Gift Cards, Web Shopping Will Be Big Winners in Holiday Season

A trio of studies released on Monday indicate the 2006 holiday-shopping season should be merry and bright for gift cards and Internet transactions. Gift cards will be the second most popular item on gift-givers' lists this year, edged out only by apparel, according to survey results from both American Express Co. and MasterCard Worldwide. Meanwhile, both the MasterCard study and one from the Conference Board say shoppers will be flocking to the Web for gift buying, though the studies differ widely on how many online users there will be. Nearly two-thirds of consumers plan to buy a gift card this holiday season, up from 57% last year and 55% in 2004, the AmEx survey says. That's second only to clothing, at 68%, and beats out toys/games (64%), music/CDs/DVDs (63%), and cash (46%). The finding at MasterCard is similar. The card network's survey says gift certificates and cards will account for 57% of consumers' holiday budgets, second only to clothing and accessories, at 73%, and higher than toys, games, and sporting goods (42%). Apparently, there is little stigma in gift-card giving these days. The MasterCard survey reveals that 74% of consumers are “very interested” in receiving gift cards, while 59% are interested in giving them. So-called open-loop cards, or ones that bear a major card brand, edge store-brand cards, 31% to 27%, while restaurant cards attracted 16% of respondents, according to the survey. All this gift card giving and receiving will spread spending out considerably beyond the immediate holiday and post-holiday period. Only 7% of consumers will use their cards in the week after receiving it, the AmEx survey indicates. One-third of consumers will redeem their cards within a month, and 23% within six months. AmEx surveyed 1,013 U.S. citizens aged 18 or older. Buying online will also pick up this season, the surveys show. Some 35% of consumers will buy gifts on the Web, up from 33% in 2005, according to the Conference Board survey. The MasterCard study indicates 26% of consumers will shop online more than last year. But MasterCard's results imply a bigger online market, with 74% of consumers saying they plan to shop on the Internet and will spend 41% of their holiday-gift budgets online. The discrepancy between the two studies may lie in the audiences surveyed. The Conference Board surveyed 5,000 U.S. households, while MasterCard's sample consisted of 1,638 consumers who own both a credit and debit card. Those who will not shop online shun the channel because of the inability to touch merchandise and worries about security, the MasterCard survey says. Some 70% said they'd be more likely to use the Internet for shopping if authentication technology were better. Still, 84% told MasterCard they believe their personal information is “at least somewhat safe” online. MasterCard's survey also indicates the critical nature of rewards programs. Forty percent of consumers say rewards are an important consideration in which card they will use for holiday shopping.