NRF’s Top Tips for Buying Gift Cards

Once again, gift cards will be the most requested gift this holiday season. According to NRF’s 2008 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch, 54.9 percent of consumers would like to receive a gift card this holiday season, up slightly from 53.8 percent last year. Gift cards will be the most requested gift this year, followed by books, CDs, DVDs, videos or video games (50.0%) and clothing or accessories (49.8%).

Preliminary gift card research conducted for NRF by BIGresearch found that shoppers’ main reasons for buying gift cards were that gift cards allow the recipient to select their own gift (25.4%) and that gift cards are easier and faster to buy than traditional gifts (12.6%). Some consumers say they are enticed to buy gift cards by retailer incentives (6.3%) or because they are easier to ship than traditional gifts (6.7%). Others say gift cards help them stick to their budget (5.7%) or like the fact that a gift recipient won’t have to deal with returning unwanted merchandise (5.1%).

The main reasons why consumers said they would be less likely to buy gift cards this holiday season are because they feel the cards are impersonal (22.7%), that they would rather stretch their dollar by buying merchandise on sale (10.9%), and because they do not want to buy a card with expiration dates or added fees (9.8%). Other shoppers say they simply do not know which gift card a person would want (7.7%), while a small number of shoppers says that they are worried the gift recipient will lose it (3.9%) or that the retailer will go out of business (3.1%).

As the popularity of gift cards continues to grow, NRF offers gift card tips that all consumers should keep in mind while shopping this holiday season.

1. Know the difference between gift card policies from retailers and banks. One in ten consumers (9.8%) says they are discouraged from buying gift cards because they are worried about fees and expiration dates. Shoppers should be aware that there are big differences between store-issued and bank-issued gift cards. According to NRF, none of the gift cards from the nation’s 25 largest retailers have expiration dates and 84% have no fees. On the other hand, gift cards issued by banks, malls, and credit card companies are more likely to add expiration dates and tack on annoying activation, maintenance, inactivity, and transaction fees. Some bank-issued gift cards even charge a fee for simply checking the balance.

2. Buy gift cards from reputable retailers. To ensure that a recipient receives the card’s full value, shoppers should only buy gift cards from reputable retailers (not online auction sites). Gift cards sold through online auction sites are more likely to be counterfeit or obtained fraudulently.

3. Spend your gift card, don’t save it. Because retailers are not allowed to count a gift card until it is redeemed and merchandise is exchanged, retailers will be enticing consumers to redeem their gift cards by holding special sales after Christmas and stocking shelves with new merchandise in January to give shoppers more of a selection.

In many states, gift cards that go unused or unredeemed for more than a few years are often treated as "abandoned" property. Where these laws apply, sometimes in as little as two years, retailers are required to turn over unused gift card dollars to state governments under the guise of returning the “abandoned” money to the gift card purchaser. In fact, states make millions of dollars a year from these clauses. Consumers are encouraged to spend their gift cards within the first year of purchase so that they—not the state where the gift card holder lives—receive the full value.

4. Personalize your gift card. One-fourth (25.4%) of people said they would be less likely to buy gift cards because they think the gift is impersonal, but there are ways to personalize a gift card without breaking the bank. When giving a gift card, make it more personal by packaging the gift card with other small items you know a person would like. Enclose a movie theater gift card with candy and popcorn, or add a pair of earrings with a gift card for a clothing retailer. Personalize the gift even more by buying a gift card from a retailer that allows shoppers to design their own cards with personal messages and photos.

5. Keep your receipt. Some retailers are able to reissue a lost gift card if consumers have kept the original purchase receipt. Many retailers also allow gift card recipients to register their card through the store's website, which enables them to check their balance online and receive a new card if they lose or misplace the original one.

The survey about gifts consumers want to receive polled 8,117 consumers and was conducted for NRF by BIGresearch September 30 – October 7, 2008. The consumer poll has a margin of error of plus or minus 1.0 percent. The survey about positive and negative considerations when buying gift cards polled 4,048 consumers and was conducted for NRF by BIGresearch October 17-21, 2008.

The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees - about one in five American workers - and 2007 sales of $4.5 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. www.nrf.com