Consumers Spending More on Gift Cards
ATLANTA -- 2011 was a good year for the prepaid card industry, according to First Data's "2011 U.S. Gift Card Consumer Insight Study", which was released this week. The average amount consumers spent on closed-loop gift cards last year increased by $50 over 2010, while the average spent per card increased by $8, the report found.
The study showed that $211 is the average amount consumers spent on closed loop gift cards in 2011, an increase from $161 in 2010. Additionally, consumers spent an average of $42 per card, a 23-percent increase from the $34 spent in 2010.
On average, consumers purchased five closed-loop cards in 2011, according to the study. On the receiving side, 52 percent of recipients said they would prefer a $25 gift card vs. a gift valued at $45, as 71 percent of recipients spent more than the amount of their gift card. And, in a sign of the times, 43 percent of recipients are interested in storing their gift card information on a mobile phone.
Study author Michael Hursta, however, cautioned retailers to stay on top of industry trends, and understand how consumers perceive and use gift cards. Hursta, vice president and category manager of Prepaid Solutions at First Data, said retailers need to "dive deeper into how attitudes, behaviors and usage vary for different segments of consumers."
Specifically, retailers need to use technology to support physical and virtual gift cards; incentivize reloads; communicate to consumers that gift cards are highly valued by receivers; and offer e-gift cards, the study pointed out.
First Data also broke consumers out into five distinct segments: budget tamers, card enthusiasts, helpful husbands, convenience shoppers and last resort consumers. Budget tamers, on average, purchased the most closed-loop cards (6.7) while spending the highest average amount ($79), compared to consumers in the last resort segment, who purchased the least amount of gift cards (3.3) and convenience shoppers, who spent the least average amount on cards ($47).
Gas stations or convenience stores received the highest amount of total dollars spent (82 percent) by budget tamers, but the least amount from the other consumer segments. This is largely due to the fact that today's economic challenges have consumers trying to stretch their dollars -- a common trait of the budget tamer.