Consumers want gift cards for practical, not frivolous, items

Gift card purchases are reflecting the hard times being experienced by many consumers. While the number of gift cards purchased rose in the six months to April 2009, average value was down 11.5% from $52 to $46.

Furthermore, the majority of gift cards purchased were pre-paid gift cards that can be used for practical items instead of frivolous fluff. Such is the demand for gift cards focused on practicality that even versions that can be used for medical services are in the pipeline.

Marketers are turning gift cards themselves into promotions, offering free $10 - $50 cards to consumers to encourage spending in their stores and on their websites, reports the Wall Street Journal.

So what does the upcoming holiday season hold for the gift card industry?

"Given that the average card price has already trended down by 11.5% and the general strain on consumer buying, Archstone Consulting anticipates that the 2009 Holiday Gift Card market will range between staying flat at $24.9 billion and decreasing by 5%," commented Dave Sievers, Principal and the Consumer Products and Retail Practice lead at Archstone Consulting.

Tags: consumer spending, gift cards, holiday shopping