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Archive for Saturday, November 26, 2005

Gift cards: A new tradition in holiday giving

November 26, 2005

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Are gift cards on your holiday shopping list? If so, consider yourself trendy.

This year, 59 percent of consumers say they have bought or received a gift card, up from 36 percent in 2001, according to annual surveys by the ValueLink consulting group. In addition, more than half of consumers surveyed by the National Retail Federation said they'd like to receive a gift card as a present this year.

For many retailers, gift cards now represent a significant portion of sales. Starbucks has sold 58 million of its gift cards, worth more than $1 billion, since they were introduced in 2001; they now account for 11 percent of the company's North American retail revenues.

What's behind the boom? It's simple. Plastic, wallet-sized cards replaced paper gift certificates. The electronic storage of funds makes gift cards easy to buy and redeem.

"When the certificate had to be written by hand, you couldn't just grab one and buy it," said Len Gilbert, who runs Barnes & Noble's gift card program. "And nobody would think to carry those pieces of paper in their wallet. But when it's a piece of plastic, it gets used more."

Besides, a gift card is no longer a "cop-out gift. Now it's seen as really giving choice," Gilbert added.

Because gift cards can be purchased over the Internet and even sent by e-mail, they're especially convenient for shoppers who dread long lines.

Shoppers who were headed to check out Friday at Borders, 700 N.H. in Lawrence, passed by racks of seasonal gift cards in various denominations.

Shoppers who were headed to check out Friday at Borders, 700 N.H. in Lawrence, passed by racks of seasonal gift cards in various denominations.

"They're ideal for the last-minute shopper or anyone who doesn't have the ability to get the gift to the person," said Jill Ambrose, marketing vice president for www.giftcertificates.com, a one-stop shop for gift cards from hundreds of retailers.

Some chains even sell gift cards at other companies' stores - like Pathmark supermarkets and CVS drug stores, where you'll find racks of gift cards for unrelated retailers. Some cards are dressed up with themed designs - snowflakes, snowmen and the like.

But does a gift card suggest that you didn't care enough to select a more personal present? Don't worry. Etiquette expert Peggy Post from the Emily Post Institute (and wife of Emily's great-grandson), says gift cards are perfectly acceptable, especially when you're not sure what the person would like.

"A lot of recipients enjoy having them," she said.

Just beware: Some cards have expiration dates. Others - especially from banks or credit card companies - come with "an abundance of fees and limits, which greatly reduces the monetary gift you're giving," said Jeffrey Strain, who runs a Web site about consumer savings called www.savingadvice.com.

"These can include a monthly maintenance fee, shipping and handling fees if purchased over the Internet, service fees, and ATM fees if used to get cash," Strain says.

On the other hand, a fee may buy convenience. At www.giftcertificates.com, e-mailing a gift card is free, but it costs extra to snail-mail or deliver overnight. The Web site's "SuperCertificate," which is redeemable for gift cards from a variety of merchants, comes with a 95-cent fee when delivered electronically.

If a card never gets used, or if only part of the value is used, merchants keep the change. Consumers who do use up their cards are likely to add cash to complete the purchase. A 2005 ValueLink survey found that 56 percent of gift-card recipients spent more than the value of the card.

And when you buy a card today and redeem it in the future, "you're making an interest-free loan. You are making a loan to the Gap or Barnes & Noble or Borders," said Slate magazine's "Moneybox" writer Daniel Gross.

Gross, who wrote a column called "Why Gift Cards Are Evil," added that it's silly to think gift cards are "better than cash or classier somehow. At the end of the day, you are giving them cash."

Gift certificates for an activity or experience - like eating out or getting a massage - are a way for busy people to encourage each other "to put aside some time for themselves. It sends the message, 'I care about you,' " said Jeremy McCarthy, director at La Costa Resort and Spa in Carlsbad, Calif., where gift card sales average $100,000 a month, a 28 percent increase over last year.

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