Is gift-card spending on the decline?

The National Retail Federation is forecasting that gift-card sales will drop by nearly six percent this holiday season as fewer shoppers buy the cards and those who do spend less on them.

The NRF, which surveyed nearly 9,000 consumers nationwide, estimates that Americans will plunk down $24.9 billion on cards this season, a $1.4 billion drop from last year. Overall, fewer people are expected to purchase gift cards as well — 53.5 percent of shoppers down from 56.6 percent — and the average amount they plan to spend on cards has declined, too, from $156.24 in 2007 to $147.33 this year.

“Since gift cards never go on sale, some price-conscious shoppers will be passing up gift cards in favor of holiday bargains," said NRF President and CEO Tracy Mullin. “Retailers may need to make minor adjustments to holiday plans as fewer people may be hitting the stores in January to redeem gift cards.”

The survey found that the biggest gift-card spenders this year will be men, who will spend an average of $156.98 on the cards, and those over age 45, who will spend $168.02.

People are buying fewer cards primarily because they consider them impersonal. Other reasons cited in the survey: Shoppers would rather stretch their dollars by buying merchandise on sale; they’re turned off to cards with expiration dates or added fees; and they simply don’t know which gift card those on their shopping list would want. A smaller percentage of respondents were sour on cards because they’re worried the recipient would lose it or the retailer might go bankrupt.

A similar holiday poll by the Consumer Reports National Research Center revealed that gift cards remain highly popular — in fact, they’re among the most desired and most-given gifts — even though we continue to warn folks the onerous fees associated with some cards and the billions of dollars in gift card deposits that are never redeemed. An astonishing finding in our poll was that one-quarter of those who received a gift card in 2007 still haven’t used it. The most common reasons: They didn’t have enough time; forgot about the card; couldn’t find anything they wanted; or the card expired and became worthless.

Related:

• Michigan’s new gift card law a step in right direction
• Tweeter files for bankruptcy: use those gift cards fast
• A call to make gift cards safer
• Avoid gift card pitfalls

Comments

[Dawn]

I think Cards are on the decline because of the stores closing. You don't want to buy a card for someone and wonder if that store will be closed in 9 months or less.

[John]

Gift card giving is highly popular because it allows the person receiving the gift the ability to choose something they really want and avoids the dreaded returns after the holidays. This article should tell you there are many reputable companies that have honest gift card programs, vs. a broad-based approach that may scare many consumers. List those that should be avoided as well as those that are safe.

[AC]

Gift card sales will go down this year, but not for the reasons in the article. They will go down because the only people who you don't know what to buy for that will still get a gift are family. This year I will not get a $10 gift card from the parent of a child I tutor. This year no one will buy a few extra gift cards to be emergency gifts. This year people won't get one for their nieces and nephews on the other coast. All of those people you feel you should get something for but you don't know what, will not get the $10 or $15 gift cards they got last year. That is where the loss will come from.

On a pro-gift card note:
I am 27. In this modern two-income economy (especially difficult at the moment) the people I graduated with are at many different places in life. I have friends who are married and/or looking to buy their first house, and those who have spent the last ten years living with their parents awaiting the promotion that finally lets them rent an apartment. The one thing we all share is a family with no idea of what to get us. There are three solutions: money, gift card, x-mas list. None of these are very personal; however, none of them involve wasted money on useless stuff that takes up room in an apartment. Of the choices, I prefer gift cards.
Money is very useful. I can use it to pay rent or utilities, but it is the most impersonal of all. It is what your grandmother sent you in a card for your birthday growing up.
A Christmas list is great if you have something big you want that you can't really afford. For example, a computer or a bicycle may require the financial assistance of family, collectively for really big items. There is no flexibility in this gift, but the giver often likes to know where their money goes when it goes in large chunks.
Gift Cards are best. When I'm given a gift card to a store, I know that they didn't know what to get me but they do know what I like. I've gotten gift cards from Subway (there is one on the road to my parents house and they wanted me to visit more often), Target (I was moving and a big box store is a good place for all the little things), Barnes @ Nobles, and even the nicer grocery store in town. That last was my favorite; because, I got to buy the really nice rootbeer that I can never afford and some good steaks for me and my friends.
Gift cards are the chance for me to buy some of those things that, during the year, I picked up in the stores but had to put back before going to checkout.

[JE]

Gift cards are only now being recognized as the "slightly more Politically Correct than cash" gift, yet people still buy them and risk having the money wasted. I'd much rather receive a check or cash than a gift card.