Many retailers reported last week that they had lackluster Holiday sales until the post-Christmas business jumped the last week of the year. What was the catalyst? Gift Cards. Major retailers from Wal-Mart to Hibbetts to The Finish Line noted that robust sales and redemption of gift cards were a major factor in achieving better-than-planned Holiday sales. Hibbetts reported Thursday that gift card purchases were up 30% over the previous year. The Finish Line saw a 25% jump.
Paymentech reported in their survey that 16% of all gift card holders had redeemed their cards by December 28 and that another 41% expected to redeem them within 4 weeks after Christmas. Since retailers cannot book gift card revenue until they are redeemed, clearly a huge portion of Holiday sales are now being recorded in the last week of December and in January.
The National Retail Federation found that 69% of consumers bought a gift card this holiday season. The primary reasons given for purchasing a gift card as a gift, according to American Express, are that they save time and effort and are more appropriate than cash. Nearly half of Paymentechs respondents said they received one gift card; one-third said they received three cards or more.
The average gift card carries a value between $25 and $50. ValueLink reported that last year 55% of gift card recipients spent more than the value of the card when redeeming. The NRF estimated that total gift card sales this year were $17.34 billion, up $100 million from last year.
Its no secret that the Holiday business has been coming later each year. But the growth of gift cards has had a profound effect on this trend in the sporting goods sector. The week of Thanksgiving has become progressively less important to the point that it is barely special at all. The only real business done during that week appears to be during “early bird specials” on Black Friday morning when retailers are giving stuff away. After that, its just another weekend day.
The numbers from SportsScanINFO bear out this shift. Of the six weeks of the holiday season, Black Friday week is the smallest contributor and actually lost 60 basis points of contribution over one year ago. While the week after Christmas is still not the biggest, it clearly is grown in importance, picking up over 300 basis points of share for the season. Yes, some of this can be attributed to calendar shift this year, but the week after Christmas is clearly becoming one of the most important of the year.
So how do we react as an industry? We need to begin to shift precious marketing dollars away from chasing no profit Black Friday business and put more effort into post-Christmas advertising of full-price goods. We need to rethink how we mark down goods at the end of the season to take advantage of the recipient with a gift card burning a whole in his pocket. This new reality also opens up new opportunities in footwear.
Not a traditional gift item, athletic footwear is clearly one of the items that kids will turn to when spending their dollars. Launch product may want to be held until after Christmas and certainly should not be wasted on Black Friday. And finally we need to come up with interesting and creative ways to boost gift card sales and redemptions. Once again our customer is way ahead of us.
>>> Anyone want in the pool as to when the first genius will offer 2/$89 on $50 gift cards???
