Black Friday is fast approaching and the chatter around holiday gift card giving is picking up. While there are some helpful and productive pieces published by the media this time of year, many fall short of offering solid gift card advice for consumers.
There's a disconnect
One thing is clear, most consumer experts don't like gift cards; meanwhile, most consumers like gift cards. A disconnect between the advice of consumer experts and the preferences of consumers is nothing new; however, it's time for many experts to take another look at the gift card advice they are giving to consumers.
Before I begin, at ScripSmart we both identify and develop solutions to the pitfalls of gift cards. Gift cards are not perfect; from ScripSmart's list of gift cards to avoid to our rating system, Gift Card Score; ScripSmart frequently points out the downsides of gift cards.
That written, some of the advice out there is simply not helpful for consumers and at times it's flat out wrong.
Disconnect one: Gift cards are popular with gift givers, not gift receivers.
This type of story often implies the notion of gift cards being an easy way out, impersonal and often a last minute decision. In short, the only reason gift cards are popular is because it's convenient for the gift giver and if you give a gift card you're doing the recipient a disservice.
The reality is most consumers like receiving gift cards. According to a the National Retail Federation's 2011 Annual Holiday Survey, gift cards are once again the most requested gift with 57.7% of survey respondents indicating they'd like to receive a gift card for the 2011 holiday season.
Here are the results for the past eight years, as you can see gift cards are actually gaining in popularity:
Naturally, there are people who don't like to receive gift cards, but I think it's important to let the gift giver discern whether a gift card is appropriate for their recipient.
Disconnect two: A wise alternative to a gift card is cash.
According to this line of reasoning cash has no strings, no fees and can be redeemed anywhere. Therefore, it's a better gift than a gift card and should be used in lieu of gift cards.
The truth is, cash is not always a viable alternative to a gift card. For example, one might feel a bit uncomfortable by giving their child's teacher cash to show appreciation during the school year. On the other hand, a Target Gift Card seems quite appropriate.
Personally, I love cash and it can make a great gift. However, when it comes to giving consumers gift card advice, telling people to "give cash, not gift cards" is a bit like telling people to never use credit cards when offering credit card advice. While the advice will certainly achieve a desired result, it's just not very helpful to most looking for advice on the subject.
Furthermore, Gift Cards aren't just for gift giving. Retailers are continually using gift cards as a way to compensate consumers. Walmart, Amazon, and Apple are just three of many. In other words, gift giving is just part of the gift card story. Consumers are obtaining gift cards form a number of sources.
Disconnect three: Gift cards should be avoided because some are never redeemed.
I've seen estimates claim as little as 5% to over 25% of gift cards go unredeemed each year. Under this line of thinking, there is a good chance the gift card you buy will never be used, so think twice before you waste your money on a gift card.
I'm of the belief consumers are pretty smart and don't like to waste money. Ironically, not wasting money is a big part reason gift cards are so popular: we all hate receiving unwanted gifts; worse yet, we hate giving unwanted gifts. Ultimately, people feel the money placed on a gift card has a better chance of being used wisely than if they simply pick a gift for the recipient.
Gift cards have their place
It turns out they have a pretty big place in our culture of gift giving. According to the Tower Group, an estimated $100 billion in gift cards will be sold in 2011.
While there are certainly occasions where a gift card is not an appropriate gift, it's important to recognize not all gift cards are created equal, not all gift cards are bad and most consumers are capable of determining whether or not a gift card is appropriate.
I'm off my soapbox. What do you think?