November 20, 2009
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News: Gift Card Controversy
Retailers and credit card companies have been optimistic with modest signs that the U.S. economy is recovering from the worst recession in decades. However, it would appear that someone wants to rain on their parade. A recent survey by the National Retail Federation (NRF) and BIG Research showed that credit card shoppers plan on buying fewer gift cards this holiday shopping season. According to the survey, holiday shoppers will spend an average of $139.91 on gift cards which is 5 percent less than last year's average of $147.33 and $156.24 from two years ago. Experts say the decline is a result of a weak economy. A spokesperson for NRF said they believed the decline in gift cards would occurred because of aggressive retailer discounts that will run prior to the holidays. Credit card consumers will be able to purchase more for their money during these sales.
Gift recipients should expect to receive lower value gift cards as the average card value is expected to drop by 1.8 percent this holiday. However, the actual quantity that shoppers are expected to purchase is not expected to change. The NRF report indicates that 77.2 percent of shoppers will purchase gift cards. Overall, shoppers 71 percent of shoppers expect to use cash or debit card for payment rather than their credit card. The most popular category is department store gift cards whereby 38.4 percent of all respondents indicated they would be purchasing gift cards. Additional popular retailers that shoppers plan on visiting to purchase gift cards are bookstores, electronic stores, and discount retailers. Approximately 22.1 percent of the respondents said they would be purchasing a gift card from a credit card company or bank.
Like credit card consumers, respondents of the NRF survey were concerned about the unfair and hidden fees associated with gift cards which will deter 22.1 percent from purchasing them. Retailers have been concerned this year fearing consumers will continue to reduce spending. Statistics have shown shoppers tend to spend more when they use their cards which will make it even more difficult for sales clerks to get those shoppers to let go of their cash.