lot of the stress out of holiday shopping, making them a favorite among people of all ages,” said Phil Rist, Vice President of Strategy for BIGresearch. “Whether they are a stand-alone gift or an addition to a gift basket, gift cards please even the most fickle people on holiday shopping lists.”

Gift card information:

• Spend your gift card before the government takes the money away!  While the rules may not kick in for a couple of years, many states have laws which allow the state to collect "abandoned property," which means that if personal property goes unclaimed for a certain period of time, the state has the right to take it into the state treasury. Like bank accounts and other personal property, gift cards that go unused or unredeemed for more that a few years are often treated as "abandoned" property by states. Where these laws apply, sometimes in as little as 2-3 years, retailers are required to turn over unused gift card dollars to state governments under the guise of returning the “abandoned” money to the gift card purchaser. In fact, states make millions of dollars a year from these clauses. Consumers are encouraged to spend their gift cards within the first year of purchase so that they—not the state where the gift card holder lives—receives the full value.

• NRF encourages consumers to shop smart for gift cards. To ensure that a recipient receives the card’s full value, shoppers should only buy gift cards from reputable retailers (not online auction sites). Gift cards on online auction sites are more likely to be counterfeit or obtained through fraudulent means. Additionally, consumers should keep their original receipt with the value of the card that they purchased in case there are any problems with the card when it is redeemed.

• 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 $24.81 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. Most retailers are moving away from expiration dates and depreciation fees in response to their customers’ requests, but 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 5.0 percent this year to $457.4 billion.

About the Survey
The NRF 2006 Holiday Consumer Intentions and Actions Survey was designed to gauge consumer behavior and shopping trends related to the winter holidays. The survey, which polled 8,090 consumers, was conducted for NRF by BIGresearch from November 1 – November 8, 2006. The consumer poll has a margin of error of plus or minus 1.0 percent.

BIGresearch is a consumer market intelligence firm that provides unique consumer insights that are gathered online utilizing very large sample sizes. BIGresearch’s syndicated Consumer Intentions and Actions survey monitors the pulse of more than 7,000 consumers each month to empower its clients with unique insights for identifying opportunities in a fragmented and changing marketplace.

The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees - about one in five American workers - and 2005 sales of $4.4 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. http://www.nrf.com/.

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