Report: Gift card buying, usage will change in 2008

Merchants can expect gift cards to help bolster the holiday shopping season, but according to a recent surve from Archstone Consulting merchants shouldn't count on those gift cards to be used on frivolous purchases. The survey found that consumers, who are already tightening their spending belts, will use gift cards for necessary purchases.

by Kristina Knight

Overall the purchase of gift cards is expected to decline by about 5%.

According to survey results, prepaid bank cards are the most highly desired gift cards to give this holiday season because of the flexibility in the cards themselves. Since they aren't "store" gift cards, consumers can use them whenever and wherever they need. Also of interest is that 50% of consumers said they would purchase a gift card if it also came with a discount or coupon.

If purchased, what are consumers most likely to use their cards for? Most will use gift cards to buy household necessities like groceries or gas; some will use them to pay for a night out.

"For many families, eating a meal out is a simple luxury and, therefore, an ideal gift in a holiday season that will otherwise be noted for pragmatic purchases," said Dave Sievers, Principal and Consumer Products and Retail Practice Lead at Archstone Consulting.

Most gifts will be purchased, as in years past, by the 13-24 year age group. The survey found that kids and young adults have less money to spend of gifts; they are also most likely to receive gift cards.