If you're growing more panicked the closer it gets to Christmas because you have no idea what to buy for half the people on your list, don't worry — it's OK to get them gift cards.
New surveys show not only that more people want to receive gift cards than traditional Christmas gifts like clothing, books or video games, but also that recipients say they actually value a gift card more than a physical gift of an equal or even higher price.
Gift cards are like gold to consumers, said Michael Hursta, vice president of prepaid solutions at First Data. The Atlanta-based payment processor is a major employer in Omaha including support staff for its gift card processing services.
The company's surveys show that nine in 10 people would rather have a $25 gift card than an actual gift that cost $25.
Thinking of buying a gift card?
It's what people want
Six in 10 holiday shoppers polled by the National Retail Federation said they would like to receive gift cards, a number that has steadily climbed from 50 percent eight years ago. Fewer than half said they would like to receive clothing, books, DVDs or video games. Just over a third were hoping for electronics or computer accessories, and fewer than a quarter wanted jewelry.
Men planned to spend $173 on gift cards to women's $142. But more women wanted to receive gift cards: 66 percent, compared with 53 percent of men.
They are valued more
Would you rather have a $25 gift card or a gift that cost $25? Ninety-three percent of consumers polled by First Data would rather have the gift card. Eighty-five percent would rather have a $25 gift card than a $30 gift. And 49 percent would rather have a $25 gift card than a $50 gift.
It doesn't seem rational, Hursta said, but it's because a gift card provides more freedom — not only to buy something of their own choosing, but also more freedom than cash, which a recipient might feel should be spent on a need rather than a want.
It's still about giving
Gift card buyers said they like the cards because they let the recipients pick their own gifts (44.7 percent) and because they're easier and faster to buy than traditional gifts (21.1 percent), according to the National Retail Federation. Only a small number (4.8 percent) buy gift cards because the retailer is giving incentives such as an additional gift card or a fuel discount.
This could be a record year
More than eight in 10 shoppers planned to buy at least one gift card this holiday season, and shoppers will spend an average of $157 total on gift cards, according to a November retail federation survey. That's the most gift card activity predicted in the survey's 10-year history.
CEB Towergroup predicts $110 billion will be loaded onto gift cards in 2012, a number that will grow to $138 billion in 2015 as gift cards continue to shift from a “last resort” to a “first choice.”
Or maybe not
Merchants tracked by First Data reported 11 percent growth in dollar volume for gift cards in the month of November. But early sales may have taken away from later holiday buys: Black Friday gift card dollar volume fell 10 percent from last year, and dollar volume fell 6.5 percent in the first week of December, according to the firm's SpendTrend report.
Four in 10 surveyed said they'd buy gift cards at a department store, while others planned purchases at bookstores, movie theaters, electronics stores, coffee shops, grocery stores and gas stations. Supermarkets and drugstores have gift card “malls” featuring cards from dozens of merchants in one place.
“It saves them a trip,” Hy-Vee spokeswoman Ruth Comer said of the cards supplied by a third-party vendor. Hy-Vee has also begun placing gift cards in bakery and floral departments — any place a person would be looking for a gift.
Some aren't cards at all
Retailers are adapting their cards to changes in technology, and Hursta of First Data said consumers are getting more comfortable with the idea of e-gift cards just as they once made a transition from paper gift certificates. In 2012, 21 percent of gift card buyers bought at least one e-gift card, which is emailed and generally used for online or phone purchases.
CEB Towergroup anticipates e-gift card sales to rise to $3 billion in 2013 and to $12 billion in 2015.
Some people store the value of a gift card on a smartphone, enabling them to use it online or in a store, whatever is most convenient. Still, 68 percent of consumers said they prefer not to use e-gift cards because they like to give a physical gift.
Omaha-based giftcertificates.com sells SuperCertificates (as well as eSuperCertificates) that are like getting a gift card for a gift card. Tim Goddard, director of corporate sales, said the recipient redeems the certificate for a gift card from any of more than 200 merchants, deciding for themselves where to shop.
Some shoppers hesitate
The retail federation's survey of holiday shoppers found that nearly a quarter of shoppers think gift cards seem impersonal. Others worry that the recipient will lose the card or won't ever spend it, that the card could expire or that they don't know which store a recipient would want a card from.
Consumer Reports said in a November report that 15 percent of people surveyed still had at least one unused gift card from 2011. Why? 29 percent said they hadn't had time to use the card; 24 percent couldn't find anything they wanted to buy; and 23 percent (30 percent of men) forgot about the card.
If you get a gift card you don't like, you can sell it for a portion of the value at such sites as giftcards.com.
But merchants like them
You've seen the deals around town at movie theaters, coffee shops and restaurants: Buy a $25 gift card, get a $5 bonus gift card for yourself. Merchants like the cards because they drive store traffic, introduce their brand to new customers and usually result in additional revenue. According to First Data's 2012 gift card market study, shoppers on average spent $20.79 above the value of the gift card they received.
— Barbara Soderlin