NRF: Gift Card Spending to Bounce Back
The holiday season is upon us and many shoppers plan to give gift cards this season, according to a consumer trends survey by the National Retail Federation. What’s more, spending on gift cards this year is expected to outpace spending in 2015.
Nearly 56 percent of consumers plan on buying gift cards this year, which is second only to clothing and clothing accessories (61.2 percent). This marks the first time in a decade that gift cards haven’t topped the list. On average, shoppers plan to buy three gift cards with approximately $46 on each card, according to the survey of 7,206 consumers, conducted Nov. 1-8 by Prosper Insights & Analytics.
Shoppers are expected to spend $27.5 billion on gift cards this year, a 5.8 percent increase compared with $26 billion in 2015. The estimated total this year is a welcome upswing after gift card spending fell from $31.7 billion in 2014 to last year’s total.
The decrease in 2015 could be attributed to retailers focusing more on discounts and sales to draw in shoppers, retailers reported in a recent study by Mercator Advisory Group. Discounts will remain an important strategy this year, but retailers also see opportunities to drive current and future sales with gift cards by, for example, offering a free gift card worth $20 if $100 in gift cards are purchased. “Gift cards are the one promotion that can bring people in twice: first to buy an item that earns them a card, and second, to redeem the card they earned,” says Ben Jackson, director, prepaid advisory service, Mercator.
The most common types of gift cards purchased, by number of buyers, for the holidays are from restaurants (35 percent); department stores (33 percent); Visa, MasterCard and American Express (22 percent); coffee shops (21 percent) and entertainment (17 percent), according to the NRF survey.
“The popularity of gift cards makes them an easy choice, but many consumers will still search online and in store, browse ad circulars and even log into Facebook to find inspiration for unique and memorable gifts for their loved ones,” said Pam Goodfellow, Prosper principal analyst.
The survey also indicates that 55.7 percent of consumers already have begun their holiday shopping to various extents. Nineteen percent of shoppers have completed up to 10 percent of their shopping, nearly 10 percent of consumers have finished up to half of their shopping and 2.9 percent of shoppers can boast (and we can envy) having completed their holiday shopping. Haven’t started your holiday shopping yet? You’re not alone. More than 44 percent of consumers surveyed haven’t started either.