Retail stocks should see even a bigger bump this month -- and possibly into 2008 -- due to an increased demand for a product that basically didn't exist a dozen years ago -- gift cards.
That's the big news coming out of "Black Monday", the newest holiday on Wall Street's docket representing the busiest on-line shopping day of the calendar year. As it turns out, many, if not most of today's online shoppers are turning to buying gift cards online instead of actual products via the ecommerce route.
According to a pre-holiday survey by First Data Corp., a global leader in electronic commerce and payment services, three out of four consumers (77 percent) are extremely, very likely or somewhat likely to buy gift cards for family and friends this holiday season.
Of those, over half will redeem their cards with purchases made online -- representing a new and burgeoning profit center for retailers big and small. And about 20% of gift card recipients will never redeem their gift cards at all -- due to forgetfulness, loss of the card, or "regifting" of the card back to other people.
According to First Data, the majority of survey participants (66 percent) plan to buy the same number of gift cards again this holiday season with 19 percent planning to purchase more. The mean number of gift cards consumers plan to purchase is five.
The study also reports that immediate family members will be the primary recipients of gift cards this holiday season with 33 percent planning to purchase for a brother/sister; 29 percent planning to purchase for a son/daughter; and 25 percent planning to purchase for a parent. Nearly half of respondents (45 percent) intend to spend more than $100 on gift cards and 22 percent plan to purchase an open-loop gift card that can be used at numerous merchant locations.
Discount stores (42 percent) and specialty retail stores (33 percent) are the top locations where gift cards purchases are planned for this holiday season. More households with incomes under $50K (55 percent) plan to purchase from discount stores while more purchases will be made at specialty stores by households with income over $50K (38 percent). In addition, 38 percent of consumers plan on purchasing a gift card from either a fast food, fast casual or fine dining establishment.
I can't think of too many businesses that don't have a mechanism for buying gift cards online, usually through their company web sites or through some type of partnership or networking affiliate.
It's a sign of the times -- the days when we do more of our shopping through gift cards bought online are coming, if they're not here already.