Holiday Spending Preview- Gift Cards

From my email:

Gift Card Sales to Decline to $25 Billion

Consumers will not only spend less on gift cards during this holiday season but also shift gift-card spending toward necessities such as groceries and gas or small indulgences such as dining out, according to Archstone Consulting’s 2008 Holiday Gift Card Survey, reports Retailer Daily.

“Archstone Consulting expects gift card sales to dip 5%, to $25 billion in Holiday 2008 as consumers continue to manage the challenges of higher gas prices, higher food prices and a sluggish economy,” said Dave Sievers, principal and the Consumer Products and Retail Practice lead at the firm.

Just 24% of consumers plan to increase their spending on gift cards compared with last year, Sievers said.

Teenage and post-college consumers will account for the bulk of the increase in gift card purchases, the survey found.

“The 13-24-year-old group has the least discretionary income, yet on a relative basis they spend more on gift cards than any other demographic, and also receive almost 40% of all gift cards,” said Michael Unger, a principal in Archstone Consulting’s Consumer Products and Retail Practice and coauthor of the study with Andrew Buss, a director at Archstone Consulting.

Other key finding from the study:

• Pre-paid bank cards (Visa, American Express, MasterCard, etc.) will remain the most desired by gift recipients this year, as they were in 2007, because they offer the flexibility of making purchases at the gas station, supermarket, or pharmacy, according to Archstone.
• However, as approximately 50% of respondents said they would consider purchasing a gift card from a retailer if it comes with a coupon/discount for the purchaser or the recipient, retailers can increase the purchase of their cards, Sievers said.
• The restaurant/fast food category will sell more cards than any other category this holiday season. “For many families, eating a meal out is a simple luxury and, therefore, an ideal gift in a holiday season that will otherwise be noted for pragmatic purchases,” said Sievers.
• Sales of gift cards through outside locations, such as grocery stores, drugstores, banks and kiosks are expected to grow significantly - up 30% from 2007 levels.

About the study: This Archstone Consulting study was based on a USA national survey of 1,000 consumers using an internet-based panel. Demographic quotas across age, gender, and region were used to ensure the sample was as representative as possible of US census bureau data.

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