Most who give gift cards aren’t desperate

November 26th, 2013

Most who give gift cards aren’t desperate

The gift card isn’t necessarily the choice of last resort, as some may think.

Shoppers say they planned almost all their gift card purchases last year, only 2 percent said they bought gift cards because they ran out of shopping time.About 59 percent said they purchased a gift card last year, and more are expected to exchange money for loaded plastic this holiday season. Last November and December, shoppers purchased about $30 billion worth of gift cards from retailers, malls, banks and credit card companies.

That represented about 13 percent of consumer expenditures, and this year, the level should inch up to 15 percent, said Michael Niemira, chief economist and director of research for the shopping industry organization.The post-Christmas season is merry for shoppers and retailers. Retailers say people shopping with gift cards generally kick in some of their own cash and end up spending more than the face value.

Because of accounting rules, retailers can’t count a gift card as a sale until it’s redeemed for merchandise. That’s why most gift card sales don’t show up until after Christmas – and why analysts are more closely watching post-holiday sales than in past years.

The National Retail Federation said last month that it expects retailers will see a 6.6 percent increase in sales from gift cards this year over last.

Why are gift cards so popular? The No. 1 answer is convenience. About 74 percent saytheir purchase was a convenience for them and the recipient. Frustration was also cited as reason, with 14 percent saying they looked for a specific item and couldn’t find it, so they settled on the gift card.