Gift Cards a Retailer Growth Opportunity - Hispanics Especially Lucrative Target

For the 2007 holiday season alone, the average U.S. gift card purchaser expects to spend $203 on gift cards, up from $186 in 2006; moreover, retailers are seeing increases in the cash value and use of gift cards among Hispanics, with card use increasing by one-third, writes MarketingCharts, citing a recent study.

Hispanics received gift cards with the highest average value - an average balance of $71, compared with $41 for Caucasians and $60 for African-Americans, according to the Comdata Stored Value Solutions (CSVS) fifth annual gift card survey of U.S. consumers. That total for Hispanics was a 33 percent increase over last year.

The study also found that 26 percent of Hispanics surveyed report giving gift cards to children as a budgeting tool or in lieu of an allowance (see related chart).

“Our survey shows us that Hispanics are enthusiastic consumers of gift cards,” said Bob Skiba executive vice president and general managers of CSVS. “Hispanics represent an exciting growth area for retailers.”

The Comdata SVS study shows that the convenience of gift card malls is clearly a selling point for consumers:

• Last year, 94 percent of purchasers bought cards at a specific retail location. In 2007, only 88 percent prefer a specific location.
• Last year, 22 percent made purchases from gift card malls, and this year, that number increases to 27 percent.
• 53 percent of all recipients report spending more than the value of their cards, and one in five says they pay retailers to reload their cards. On average, they reload cards with $47, up from $32 in 2006.

The market for children’s gift cards is also growing (see related chart):

• Approximately one-third of all gift cards purchased last year were purchased for children or teens.
• 4 percent of cards purchased were for children under the age of five.
• Of those who have purchased gift cards for children, 35 percent are the child’s parents, followed by 30 percent who are aunts or uncles.

Among other survey highlights, related to Hispanics:

• Hispanics are most likely to purchase gift cards for personal use: 40 percent report buying cards for themselves vs. 30 percent of Caucasians and 24 percent of African-Americans.
• 31 percent of Hispanics report purchasing gift cards at gift card malls, which provide a variety of card options at one location, compared with 26 percent of Caucasians and 33 percent of African-Americans (see related chart).
• Hispanics are most likely to spend more than the value on their cards, adding their own money to increase their purchasing power: 69 percent of those surveyed say they spend more than the amount of the card, compared with 52 percent of Caucasians and 44 percent of African-Americans.
• Hispanics are buying cards through several channels: 38 percent via the internet, 31 percent at gift card malls and 6 percent at charity fundraisers and other events; 90 percent of Hispanics still purchase cards at a specific retailer.
• Hispanics buy cards with higher initial values and are most likely to reload cards: 40 percent buy for themselves and their children vs. 30 percent of Caucasians and 24 percent of African-Americans.
• Many Hispanics like enhanced features and special packaging:
  • 24 percent prefer cards that also function as a DVD with music.
  • 75 percent appreciate a card that is presented in unusual packaging.

MarketingCharts offers additional general findings from the study.