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Retailers take heed as gift cards become popular again

Gadget

Retailers have been getting creative with their gift card offerings as they realise their increasing value among shoppers.

Retailers are seeing the benefit of the simple gift card. (Reuters)

Evidence is showing that while possibly not the most romantic of gestures, gift cards are high on consumer shopping lists. As a result, retailers are getting creative with their offerings as they realise the value of the simple gift card.

There is a joke doing the rounds on Facebook at the moment: Give a gift card, show someone you really don't care.

Humour value aside, a definite rise in popularity is evident. More particularly, retailers are thinking outside the box when it comes to store gift cards.

A tighter year-end budget and a lacklustre economy are the key factors that drove consumers to be pragmatic over the festive season and into the new year.

"The 16th edition of the Deloitte Year-end Holiday Survey bears out the trends we are seeing from our stores," says Angelina dos Santos-Barrett, product manager at Innervation Value Added Services.

"Consumers are adopting a sensible outlook towards gifting this year and are looking to realise more value from their spend. Gift cards will be a key feature on this year's shopping list, with the recently launched iTunes card likely to be high on the most wanted list."

Retailers are waking up to the fact that they can leverage their channels and gift cards are being used to drive online sales as well as being offered as refunds in lieu of cash.

Sensible gifting
"Malls often use association branded cards as their in-store gift cards," says Dos Santos-Barrett. "This has its benefits since it can be used anywhere and does not require additional infrastructure, but individual stores see the value of having their brands in customers' wallets. The Fica requirements for mall gift cards can also be a deterrent."

There is a growing trend in the older age group to be more sensible in their gifting options.

"The range of stores offering gift cards is now extensive and we have seen a marked uptick in the more discerning consumer looking for luxury store cards to give as a gift. High-end consumer goods are a definite favourite. We are even seeing a trend toward using gift cards as wedding presents – a smart way to avoid receiving duplicate gifts, and one which is being embraced by couples who request cards from their favourite stores."

The high-end gifting market is bigger than most people are aware. Starbucks launched 5 000 limited edition gift cards – made from stainless steel, costing $450 (R4 800) each and loaded with $400 – in 2012 that sold out in six minutes. That's $2.25-million worth of gift cards in 360 seconds.

Retailers are seeing the benefit of the simple gift card. Not only do recipients of the gift cards spend between 20% and 50% more on their purchases, but some even opt to reuse their cards, charging them with more credit at the checkout points.

'Cashless option'
Dos Santos-Barrett says the gift card is making its way into everyday life.

"Many school tuck shops have opted to go the way of gift cards as it cuts down on the time to check out, is simple to use and pupils and parents prefer the cashless option."

The growing movement towards a more pragmatic lifestyle is making the gift card option increasingly attractive. Consumers are seeing the benefit of leveraging all the retail channels. Loyalty points are being redeemed as gift cards, which significantly adds to their attraction. Personalised gift cards are also gaining traction, facilitating the personal touch.

Dos Santos-Barrett adds: "It may not seem all that personal to give a gift card, but more and more people are realising the practicality of them. Not only do you save yourself the angst of finding an appropriate gift, but by using all the available retail channels you could be making every cent work for you. The smart retailer will also make it as attractive as possible to get the best value out of your hard-earned cash and drive sales in a depressed economy." – Gadget.co.za

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