The gift-card giveaway
When you buy a gift card, it’s not the retailer who’s supposed to get a present. But that’s how it works out when consumers fail to redeem all or part of gift cards worth billions of dollars every year.
And given the continuing boom in gift card purchases during the all-important holiday retail season, one question stands out: Why do so many people fail to cash in?
“They’re not perceived to be money,” said Kit Yarrow, a professor of psychology and marketing at Golden Gate University in San Francisco. “Partly that’s because it’s a gift that they got for free. They didn’t work for it.”
One business research firm, TowerGroup in Massachusetts, has estimated that $7.8 billion will end up unredeemed for 2007, out of $97 billion in gift card value purchased by consumers. Dave Sievers, a consumer products and retail expert for Archstone Consulting in Stamford, Conn., believes that as many as 20 percent of gift cards could be going unused, based on his conversations with retail clients.
The upward spike in gift card purchases over recent years has made it increasingly tricky to evaluate retail sales results for the crucial months of November and December. Industry analysts are eager to interpret what those sales signaled about consumer spending and the overall economy, but the heavy use of gift cards poses complications.
