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Prepaid gift cards will be popular gifts this holiday season, but consumers will buy cards with lower balances and fancier packaging, predicts Iconoculture Inc., a market research firm specializing on consumer trends. Tim Henderson, senior director and consumer strategist for retail at Minneapolis-based Iconoculture, says the company's research is qualitative, so he could not predict the actual amount of gift card sales. However, gift cards will remain popular because they are convenient to buy, and consumers can scale back their spending while still giving a gift, he says. "It's up to the gift giver to decide what they actually spend. Instead of spending $100, they can spend $50 on a gift card," Henderson says. Consumers likely will use gift cards the same way they did last year–hang onto them until after the holidays and spend them on products they use in their daily lives, he says. Such mass-market retailers as Wal-Mart Stores Inc., Target Corp. and Kmart would benefit from the trend, Henderson says. In February, Wal-Mart reported shoppers were using gift cards for "food and other consumables rather than discretionary purchases" at a higher rate than the company had expected (CardLine 2/8).
