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    Gift Cards Go Mobile

    Traditional gift card use is on the decline, but programs are taking on new form.
     

    NATIONAL REPORT -- Traditional retail gift card programs have declined in recent years, the National Retail Federation (NRF) reported in its latest STORES magazine.

    However, this doesn't mean consumers are buying fewer gifts cards overall. Instead, gift card programs have undergone a metamorphosis. They are now being tied to retailer loyalty programs and reside on cell phones, where a phone can be tapped at the point-of-sale for redemption, according to the NRF.

    "We've seen steady growth despite the recession," Bryan Wang, director of marketing for gift card company Givex, said in the report. "Nearly every retailer realizes that gift cards are essential to their business, and customer loyalty is a big part of that."

    Besides the shift from traditional to mobile gift cards, the NRF reported that additional changes are taking place in the gift card landscape. One notable change of late is that gift cards are no longer tied only to holidays or special occasions.

    "More people are purchasing [a gift card] to say thank you to a friend…[or] for themselves to use as spending cards," Mike Hursta, vice president of prepaid solutions for First Data Corp., told STORES.

    In fact, First Data found that more gift cards are being reloaded after the original value runs out. In 2011, customers put an average of $211 on gift cards, compared to $161 in 2010, its research revealed.

    Another trend noted in the magazine's report is that retailers are providing more incentives to consumers who go online and register their gift cards.

    "Some stores and restaurants are telling their customers that they will give them an extra $5 if they go online and register their cards," Wang said. "Once they track their purchasing behavior, they can notify the customers of specific promotions and offer rewards that are likely to fit the customers' wants and needs."

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