Gift Cards Extend Holiday Sales

Retailers continue to experience holiday sales nearly a month after Christmas. How is this possible? Gift cards, that's how. Shoppers surveyed by BIGresearch for the National Retail Federation (NRF) say they have spent less than half (37.3 percent) the value of their gift cards.

Retailers don't count a gift card as a sale until the card is redeemed, and -- because gift card holders (50.9 percent) are likely to spend more than the value of the card -- retailers want gift card holders in their stores sooner rather than later.

Tracy Mullin, CEO of the NRF, says retailers are wise to lure shoppers in to spend gift cards as soon as possible. She cites two reasons: (1) The first couple months of the year are slow shopping periods so gift card spending can boost sagging bottom lines; and (2) The sooner gift cards are redeemed, the less likely they are to become lost or misplaced.

Gift cards were a more popular than projected as 2006 holiday gifts. Shoppers spent an average $164.81 on gift cards, up from the $146.20 they were expected to spend. That brought holiday gift card spending up to $27.8 billion, higher than the $24.8 billion projected by NRF.

Men spent the most on gift cards ($176.84), and young adults aged 18-24 spent the least ($118.12).

The most popular gift cards came from department stores (37.9 percent), followed by restaurants (26.8 percent); bookstores (18 percent); electronics stores (16.2 percent); and discounters, (14.8 percent).

Gift cards for various retailers can be purchased at various locations (drugstores, grocery stores), but most consumers who bought them for the holidays (76.7 percent) purchased the cards at the store where the card will be used. Some shoppers (17.3 percent) did purchase them from other stores, and others (17.7 percent) purchased gift cards online.

Consumers like the convenience of being able to buy different gift cards at one location -- such as a convenience store -- says Phil Rist of BIGresearch. And thus, he adds, it's a trend that will continue.

Ka-ching.