A late flurry of holiday shopping this week should help boost fourth-quarter gift card sales compared with the same period last year, according to a report from Mercator Advisory Group.
Consumers beaten down by a bleak economy may be seeking to “reclaim Christmas, and prepaid gift cards, especially open-loop products, appear well-positioned to benefit from this shift in attitude,” Mercator’s report says.
“Consumers are beginning to appreciate the flexibility open-loop cards give recipients,” Watters writes.
Mercator predicts consumers will deposit $6.9 billion into open-loop gift card accounts during the fourth quarter, a 50% increase from $4.6 billion in 2008. Overall, Mercator predicts consumers will load $11.8 billion into open-loop gift card accounts during in 2009, a 51% increase from $7.8 billion in 2008.
“This is an optimistic prediction,” warns Brent Watters, an analyst for Mercator’s prepaid advisory service. “Our worst-cast scenario assumes consumers remain pessimistic, and outside of a major financial institution closing or the stock market imploding, we still predict a healthy 35% increase for the year and quarter.”
Closed-loop gift card loads will not experience any significant increases, possibly because the largest merchants with gift card programs have reached near-saturation, Watters writes in the report. Of the $63.4 billion Mercatur predicts consumers will load into closed-loop gift card accounts during all of 2009, $38 billion will be loaded during the fourth quarter, an increase of 1.9% compared with $37.3 billion 2008. Mercator says consumers loaded a total of $62.2 billion into closed-loop prepaid gift card accounts last year.
Merchants along the east coast may experience a big last-minute holiday shopping rush because consumers lost a day last weekend because of a major snowstorm, Watters says. “People are going to be stressed, and that’s when they might reach for a gift card, especially open-loop,” he says.
Several industry research reports and consumer-survey findings earlier this year suggested gift card sales this holiday season would decrease for the second consecutive year. But some observers, including First Data Corp., 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 (http://www.paymentssource.com/news/research-predicts-gift-card-sales-decline-2711281-1.html).
