Growing Gift Card Demand Evokes Change

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Gift Card Use
Evokes ChangeNew Systems Ful? ll Growing List Of Demands
Customers enjoy buying Executive Summary Customer Demand Is Changingand receiving gift ift card use has exploded among Customers are still very interested cards. In 2006 the NRF projected that holiday Gadult consumers of all ages and in gift cards. While growth has been sales would total $24.81 economic segments. However, as more a boon to retailers, it has also been a billion. Furthermore, people are using gift cards, the limita- source of costs. Most customers require 52.8% of adults surveyed tions of the original systems are being at least two uses to use up the value on planned to request a gift strained. Buyers want to purchase cards a gift card, and then end up spending card. The new challenge of variable amounts through any chan- more than the value of the card. While is for retailers to provide nel. Gift recipients want equal flexibility this behavior benefits the retailer, it also gift cards that mesh with in using the cards. And retailers want to incurs more transaction and communica-the way customers want satisfy these demands without break- tion cost. As the average value of gift to use the cards. Many ing the bank. In addition, according to cards increases, so too may the num-early systems cannot Datavantage's research, many retailers ber of store visits required to exhaust efficiently support the underestimated the internal demand for changes in demand. the balance. Additionally, some retailers gift cards to support marketing/promo- offer loyalty points for the purchase of tional activity. Costs for those retailers gift cards, encouraging the purchase may be higher than anticipated. Now of stored value cards for personal use. there are ways to control those costs. This also increases the retailer's fees for New gift card solutions offer options loyalty card use. Finding a solution that not available just a couple of years ago: keeps transaction costs low ultimately multi-channel functionality, lower oper- benefits the retailer without affecting the ating cost, and more opportunities for customer's experience. customer involvement, just to name a few. The retailers who lead the gift card Gift Card Userreevvoolluuttiioonn nneeeedd ttoo rree--eevvaalluuaattee tthheeiirr ppoossii-- Increases With Incomettiioonn aanndd eexxaammiinnee tthhee ooppppoorrttuunniittiieess nnooww available. 70%Situation Analysis 60%YYoouu hhaavvee aa ggiifftt ccaarrdd ssyysstteemm iinnssttaalllleedd,, 64%aanndd iitt''ss ddooiinngg wweellll.. BBuutt yyoouu''vvee lleeaarrnneedd aa 50% 51% 57%lloott ssiinnccee yyoouu ffiirrsstt bbeeggaann sseelllliinngg ggiifftt ccaarrddss.. 40%TThhee ccoossttss ooff ooppeerraattiioonn aarree hhiigghheerr tthhaann 30%yyoouu aannttiicciippaatteedd.. AAnndd yyoouurr ccuussttoommeerrss 36%wwaanntt mmoorree fflleexxiibbiilliittyy.. AArree yyoouu ssttuucckk wwiitthh 20%tthhee ssttaattuuss qquuoo?? NNoott bbyy aa lloonngg sshhoott.. WWiitthh 10%tthhee pprroojjeecctteedd ggrroowwtthh iinn ggiifftt ccaarrdd uussee,, aanndd tthhee iinnccrreeaasseedd vvaalluuee ppeerr ccaarrdd,, nnooww iiss tthhee Under $30- $50- $75-iiddeeaall ttiimmee ttoo bbeeggiinn yyoouurr sseeaarrcchh ffoorr aa nneeww $30,000 $50K $75K $100Kssttoorreedd vvaalluuee ssyysstteemm ccoommppaattiibbllee wwiitthh tthhee Source: Fiala National Consumer Survey 2002changes in the market.The average gift card buyer purchases Multi-Tasking Systemsnearly $200 worth of gift cards in a year; Many retailers have one system for usually spending the value among five gift cards, one system for loyalty, and one or six cards. system for store credits. They require According to a recent survey by Fiala, different vendors, different software, Inc., a leading gift card packaging compa- and different procedures at the register. ny, 45% of people with Internet access As those retailers prepare to upgrade, would be "somewhat" or "very" inter- they need to consider one basic fact: ested in purchasing a gift card online. The data their store system processes Many retailers, however, cannot current- is the same for all three applications. It ly offer the same gift card online as they is a numeric value stored in a database. offer in their stores, making it necessary While supporting three separate pro-to support two systems. c... [download for more]