Consumer Give More Gift Cards but with Fewer Bucks Aboard

More consumers are purchasing gift cards but they’re spending less on them.

A study by the Hartman Group and National Research Network indicated that between September 2007 and August 2008, 52 percent of consumer purchased at least one gift card while in the period from March 2008 and February 2009 the proportion was 57 percent.

In contrast, between September ’07 and August ’08, the average spent on a gift card was $52 while, in the March ’08 to February ’09 period, the average was $46.

Lauren Coady, manager of consumer research at NRN, said the research suggests that consumers are giving gift cards because they provide the option of spending on a luxuries or necessities, an appealing trait in a recession.

“We see that gift cards are replacing other kinds of gifts, in general,” she asserted.

Discount store gift cards from retailers such as Wal-Mart and Target were the kind most often given followed by restaurant, then department and apparel store cards. While consumers were more likely to give gift cards generally, restaurants, among the various categories studied, saw the most significant gains. Coady said consumers seem to be giving restaurant gift cards because they know family and friends are going out less to conserve cash. Essentially, the gift card becomes relief from recessionary bunkering at home.

“It’s a nice luxury, a way to take a break from cooking in,” she said.

As for giver demographics, Coady said gift card purchases are more likely to be women than men, have higher incomes, are younger than average and tend to be parents with children in the household. Less demographic difference exits between consumers who purchase discount store and department store gift cards than between those who purchase department store and apparel store cards, she noted. Consumers giving apparel store gift cards tend to be considerably more affluent.

Coady noted that gift cards represent a net advantage for retailers. About 48 percent of consumers redeeming gift cards spend more than their value, and, perhaps surprisingly, that hasn’t changed in the recession.