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Research Report Says Holiday Gift Card Market Could Shrink by 5 Percent
October 09, 2009
By William Ng
The 2009 holiday gift card market is predicted to either stay flat at $24.9 billion or shrink by up to 5 percent versus last year, according to a research report by Stamford, CT-based Archstone Consulting.
Examining consumer, as well as retailer and government trends, Archstone reveals that the average value consumers are purchasing for gift cards is $46—down $6— and they’re redeeming cards for necessities and practical items from big-box retailers, restaurants, and department stores.
“Gift cards are still the gift of choice among consumers, but purchases reflect economic times,” says Dave Sievers, an Archstone principal and the leader of its consumer products and retail practice. “The focus is on the pragmatic, not frivolous.”
In a tough sales and financial environment, gift card companies are aggressively trying to be innovative, Sievers adds, who noted two prepaid companies, Wired Benefits and InComm, are working on a Visa medical services gift card redeemable through some of the country’s largest health networks.
Online gift card purchasing and distribution is also growing, with retailers adopting third-party-run web platforms from which consumers can order customized gift cards delivered via e-mail. But the lack of standard ordering and delivery processes from retailer to retailer remains a problem, the Archstone assessment notes.
The consultancy also notes that the federal government's new rules to limit gift card fees and expiration policies could push card providers to move to an upfront-fee model with consumers to meet revenue targets. But American Express, combating negative gift card perceptions, has just moved to eliminate its gift card fees entirely, which could lead other card suppliers to do the same.
More information on Archstone’s “2009 Gift Card Trend Report” is available at the firm’s website.
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