Retailers welcome gift cardscontinued from page 1 The holiday shopping season is over, but retailers are
seeing it live on in the form of customers cashing in their gift cards. Citing convenience for consumers and improved management
and tracking for themselves, retailers report that gift cards are the
format of choice for retail service or merchandise vouchers. According
to New York consulting firm Bain & Company, sales of gift cards hit
a record $38 billion for 2002, up 15 to 20 percent from the previous year. “Gift cards are a more efficient way to handle the
needs of our customers,” said Deb Sweeny, director of finance for
Douglas J Salon and Spa in Okemos.
The Douglas J Salon and Aveda Institute reported 100 percent
growth in electronic and paper gift certificate sales this year—their
first using electronic gift cards. Gift sales on their website are up
150 percent. While paper certificates are still used to differentiate
services bought at the salon versus the schools, plans are in place to
phase out paper certificates completely. “We have activated 1,647 gift cards since early December,”
said Douglas J’s owner, Scott Weaver. “Between the winter holidays,
Valentine’s Day and Mother’s Day, we expect our gift card business
to remain vigorous.” Sweeny and Weaver are also pleased with the added security
of gift cards. “From time to time we would get doctored or damaged
and unreadable gift certificates, which was difficult for us and the customer,”
said Sweeny. “A gift card eliminates the opportunity for forgery,
and we can run instant reports on how many cards have been activated,
to whom and for what amount.” While Douglas J, as well as hundreds of other retailers
across the state, sold thousands of gift cards over the holidays, they
are still waiting for consumers to redeem them. The cards have no set
expiration date. “Many retailers don’t book gift card sales until
consumers actually use them,” said Britt Beemer, chairman of Charleston,
South Carolina-based America’s Research Group. “Across the country
there are literally billions at stake.” Douglas J understands that unredeemed gift cards can make
for an imbalance in the books, but Weaver also sees it as a lost opportunity. “Many times a gift certificate customer is a first-time
customer. If we redeem that gift certificate and produce a quality product
or service, chances are excellent they will return. We see gift cards
as not only a convenience for our customers, but as a way to significantly
grow our business.” Michigan Retailers Services began offering its gift card
program to members in December of 2002. “MRS is happy to have Douglas J as our first gift
card customer,” said John Mayleben, MRA vice president of sales and
marketing. “Their reputation for excellent customer service is well
known, and these gift cards take it to the next level. We are glad to
be a small part of that achievement.” Although their gift card program is a clear success, Sweeny
and Weaver look forward to new ways to promote their salon’s newest
value. “We have the gift card on billboards and as point-of-sale
items at the registers,” said Sweeny. “We have just tapped in
to how to use these cards to their full potential. Gift cards are a surging
trend, and we are glad to be on the cutting edge.” Sweeny’s outlook on the popularity of this retailing
trend is dead on. A survey by America’s Research Group found that
more than half of Americans who shopped this past season said they intended
to purchase gift cards or give cash for the holidays. Return to January/February Michigan Retailer Page one • MRA home |
“We
have a training institute and two salons at different locations, so gift
certificates issued at one location could be redeemed at another, but
it was a big financial hassle. One location would need to cut a check
to the other to compensate for the gift certificate redemption. It was
an accounting nightmare. Now we have three locations, one gift card and
zero hassle.”