- The Washington Times - Thursday, November 17, 2005

Holiday shoppers are expected to spend 15 percent of their holiday purchases on gift cards this season, and they will have a wider variety of retailers to choose from, including hair salons and fast-food restaurants.

Shoppers plan to buy $18.48 billion in gift cards this year, a 6.6 percent jump from 2004, according to a study by the National Retail Federation (NRF), a Washington trade group.

Smaller retailers are joining the pack of department stores and large chains in selling gift cards.

“It’s not only the J.C. Penney’s and the Gap and the department and specialty stores [that have gift cards], they’re now going down into the smaller players that you usually wouldn’t see, like Regis Salons and Arby’s,” said Bob Skiba, general manager of gift card producer Stored Value Systems, a Louisville, Ky., division of Ceridian Corp. “They [didn’t] have a gift card program until the last year or two.”

Stored Value Systems’ customer list, which includes clients like Target Corp., Gap Inc., Limited Brands Inc. and Costco Wholesale Corp., increased by 70 retailers to 350 this year, riding on the coattails of the gift card’s spike in popularity.

Retailers like gift cards because they bring consumers into the store, where they typically spend more than the card allots — about 10 percent to 15 percent more.

“Gift card recipients tend to spend an additional amount … to the gift card. They use it as a down payment toward a bigger purchase,” said J.C. Penney spokesman Tim Lyons. “It gives the customer a choice in what they ultimately get as a gift.”

J.C. Penney sells about 60 percent of its gift cards during November and December.

“It’s jumped the last couple years and has become a significant part of holiday business,” Mr. Lyons said. “Gift cards are well accepted by gift givers and receivers alike.”

About 60 percent to 65 percent of gift card purchases are made during the winter holidays, Mr. Skiba said.

About 75 percent of shoppers plan to buy gift cards this year, according to the NRF study. Shoppers probably will spend an average of $88 on gift cards — about 15 percent of their holiday budget.

The International Council of Shopping Centers, a New York trade group, attributes the increase to the vast availability of the cards and the increased personalization and better design of them.

“Most people are used to ‘I gotta get a gift card’ being a bad thing, a stigma that ‘I didn’t really know what to get you,’” said Patrice Duker, a spokeswoman for the shopping center trade group. “People request them more. They don’t know what they want and it allows them to say, ‘I know you love this one retailer. …’”

Aunts and uncles are prime purchasers of gift cards, often for their teenage nieces and nephews, Mr. Skiba said.

“Aunts and uncles may know they like American Eagle, but not sure what in American Eagle they like,” he said.

Retailers also attribute the spike to the vast availability of gift cards — whether in the store, online or in a different retailer’s shop.

“Gift card malls,” or a collection of cards from various retailers, are often in the check-out lines of grocery stores. The gift card malls have been spreading in popularity for four years, Mr. Skiba said, and are now in 7,500 locations across the country.

While November and December are popular months to purchase gift cards, January and February are when they are most often redeemed, Mrs. Duker said.

Retailers do not account for gift card sales until then — under accounting rules — meaning more of “holiday” sales will take place in January, February and even a year after the gift card is bought.

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