Gift Cards Will Shine this Holiday

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Gift Cards Will Shine this Holiday

NEW YORK -- Consumers will spend more than $35 billion on gift cards this holiday season, a 25 percent gain over the $27.8 billion seen in 2006, reported, citing a survey by Archstone Consulting.

Last year, more than one-quarter of consumers purchased gift cards online, while 78 percent reported purchasing the cards at the specific retailer's location, eMarketer reported, citing a study conducted by The Marketing Workshop for Comdata. In addition, 22 percent of consumers report purchasing gift cards at a gift card mall.

While many channels will sell gift cards this holiday season, those that do so creatively will win customers.

"Retailers are innovative in their use of gift cards, making them double as DVDs and CDs and offering them in bags, boxes and tins," Jeffrey Grau, eMarketer senior analyst said in a statement, noting that The Home Depot plans to offer gift cards with how-to home improvement videos this holiday season.

In addition, Archstone predicted holiday retail sales would increase 3 percent in 2007, the slowest growth rate in retail holiday sales in the past five years, the report stated.

"Retailers will see limited growth in holiday spending, resulting in a 'season of discounts' that will reward savvy shoppers," Dave Sievers, retail and consumer products practice leader at Archstone, said in a statement. "While this tactic will drive shoppers to the stores, it won't allow retailers to overcome the adverse economic factors that will affect sales, including the downturn in housing and a tightening credit market."

Meanwhile, a recent Gallup survey found that the Christmas buying season should be at least as active as last year, Brandweek reported.

The poll, conducted Oct. 4-7, found Americans plan to spend an average of $909 on Christmas gifts this season, matching the $907 forecast for the 2006 holiday at this time last year, the poll found.

In addition, the proportion of Americans saying they will spend less this holiday season compared to last year is on the low side, compared to the results seen by Gallup since 1990, according to the report.

"If Americans' current spending estimate does hold up in Gallup's subsequent measures in November and December, it would be the highest level of projected holiday spending Gallup has seen at any time over the past decade -- not by an extraordinary amount, but possibly enough to make Christmas 2007 a better-than-average retail season," the poll stated. "However, even if Americans' average estimated spending drops between now and November by as much as it did in 2006, the figure would still be at the upper end of the range seen in recent years."