October 4, 2007

Analysis of 2007 Holiday Gift Card Survey

On September 18, 2007, Archstone Consulting announced the results of their 2007 Holiday Gift Card Survey. Over 1,000 web users from across a very broad demographic participated in the survey as illustrated in the following chart.
Demographics of Survey Participant

Figure 1. Demographic of Gift Card Survey Participant.

What Figure 1 does not show accurately is that men on average spend more per gift card than women ($61 vs $49). In addition, 90% of all gift cards exceeding $200+ in value were purchased by men.

Time Duration Before Gift Card is Redeemed

Figure 2. Time Duration before Gift Card is Redeemed.

Gift Card Redemption Percentage Exceeded Face Value

Figure 3. Gift Card Redemption Percentage that Exceeded Face Value.

Here are some key findings of the survey.

  • More than 56 percent of gift cards are redeemed within the first month of purchase; 85 percent of all cards are redeemed within three months.
  • Luxury, Auto and Music were generally the first cards to be redeemed within the first month.
  • Entertainment, Food and Beverage, and Mass Stores gift cards were among the higher redemption rates within three months.
  • After three months, consumers tend to have the most cards outstanding in the Travel, Luxury, and Home Improvement (Do It Yourself – DIY) categories (refer to Figures 2 and 3).

The survey revealed a surprising trend that prepaid credit cards would see the most growth this season, because consumers view it as having the most flexibility spending options. A quick review of Figure 2 shows that approximately 10% of bank gift cards take up to one year to redeem. The percentage could actually be higher as “breakage”, unredeemed gift card, is not factored into the survey’s result. The sad truth is that most of these bank gift cards have some sort of monthly maintenance or dormancy fee that can easily wipe out a $25 card. The flexibility to use it whereever comes with a lot of strings attached. Bank gift cards are governed by federal banking laws, so state laws governing gift cards, such as fees and expiration date does not apply to them.

Archstone Consulting Releases 2007 Holiday Gift Card Survey. [SmartMoney]

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