Gift Card Research Study Affirms Consumer Appeal

Electronic gift cards have struck a chord with the nation's consumers as product awareness and retail purchases continue to rise, according to results of a recently completed research study commissioned by ValueLink. It is the first national survey to focus exclusively on consumer gift card awareness and use, according to ValueLink Director of Marketing, Jerry DeWitt.

ValueLink develops, implements and manages programs with brick and mortar, Internet, business-to-business and international applications for more than 100 major national retail, restaurant and grocery brands.

"Since implementing our first third-party gift card program with Blockbuster in 1995, we have made tremendous strides with our retail partners to reach out to consumers who are increasingly purchasing and receiving stored value/gift cards," said DeWitt. "This research helps us to further define who the gift card consumer is and their overall awareness and usage of gift cards. In addition, it will enable us to make sound projections relative to the overall market potential based on an understanding of consumers' current and potential purchasing behaviors."

Despite gift cards being a relative newcomer to the retail world -- they were introduced less than 10 years ago -- 76 percent of the 1,024 people surveyed indicated that they were aware of gift cards as a retail product. Of those, 44 percent were very or somewhat likely to purchase as many as four gift cards in the next 12 months with an average value of $44.

Thirty-six percent of the survey respondents said they had purchased and/or received an electronic gift card in the previous 12 months. One in four consumers had received a card in the previous year while 22 percent had purchased an electronic gift card during the same period.

In addition, 76 percent of purchasers had decided to buy a gift card prior to entering the store, buying an average of four gift cards in the prior year. In-store advertising or displays helped influence 40 percent of those people not intending to buy a gift card prior to entering the store. The most popular values for purchased cards were $20, $25 and $50, although a majority, 71 percent, prefer a card with an open-end capability that allows the buyer to determine the dollar amount.

Spending more money, creating more trips to the store.
The majority, 58 percent, of gift card receivers spent more than the original value of the card received. And, although 64 percent said they use up the value of the gift card in one trip to the store, 28 percent take two, three or more trips to use up or exceed the value of the original gift card. One-third of the people who received a gift card used the full amount within one week while 68 percent used the full amount within one month.

One in five surveyed were interested in adding their own funds to the card rather than discarding the product after using up available funds.

What's the occasion?
With the flexibility to give and use gift cards 365 days a year, birthdays and the Christmas holiday dominated the list of occasions and reasons people purchased or received an electronic gift card. Eighty-one percent of gift card purchases were to recognize one of those two occasions, while 77 percent of receivers cited the two occasions as the reason for receiving a card. Sixty-four percent of purchasers also purchased a greeting card to go with the gift card.

Receivers of cards were diverse with male friend (21 percent) leading the way, followed by female friend (15 percent), girlfriend (13 percent), son (10 percent), mother (9 percent) with brother, daughter, sister and boyfriend rounding out the list of recipients. According to the receivers, card givers were their mother (16 percent), a girlfriend/female friend (10 percent), male friend (9 percent), or a business associate (8 percent). Other friends, a son, aunt, father, sister, brother and daughter rounded out the list of other card givers.

The research data was weighted to reflect the U.S. population with a statistical significance at the 95 percent confidence level. ValueLink estimates the following gift card awareness and use statistics based on the U.S. adult population of 225.7 million:

• With 76 percent awareness of electronic gift cards, approximately 171.5 million adults in the United States are aware of the product;
• 49.7 million adults purchased electronic gift cards in the past 12 months; and
• 63.2 million adults received an electronic gift card in the past 12 months.