Big-Box' Retailers Spice Up Gift Cards For Holiday Season
October 06 2009 - 3:54PM
Dow Jones News
Some "big-box" retailers may be spicing up an otherwise
plain-vanilla product this holiday season to lure in
value-conscious consumers - the gift card.
Certain of these retailers - whose stores are physically large
and usually part of a chain - are rolling out gift cards that play
on social networking trends and webcam technology as a way to help
them stand out from mounting competition.
Their creativity may be driven, in part, by necessity. A third
of retailers said they expect sales during Christmas to decline 5%
to 25% this year despite recent strength in the stock market,
according to a Hay Group seasonal hiring survey.
Although the size of the gift card business is hard to track,
analysts say it is growing and becoming an increasingly important
part of retailer's sales. Catherine Fox-Simpson, tax partner in the
retail and consumer product practice of BDO Seidman, expects gift
card sales to increase this holiday season as consumers seek
practical gifts. She estimates the gift card business to be upwards
of $25 billion a year.
Consumers' emphasis on value will help drive sales of gift cards
that have an added value or special selling point above and beyond
the standard gift card, she said.
"There's so much competition [among different retailer's gift
cards], the retailers have to make their gift card different,
attractive and practical," said Fox-Simpson.
Best Buy Co.'s (BBY) new Pitch In Web site, set to go live on
Wednesday, may be a play to combine both the practical and
innovative. Inspired, in part, by social networking trends,
customers can create a card online and friends and family can
contribute any amount to the card - starting at $5 - to be used
towards larger items on that customer's wish list. The card can be
used at any U.S. Best Buy store or online.
Ann Platt, senior director in marketing for Best Buy, said the
card will work well for consumers who can't afford to buy
big-ticket gifts and will act as a "group gift solution."
"It allows people to pool their resources together," Platt
said.
Fox-Simpson said another big-box retailer differentiating itself
in the gift card area this season is Home Depot Inc. (HD).
When a customer receives one of the company's interactive gift
cards, he or she can go to a special Web site, enter the gift card
amount and hold the gift card up to a webcam. The webcam will show
the consumer's image and the image of a crate on the computer
screen. When the customer shakes the gift card, products will
appear in the on-screen crate within the card value range.
"We've got high expectations for the card," said Mike Homiak,
director of gift cards for Home Depot. Although he wouldn't give
specific gift card guidance, Homiak said the company is "generally
pretty optimistic" about its gift card sales this holiday
season.
But the billion dollar question for retailers will be to see if
these more high-tech gift cards will actually boost sales.
Marshal Cohen, chief retail industry analyst at NPD Group Inc.,
said gift cards will likely be one of the most unpredictable
components of sales this season as consumers continue to search for
deals. Still, Cohen views retailers' move to more sophisticated and
personalized gift cards as a positive.
"Any way of trying to engage consumers is step in the right
direction," he said.
-By Veronica Dagher, Dow Jones Newswires; 212-416-2261;
veronica.dagher@dowjones.com
(Mary Ellen Lloyd contributed to this report.)