Expect to see deep discounts this holiday season as stores work to move their merchandise, although the weak economy could inspire more shoppers to opt for gift cards instead.
In fact, "We see gift cards bumping out apparel this year" as the top holiday present, retail expert Diane Crispell of GfK Roper Consulting said.
Store gift cards are forecast to rise from the third most popular gift item in 2007 to No. 1 this year, with 69 percent of Americans planning to buy them, a survey by the New York City-based marketing firm concluded. And that should boost sales at Green Tree-based GiftCards.com, which sells prepaid Visa gift cards and will offer around 30 retailers' gift cards online starting this week.
The company expects to sell about 600,000 gift cards this year. Most are for corporations that want customized Visa prepaid cards to give to employees, for example, though individuals can order unique cards online that feature family, pet or other photos.
This season, "With the economic pressures people are experiencing, maybe they'd rather get a Visa gift card than a toaster," said Jason Wolfe, CEO of GiftCards.com and its parent company, card producer Omni Prepaid Group LLC.
Shoppers' expected cutbacks this year will figure into the continued popularity of gift cards, experts say, although overall spending on them could be about 5 percent less than last year. Along with ease and convenience, gift givers are seeking ways to help relatives and friends buy the items most useful to them, and that could mean everyday necessities -- not a new sweater or the latest cologne.
"Instead of giving a big pile of gifts, people may give one gift and make sure it's really worth it," Crispell said, and her firm is recommending that merchants be sure to make lower-priced cards available. "We know people are planning to spend less," she said.
The National Retail Federation also puts gift cards atop its list of the most requested items. The Washington-based industry group said its research indicates 54.9 percent of consumers this year would like to receive gift cards, up around 1 percent from last year.
All that said, gift givers and recipients should realize some cards -- mainly from banks, malls and credit card companies -- lose value through fees or expiration dates. They should be used quickly to reap the full value.
Retailers' own cards have pitfalls, especially when those stores go out of business quickly. Sticking to larger, financially stable store chains is best, experts say.
Some consumers surveyed Downtown last week said they buy gift cards during the holidays, but often combine them with other, small presents that a family member, for example, will enjoy opening on Christmas Day.
Lisa Malackany of White Oak buys toys for the children in her family. But for adults, especially older family members, she opts for restaurant or store gift cards. "What else do you really get for them?" she said.
Others avoid what they see as an impersonal gift that can decline in value. Rachel McGuigan of North Braddock said she never buys the cards. "They expire, and people forget about them," she said.
Wolfe, whose company expanded from 15 employees last year to 55 now, said card programs vary though most consumers nowadays are savvy enough to pay close attention to the terms.
An estimated $97 billion in gift cards were sold last year in the United States, up from $83 billion in 2006. GiftCards.com said it anticipates selling more than $300 million in cards over the next three years.
Wolfe expects several hundred retailers' gift cards to be available within a year at GiftCards.com, and said Omni will move into producing other items: Greeting cards that match its customized gift cards, for example, and cards for other prepaid services companies. Omni eventually will have a card processing division that performs services such as checking card balances, he said.
Other local companies are delving into the gift card boom -- most notably, Giant Eagle Inc., which kicked off its online fuelperks! mall in October. Customers buy retailers' gift cards via a Web site, and for each $50 spent, they get 20 cents off for each gallon of gasoline they buy at the company's GetGo stations.
Tens of thousands of customers have visited www.fuelperksmall.com so far, spokesman Dick Roberts said.
So far, 120 retailers participate and the Cheesecake Factory and Smokey Bones restaurants, American Airlines and f.y.e. stores are the most recent additions. The O'Hara-based supermarket chain collects a varied percentage of card sales, he said.
Wolfe sees a day when consumers will move to gift codes that use radio frequency technology. GiftCards.com could evolve into a business that encodes gift amount information and sends it to a cell phone or other mobile device. The customer then could show the code at a store.
The codes would eliminate the need to print and carry plastic. Also, "electronically, they are just inevitable," he said.
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