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Industry Perspective
Nilson Report
Gift card systems are the fastest growing consumer payment system
in the U.S. over the last three years. Retailers have much to gain from
the migration from paper certificates to plastic cards, and we expect
gift cards will dominate the prepaid payment system market for years
to come.
Retail Card Forum
American Express estimates retail gift card outstanding balances
alone are currently $1 billion, and project they will grow to $15 billion
in the next 2-5 years. Shoppers using prepaid gift cards and certificates
are less concerned about paying full price in retail stores than shoppers
using other media, according to research by Daniel R. Horne, assistant
professor of marketing at Providence College, RI. Horne's survey of
gift card and certificate users found that 40% of shoppers using a retailer's
gift card or certificates purchased items at full price, compared to
16% of shoppers using other payment methods.
Los Angeles Times
Macy's, Gap, Bloomingdale's and others are promoting prepaid gift
cards that take the place of paper gift certificates, hoping to boost
sales. The cards have an important advantage for retailers over paper
gift certificates. Consumers using gift certificates receive their change
in cash, which can be spent elsewhere. The electronic gift cards keep
the money from leaving the store.
Dan Horne, retailing professor at Providence College in Rhode Island,
said sales of gift cards and certificates have been growing 11% to 15%
annually since 1993, thanks in part to gift cards. Americans will spend
billions on them, he said. The cards appeal to time-pinched consumers
in search of a convenient gift, Horne said. Also, corporations purchase
batches of the cards to give to customers. Retailers view the cards,
which usually have the store logo on them and easily slip into a consumers'
wallet, as a form of branding.
"A reusable gift card can be a constant reminder of a store and its
brands," said Joe Enos, a spokesman for Old Navy. Neiman Marcus is credited
with creating the electronic gift card in 1994. The retailer known for
its expensive, not to say extravagant merchandise, has actually sold
cards with values in the $100,000 range, said Billy Payton, vice president
of marketing at the Dallas-based chain. "We launched the prepaid gift
card because we believe it can be fun to buy, fun to give and fun to
use," Payton said.
The Associated Press
Retailers have high hopes for the future of electronic gift cards.
Finding that perfect gift for someone at Christmas or any other time
is never easy, but a growing number of retailer's think they have the
solution...It's plastic. Stores are converting gift certificates from
documents to electronic cards. They're less cumbersome to carry, have
a technological edge that appeals to kids and are advantageous for retailers.
Card Marketing
Neiman-Marcus and Barneys New York are wrapping up higher gift sales
after replacing paper gift certificates with magnetic stripe, prepaid
cards in all stores. Customer response has been so strong; the upscale
stores are now jockeying to develop the most colorful and unique cards
for every occasion, before mainstream department stores jump on the
bandwagon. Although the trend began at two of the nation's most upscale
stores, retailers from Bloomingdale's to Target are expected to begin
offering prepaid gift cards in the near future, say industry experts,
because of the convenience and cost savings the cards offer.
MasterCard International
The average consumer today carries with them 12-14 credit cards.
National Retail Federation
U.S. annual retail establishments registered sales of more than
$2.5 trillion in 1997 and $2.7 trillion in 1998
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