From the President: Have You Been “Carded” Lately?

– Don Capman

A couple of weeks ago as I was standing in the express checkout line at the supermarket, a gentleman was making a cigarette purchase when the clerk asked for his ID. Appearing to be not a day under sixty and amazed that he was being “carded,” the man looked both annoyed and flattered at the same time. Incidentally, “express” checkout, I’m sure you will agree is a serious misuse of the word as I’ve waited longer in the so-called “express” line than the regular checkout.

Well, that’s not what I meant by “carded” anyway. What I am talking about is the biggest success of the retail holiday season—GIFT CARDS! According to the National Retail Federation, shoppers bought $18.5 billion of gift cards in November and December which amounts to a 6.6% increase over 2004. The NRF further predicted that total holiday sales would be at $415 billion, or an increase of 6%. So, if you do not offer gift cards in your stores, you are missing out on some serious bucks and the opportunity to increase sales dramatically.

Consumer buying habits are changing rapidly. Over the past couple of years, pre-holiday sales have started earlier and earlier, conditioning the consumer to purchase only things that are on sale and waiting patiently for deeper discounts. Subsequently, the weeks following Black Friday have been disappointing and scary for many retailers.

“So,” you ask, “why should I include and promote gift cards in my store?” Gift cards offer many benefits and very few drawbacks. One of the most commonly cited drawbacks is the impersonality of gift cards. Many people feel that shopping for a gift for a special person should be a very personalized experience. You want people to feel that you thought about them and took the time to make an appropriate and meaningful purchase. Gift cards certainly don’t do that, so a thoughtful consumer might consider purchasing a smaller personalized gift and combining it with a gift card.

The benefits, on the other hand, are numerous and can significantly increase your bottom line. Take, for instance, returns. According to the National Retail Federation, four to six percent of all holiday purchases get returned. Britt Beemer, president of Americas Research Group, which tracks consumer shopping habits, makes a point that it can cost retailers as much as 20 percent per item to retag, get it back on the shelf and try to sell it again. Beemer further states that this year shoppers will return about 5% of their gifts down from 6 percent last year and 10.5 percent two years ago. Why the drastic reduction? GIFT CARDS!!! Given the opportunity to shop for themselves, consumers will keep what they buy.

Another tangible benefit of gift cards is the inclination of many consumers to spend more that the value of the card. As cited in Forbes.com, a survey conducted by Accenture found that 44 percent of shoppers polled said they would spend their gift card within a month of receiving it and more that half said they intended to spend more than the value of the card. WOW! This means that you will have much more post holiday traffic than in the past and will have a real opportunity to clear out your inventory and expose consumers to newer, full price inventory. While post holiday shoppers usually are looking for bargains, if newer product is attractively merchandised, it can often create excitement resulting in a full priced sale!

Gift card promotions are also very profitable for retailers. For instance, if you offer a gift card that is re-loadable, (in other words when the card amount is used, the user can simply pay a fixed amount to re-load the card), consider offering a 5% discount when re-loading. This is a great incentive to keep the buyer coming back to your store. Another gift card promotion would be to offer a 5% discount on the original gift card if purchased by a certain date. Some retailers have special offerings when the consumer purchases a product with a gift card. Take for instance; when someone purchases a pair of shoes with a gift card, the consumer receives some free shoe polish. Be creative! Gift cards are the wave of the future whether you like it or not.

If you would like to find out more about Gift Card Programs and how they can integrate with your Point Of Sale Solution, email Audrey LaBrie at audreyl@jdapos.com.