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Several industry research reports and consumer-survey findings suggest gift card sales this holiday season will decrease for the second consecutive year. Some observers, however, expect gift card sales to increase because retailers are stocking less merchandise compared with last year. Fewer options, they say, may force shoppers to purchase gift cards so recipients can buy goods they want once merchants restock their shelves. Moreover, retailers last year marked down merchandise because they overstocked, not anticipating the full effect the ailing economy would have on sales. Consumers also "went to the store or mall and [did] a mental calculation and asked themselves, 'where do I get the most bang for the buck?'" says Jim Contardi, senior vice president of prepaid solutions at First Data Corp., an Atlanta-based transaction processor. "They saw the heavily discounted merchandise they could buy for whatever their budget was" and decided to skip the gift cards, Contardi tells ATM&Debit News. "Consumers believed the gift card recipient would appreciate the merchandise more than that same value in a gift card." Contardi expects the situation will be different this holiday season based on conversations with First Data's retail partners. Merchants have "purposely ordered much less merchandise going into this holiday period so that they will not have to do the markdowns," Contardi says. When consumers do their holiday shopping this year, "we can have a lot more people landing on the side of the gift card as opposed to the merchandise." Daniel Horne, associate professor of marketing at Providence College in Rhode Island, agrees with Contardi that overall gift card sales this holiday season should increase, including network-branded cards. "The driving force [for increased gift card sales] will be the lean inventories consumers will face at [brick-and-mortar] stores," says Horne. Retailers were "burned last year because of the economy and had to dump inventory" by dramatically dropping prices, he says. More than half (54%) consumers planned to purchase gift cards this holiday season, according to a survey by Auriemma Consulting Group LLC. Auriemma in September conducted the online survey with 439 consumers.. While that percentage is down from 59% in a similar survey Auriemma conducted in 2007, the average anticipated card-load amount was up 18.6%, to $51 from $43, according to Auriemma.
