Thursday, June 12, 2008

The Booming Gift Card Business

The gift card business is expected to reach $100 billion in sales this year; companies are trying to find new and exciting ways to expand their businesses with the options of gift cards. The new theme is multi-branding according to this article at Manage Smarter.

"People don't want to carry around five different gift cards they received as spot rewards in their wallets. They want one card that can be used in a variety of ways, even at a variety of merchants. For example, they could have a Starbucks/Apple card or a gas card attached to a McDonald's card. Right now, our company is piloting a couple of merchants to offer a card that can be redeemed at any of their stores."

The article gives credit to Starbucks for beginning the creative segment in gift cards. According to the article, the 2004 gift card with doubled as a Visa and an in store transaction card got the creative juices flowing. Another significant trend is that many gift cards are coming with loyalty plans, or points systems to earn rewards.

While some people believe that multi-branding gift cards save space in the wallet, as well as provide incentive to shop in many stores, there are still some skeptics. Timothy Rossi explains why:

“Many may think they are a 'cure-all' for recognition and incentive rewards. We have to be careful with the concept," he cautions. "If 'multipurpose' gift cards can be used to purchase everyday sundries such as milk, eggs or gas, then the intrinsic value of the recognition experience is lost."

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