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News > Gift Cards - The Pros and Cons for the Consumer

Date: 10/04/2018

If as a business you are considering offering gift cards then you need to consider how consumers view them so that you get your offering right.   It isn't just about putting a poster up at Christmas to try and drumo up a bit of extra trade, because if you don't get the experience right for the consumer you won't get that all important word-of-mouth repeat business.

Gift Cards First Impression

In the retail sector gift cards are a very popular option amongst those giving them as a gift.  If someoneis in a shop and they have no idea what specific gift to buy then a gift card is something that they can purchase, knowing that the recipient will choose something that they will need.

For the recipients, however, there is a perception that buying a gift card is the lazy option. Which can be seen as true in the case of getting a gift card for a safe choice of card. Getting a gift card for a regular high street chain could be seen as not going out of the way to make a considered purchase. If a gift card was given from a boutique, or specialist retailer, that the recipient has said they enjoy, then this can be seen as a more personal gift as the purchaser has listened to a person's interests and given a gift card relating to that.

So Why Don't People Like Receiving Gift Card?

A survey in the USA concluded that about 25 percent of all gift cards that were purchased were never used. With the reasons for not using them fall into three main categories:

  • They didn't have time to use the gift card
  • They couldn't find anything to buy
  • They lost the gift card, or forgot they had it

Now the fact that so many cards do not get used may sound like failure, but considering the quantity of gifts that are given and never worn, or used, or even have the packaging opened, this isn't that bad.  As a retailer though what you can do is look at the pros and cons of gift cards, and promote the pros, and have solutions to the cons.

The Pros of People Buying Gift Cards

  • If you don't know what to get, then gift cards offer a simple solution
  • The receiver can choose what they want when they want, maybe club together several cards for a big purchase
  • Sending a gift card in a birthday / occassion card is easier than sending a package

If you do have a shopper that is looking for a present for someone, and they really do not have an idea what to get a gift card is an ideal solution for you both. Instead of them getting a present that the recipient is going to either not want or bring back to the store to get a refund, they will get a present they can use.

For regular customers that have been looking to get a bigger item, then a suggestioh that they could ask for gift cards is a good selling point. It isn't as direct as asking for money for a birthday present, so they can drop a hint to a relative or friend that they'd really like a gift card.

With the advent of online shopping, wish lists and sending items direct to a recipient is even less personal than getting a gift card. One that has been chosen and given in a handwritten card or letter. Something that does have that personal touch.

The Cons of People Buying Gift Cards

  • Gift cards appear impersonal to the recipient
  • Gift cards are easily lost or forgotten about
  • Cards expire or have charges apply before they are used

To deal with these negative views of gift cards retailers can overcome them buy putting together a few simple steps.

Firstly offer a choice of designs, maybe photos of the different products you offer, so that the buyer of the card can choose a design that they know the recipient would like.  Maybe have a few funny designs, some more traditional, gift card manufacturers can help out with this.

Secondly, for lost cards an on-line tracking system for cards can be used. This allows the retailer to know what cards have been issued and redeemed. Systems can record a receipt number, so if a card is lost and the receipt can be produced a new card could be issued.

Thirdly, think long and hard about a timeframe for an expiry date for cards. Too short, and buyers will think twice about buying them and recipients will be less likely to recommend someone getting one for them. As a retailer, if you are using a third party system that charges fees for cards, look closely at any management fees. It is better to go for system where charges are based upon usage instead of time

Conclusion

Gift cards are a great option for retailers, givers and receivers. With just a little planning you can have an offering in place that will drive additional revenue and have happy shoppers all year round.

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