I love gift cards- love to get them, love to give them. I like getting them because a gift card gives me a "kid in the candy store" feeling. I get to go to a store and pick out something for me! I like to give them for the same reason- I want the recipient to enjoying picking out something and not get stuck with a gift they may not want. Gift cards have become BIG business for U.S. retailers as we spent an estimated $80 billion on them in 2006.
So why is Consumer Reports going after retailers and the gift card business? They have released a report critical of gift cards. Among the negative points raised by Consumer Reports is that more than 25% of gift cards given are not completely redeemed. This behavior (or lack of behavior) by consumers results in retailers enjoying an estimated $8 billion windfall... all revenues, no expenses!
The argument that gift cards mainly benefit the retail industry is off base. The responsibility for consumers not redeeming gift cards rests solely with the people holding the cards, not the stores that sold them. Prime reasons that people don't redeem gift cards are 1)they lose them and 2) they simply forget they have the gift card.
I would rather have a gift card than an ugly sweater any day. That reminds me, I have some gift cards from last Christmas floating around my sock drawer. I'd better use them so I won't become part of the argument Consumer Reports uses against the gift card industry! CR does a lot of good for consumers; its efforts could better serve consumers in areas other than the giving and receiving of gift cards.
Labels: Consumer Behavior, Retailing