Power Capital Consulting
Competitive and Business Intelligence Research & Analysis
Gift Card Strategies
Brief Marketplace Overview
3Q, 2006
The 2005 holiday season brought $18.5 billion in Gift Card sales during November-December. Gift card market expansion continues, driven by technological innovation as exemplified by the advent of reloadable CD cards to be offered by Sears, Kmart and CompUSA as of 4Q, 2006. Brooks Brothers shattered previous sales records on December 26, 2005, with significant contributions originating from online and Gift Card activity. Companies such as Blackhawk are offering branded Gift Cards to thousands of smaller retailers. Finite chronological limitations have diminished in response to the transitioning competitive landscape.
Recent survey results targeting college students revealed male preference for electronic store gift cards and preset amounts, while females preferred clothing and book stores and greater purchase flexibility. 48% of males chose gift card purchases over specific gift buying. Teens purchased an average of 4.3 gift cards for friends and family during the prior 12 month period. Leading holidays for gift card giving were Christmas and other winter holidays, graduation, Mother’s Day, and Father’s Day, in addition to congratulations, thank you, and anniversary giving.
Credit card loyalty programs customarily include points-based, promotional, cashback, and discounting features designed to attract new customers, reactivate lapsed accounts, encourage long-term customer relationships though delivery of tangible benefits, increase account profitability as well as leverage existent partnerships. Sears, Federated, Home Depot, Kohl’s, and others have sold their credit card portfolios in the recent past, in an effort to generate surplus cash and focus on core business expertise.
Card issuer promotional campaigns have included MasterCard’s “Priceless” program, emphasizing relevance to the consumer and partnering with Banana Republic, The Gap, Kmart, Travelocity, RadioShack, Shell, and Williams-Sonoma. Advertising placement was targeted at publications such as Conde Nast Traveler, Golf Digest, Gourmet, Money, and Sports Illustrated. MasterCard initiated the MasterValues program oriented toward providing merchant incentives. Past programs have, for example, targeted empty-nesters, campus life relating to their college-bound daughters in partnership with Bed Bath & Beyond.
Visa’s market expansion strategy has incorporated online bill paying, in addition to retail usage and pass-through benefits. Chase offered a back-to-school program in partnership with United Airlines, offering double mileage and incentivizing purchases at OfficeMax, Banana Republic, The Gap, Old Navy, Ikea and Borders.
Discover embarked upon an aggressive merchant recruitment program in 2005, signing up as many as 1000 merchants daily. “It pays to Discover”, a national campaign designed by The Martin Agency debuting during the recent Emmy Awards, utilizes the question “What if?”, and “What if you could get rid of the things you don’t like about credit cards?...What if we could start over and this time, do it right?”. Discover’s research has uncovered significant consumer interest in e-mail alerts facilitating fee avoidance, payment due date selection, and ready access to customer service.
3Q, 2006
The 2005 holiday season brought $18.5 billion in Gift Card sales during November-December. Gift card market expansion continues, driven by technological innovation as exemplified by the advent of reloadable CD cards to be offered by Sears, Kmart and CompUSA as of 4Q, 2006. Brooks Brothers shattered previous sales records on December 26, 2005, with significant contributions originating from online and Gift Card activity. Companies such as Blackhawk are offering branded Gift Cards to thousands of smaller retailers. Finite chronological limitations have diminished in response to the transitioning competitive landscape.
Recent survey results targeting college students revealed male preference for electronic store gift cards and preset amounts, while females preferred clothing and book stores and greater purchase flexibility. 48% of males chose gift card purchases over specific gift buying. Teens purchased an average of 4.3 gift cards for friends and family during the prior 12 month period. Leading holidays for gift card giving were Christmas and other winter holidays, graduation, Mother’s Day, and Father’s Day, in addition to congratulations, thank you, and anniversary giving.
Credit card loyalty programs customarily include points-based, promotional, cashback, and discounting features designed to attract new customers, reactivate lapsed accounts, encourage long-term customer relationships though delivery of tangible benefits, increase account profitability as well as leverage existent partnerships. Sears, Federated, Home Depot, Kohl’s, and others have sold their credit card portfolios in the recent past, in an effort to generate surplus cash and focus on core business expertise.
Card issuer promotional campaigns have included MasterCard’s “Priceless” program, emphasizing relevance to the consumer and partnering with Banana Republic, The Gap, Kmart, Travelocity, RadioShack, Shell, and Williams-Sonoma. Advertising placement was targeted at publications such as Conde Nast Traveler, Golf Digest, Gourmet, Money, and Sports Illustrated. MasterCard initiated the MasterValues program oriented toward providing merchant incentives. Past programs have, for example, targeted empty-nesters, campus life relating to their college-bound daughters in partnership with Bed Bath & Beyond.
Visa’s market expansion strategy has incorporated online bill paying, in addition to retail usage and pass-through benefits. Chase offered a back-to-school program in partnership with United Airlines, offering double mileage and incentivizing purchases at OfficeMax, Banana Republic, The Gap, Old Navy, Ikea and Borders.
Discover embarked upon an aggressive merchant recruitment program in 2005, signing up as many as 1000 merchants daily. “It pays to Discover”, a national campaign designed by The Martin Agency debuting during the recent Emmy Awards, utilizes the question “What if?”, and “What if you could get rid of the things you don’t like about credit cards?...What if we could start over and this time, do it right?”. Discover’s research has uncovered significant consumer interest in e-mail alerts facilitating fee avoidance, payment due date selection, and ready access to customer service.
