Gift cards, holidays:
a profitable pairing

The forecasts for the holiday season’s “must have” items are appearing. Will it be the new-and-improved Tickle Me Elmo or some as-yet-unspotted blockbuster?

Despite the hype, in most retail categories no truly “must have” items have emerged in the past few years. Not for consumers, that is. For retailers, the “must have” item for the holiday season is the gift card.

Last year, consumers spent $18.5 billion on gift cards during the holidays, up 6.6 percent from 2004. Sales of gift cards are expected to continue to go up for the foreseeable future.

Although gift card programs have been used primarily by large retailers, small to mid-sized businesses are also benefiting from implementing gift card programs.

A 2004 First Data survey of small to mid-sized businesses found that 82 percent of respondents indicated that offering gift cards has had a positive impact on their bottom line. The majority of merchants who implement gift card programs report an increase in their sales.

Most businesses are realizing that the best way to maximize their gift card programs is by opting for reloadable gift cards. Reloading lets the business add or “load” additional money onto a card—a great way to encourage repeat visits by customers.

Also, many merchants now use gift cards to issue store credits or refunds—a great way to increase transactions while building customer loyalty.

The economic benefits of offering gift cards are well documented. They include:

• Float time—a gift card sale is an interest-free loan to the retailer.

• Merchandising—far more options with gift cards than with gift certificates. Gift cards can be displayed prominently at the point of sale or worked into other innovative merchandising ideas. (The cards have no value until activated at the point of sale.)

As the market for gift cards matures, retailers are finding new, innovative ways to use them aside from simple sales or refunds. Opportunities for co-op advertising and collaborative marketing are limited only by retailers’ imagination.

The MRA Gift Card Program is a full-service gift card program that provides card creation, card packaging, transaction processing, administration and customer service support to merchants nationwide.

The program is designed to integrate easily into your existing system. Typically, a partial or full download to your stand-alone credit card terminal is the only change necessary to begin accepting MRA gift cards. Comprehensive gift card reporting will be provided to your business.

It doesn’t take long to get set up, and there’s still time to do so before the upcoming holiday season is in full swing. Contact MRA’s John Mayleben at 800.366.3699 or jmayleben@retailers.com to get started.