The Green Sheet Online Edition
December 08, 2008 • Issue 08:12:01
Insider's report on payments
Consumers' new mantra: Shop smart
Looking for ideas to help your merchants draw in more shoppers this holiday season? Encourage them to consider special savings and discount programs.
Gift card sales (proprietary as well as those issued by other merchants) are worth considering, too, although there are indications that gift cards may be losing some public appeal.
A new survey from MasterCard Worldwide suggests nearly one in three Americans will be looking harder for bargains this year than when they shopped the winter holiday season last year. A report of findings, released in November 2008, indicates consumers will shop "smarter" this year, focusing more on cost-savings and practical gifts for the holidays.
I discovered firsthand the other day that smarter shopping doesn't stop with bargain hunting, either. It came in the form of an urgent e-mail from a relative with a warning about gift cards.
I have a bit of a reputation in the family for gifting money in the form of gift cards to my two-dozen or so nieces and nephews. (Seriously, ours is a big family.)
And one of my sisters-in-law wanted to alert me (and about a dozen other folks) to the possibility that some store-branded gift cards could prove worthless should those stores file for bankruptcy protection or worse, close altogether in the weeks and months after the holidays.
Gift card honeymoon over?
When a company declares bankruptcy there's no obligation to honor gift cards - a fact that was brought to light earlier this year when the upscale gadget chain The Sharper Image Corp. filed for bankruptcy protection and told customers it would no longer accept the chain's branded gift cards.
Eventually, after a lot of public outcry, the company agreed to redeem the cards at far less than their face value.
Then, last month, the attorneys general of three states (Connecticut, Delaware and Maryland) leaned on the electronics chain Tweeters to continue accepting gift cards until all its stores are shuttered, which most likely will occur on Dec. 31, 2008. The retailer stated that it was filing for bankruptcy protection and would not honor its gift cards after Nov. 15.
In November, the press was brimming with stories warning of risks gift card purchasers assume in a tough economy. "The Gift Card Comes Wrapped in Growing Risk," read a headline in The New York Times.
At about the same time, a Maryland company, GiftCardRescue.com LLC, unveiled a service that is supposed to protect consumers from useless gift cards, provided the cards are purchased through the company's Web site. GiftCardRescue says it will reimburse consumers for unused gift card balances should the retailer issuer stop honoring its gift cards within a year of purchase.
Gift cards have won many converts these last several years. MasterCard's survey results suggest 57 percent of Americans will purchase gift cards this year; 61 percent are hoping to get them as gifts.
But indications are that card buyers will be spending less. Data analyzed by the National Retail Federation suggests gift card sales will dip about 6 percent this holiday season, to a total $24.9 billion.
The NRF's Third Annual Gift Card Survey, conducted by BIGresearch, found consumers expecting to spend, on average, $147.33 on gift cards this year, down from $156.24 in 2007.
The biggest gift card spenders: men. The NRF's data suggest men will spend an average $156.98 on holiday gift cards this year. "Since gift cards never go on sale, some price-conscious shoppers will be passing up gift cards in favor of holiday bargains," noted NRF President and Chief Executive Officer Tracy Mullin.
Today's smart shopper
Nationwide, the smart money this holiday season is on bargains.
"With bargain hunting on the rise and Americans looking at a variety of cost-cutting and practical giving strategies, the 2008 holiday shopping season is all about the smart shopper," said Rob Sheets, group head for U.S. Commerce Development at MasterCard.
According to MasterCard's research, 42 percent of Americans will be hunting for bargains this year by shopping at merchant locations offering special discounts, free shipping and rebates.
Twenty-eight percent hope to save by waiting for last-minute deals. Other smart buying strategies consumers are using include shopping online (34 percent), shopping in-store early bird specials (30 percent) and taking advantage of Black Friday (28 percent), the day after Thanksgiving and the traditional start of the holiday shopping season. I admit, I don't spend much time in brick-and-mortar stores, and I've never been tempted to engage in the kind of "commando shopping" that has become analogous with Black Friday.
But as I sat down to write this column, I took a call from a friend. A single mom with three teenagers, she's been struggling with how to make the best use of the money she saved for holiday shopping.
"What do you know about Black Friday?" she asked. Not much, I told her, except that it's supposed to be a bargain hunter's delight. "That's what I heard, too," she said. "I'm going to do it. I want to get the kids each something nice even if I can't afford to buy them much this year."
I didn't have the nerve to warn her about the crowds.
I must say, I was a bit surprised to learn there were folks who didn't know that some of the best bargains appear on Black Friday. But then, as the research indicates, people are more serious than ever about finding bargains in today's economy.
Patti Murphy is Senior Editor of The Green Sheet and President of The Takoma Group. E-mail her at firstname.lastname@example.org.
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