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Playing Cards

By Peter Breen

I'm going to buy my father-in-law a gift card to Lowe's for Christmas. Maybe I'll get it at Lowe's. Or maybe I'll go to 7-Eleven.

The National Retail Federation predicts that U.S consumers will spend $26.3 billion on gift cards this holiday season. Shoppers no longer have to worry about hunting down that elusive Tickle Me Elmo doll for their niece; they can just buy a Toys "R" Us gift card and let the tyke's parents get it in January.

Gift cards and certificates have been available for years, of course. But read through our Holiday 2007 marketing overview (see below) and you'll see how many leading retailers made them a focal point -- if not the centerpiece -- of their holiday marketing this year. It was nearly impossible to find any retailer that didn't have a rack of cards situated somewhere near checkout.

But it's often more widespread than that. Gift cards have become the new batteries, merchandised anywhere and everywhere there might be opportunity for impulse purchases -- which, in this case, literally is anywhere and everywhere. Buying sneakers? Pick up a gift card, too! Getting a sweater for Dad? Grab a gift card for Mom while you're at it.

One of my favorite examples of the merchandising craze is this pallet display Frito-Lay created for Wal-Mart's 2007 back-to-school campaign. The product manufacturer took what often is unused display real estate and provided some pockets for the chain to stock a few gift cards. That's a very nice touch.

Brand marketers aren't letting the trend pass them by. Toys "R" Us offers branded cards -- Vtech, The Golden Compass -- with related purchases. Electronics brands like Sony and Samsung have used them in promotions at key retailers for a while now.

That leads to the other aspect of the trend, in which store gift cards have become the promotional incentive of choice. For years, retailers have sought brand-sponsored promotions that increase receipts and drive repeat visits. The now-ubiquitous "free store gift card" with purchase is a perfect solution, as is seeding most (if not all) of a sweepstakes' prize pool with cards of varying denominations. Do a keyword search on "gift card" in the Retail Handbook to see just how commonplace this has become.

I'm still trying to decide if it's a smart move for retailers to sell gift cards for other retailers (as many are), even if they aren't direct competitors. I know that 7-Eleven doesn't often fall into the same store consideration set as Lowe's, Circuit City, Borders or Bass Pro Shops, but maybe the company should be enticing customers to spend more money in 7-Eleven rather than helping them do it elsewhere.

On the other side of the tactic, Best Buy has a gift card inventory featuring more than 200 varieties of messages and denominations. But they're all for purchases at Best Buy.

What's next for the trend? We're waiting for a retailer to start offering free merchandise with purchase of a gift card. That'll really set retail on its ear.

I've got one question for 2008, as I try to put this trend into perspective alongside other industry movements: Are all these plastic gift cards environmentally friendly?

The staff at the In-Store Marketing Institute would like to wish everyone a healthy and happy holiday season.

Peter Breen
Managing Director, Content
In-Store Marketing Institute

Published: December 2007

Source: In-Store Marketing Institute

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