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Consumers are loading fewer funds on retailer-issued, closed-loop gift cards because of concerns about the economy and whether retailers will be around to honor the cards, according to a report authored by two consumer-research firms. The National Research Network and Hartman Group Inc. based their report on consumer surveys that were conducted twice in six months. The data presented in the report is the result of two separate online surveys of a national sample of consumers 18 years old and older. The first survey was conducted in August 2008, resulting in 3,007 responses. The same sample of consumers was contacted again in February, resulting in 1,578 responses. The economy is mostly to blame for shrinking dollar amounts loaded onto gift cards, but 43% of the consumers surveyed hesitate to buy gift cards due to the bankruptcy of retailers and restaurants. The survey, however, indicates gift cards are still popular gifts. The survey found the number of consumers purchasing gift cards increased significantly over the past six months. Fifty-seven percent of U.S. consumers purchased at least one gift card within the past year, compared with 52% of consumers who purchased a gift card between September 2007 and August 2008, the report says. The report did not reveal the average amount of funds being loaded onto gift cards. "Gift cards continue to work well for a variety of gift-giving occasions," Daniel Horne, associate professor of marketing at Providence College in Rhode Island, tells ATM&Debit News, a CardLine sister publication. After several retailers that issued gift cards filed for bankruptcy, the news media reported that the retailers would not honor their gift cards, leading to speculation that the retail gift card industry was dying. "The media's pronouncement of their demise is greatly exaggerated and is based on a slowing of growth, which had been phenomenal, rather than a change in fundamental attitudes," Horne says.
