Gift Cards Could Suffer From Economic Woes

I received an e-mail today - one of those forwarded chain notes I often get. It supplied a list of retail stores, and warned recipients not to purchase gift cards as Christmas presents from these companies because they have announced plans to close up shop by January 2009. This got me to thinking: will gift cards, a typically popular holiday gift, suffer in wake of the current economic climate?

An Ipsos Reid study conducted around Christmas-time last year found that 88% of respondents like receiving gift cards. In fact, 72% would rather a gift card than an actual gift! I don't think these numbers will drop this year simply due to fear that a store might close, but if e-mails like the one I received continue to circulate, it might just scare people off from buying gift cards.

The whole idea of a gift card is that the person can buy something they want. While it replaces an actual gift, what I've often found is that you end up spending more money than you otherwise would have with a gift card. Now if the recipient ends up getting nothing from the card because the company went out of business (a horrible experience: trust me, I've been there!), you've now both disappointed the person and lost a whack of money.

Will you be buying gift cards this year?

As an aside, I thought it funny that the most often-requested gift item I've heard over the past few months from family and friends is in fact a gift card, but of a specific kind: a gas card! You know times are tough when filling up your car becomes a luxury!

Gift Cards Could Help Consumers Remain in Canada to Shop

Amidst all of the hoopla surrounding the rising Canadian dollar and the risk of more and more Canadians heading over the border to shop, we see a positive sign: gift cards! An Ipsos Reid poll found that 88% of Canadians enjoy getting gift cards, while 72% say they'd even rather receive a gift card than an actual gift!

This will, of course, bode well for the Canadian retail landscape because, for the most part, one is likely to purchase a gift card from a local retailer rather than one in another country. Sure, online shopping still poses a threat in the gift card domain. But, for the most part, I think Canadian retailers can rest easy that they'll be seeing consumer bucks for those handy pieces of plastic.

Although...I am a bit skeptical about the study results: the press release did not mention the sample size of the survey (it was conducted on behalf of Mark's Work Wearhouse), and the number does appear a bit high. This is especially odd, since a similar Accenture survey conducted at this time last year with 498 Canadians found that only 29% would prefer a gift card to a well thought-out gift. This means that, in one short year, 40% more people have decided they'd rather just get gift cards than a gift? I guess a lot of coal was distributed under trees and in stockings last year! We do have to bear in mind, however, that the studies were conducted from two different companies, so the parameters were likely very different. Nonetheless, it does seem like an oddly large jump.

This year's Ipsos study revealed that women appreciate gift cards more so than men (so much for the theory that "it's the thought that counts"), as did younger folks. As a funny aside, Ipsos says that 46% of men admitted to having forgotten to purchase a greeting card to hold the gift card (39% of women suffered from this temporary lapse). A total of 84% of respondents said that they always remember to redeem a gift card.

As for Canadian retailers, those who offer gift cards options will likely receive some extra bucks this year. My advice to any retailer who doesn't offer gift cards is to jump on that bandwagon ASAP; if not for good, at least for the holiday season. If Tim Horton's can do it, so can you. And for those with expiration dates, what's with that? If someone paid for credit at your store, they should be entitled to redeem it when they see fit.