Holiday gift card sales expected to surpass $26 billion

Now, retailers look forward to the days and weeks after Christmas, as more people receive gift cards and are eager to pick out their own presents.

“Gift card sales are growing,” said Tom Saquella, president of the Maryland Retailers Association. “We?re living in an increasingly mobile society, and gift cards offer choices to people.”

Gift card sales are expected to total $26.3 billion this holiday season, up from about $24.8 billion last year, according to the National Retail Federation. The average consumer will spend $122.59 on gift cards, up from $116.51 last year.

Gift cards, however, can frustrate retailers, Saquella said. A store can?t record a sale on a gift card until the card is used, so gift card sales can skew retailers? holiday numbers.

In fact, 27 percent of gift cards purchased in 2006 still haven?t been used, representing about $8 billion in retail sales, according to Consumer Reports.

“We?ve found that if people don?t use their card in the first two weeks after Christmas, they tend to not use it for a while,” Saquella said.

Retailers will make a big push to have gift cards used during holidays, Saquella said. Sellers will likely offer discounts on purchases made with gift cards just to get the consumer in the store.

“If someone walks in with a $50 gift card, more than likely that person is going to spend $75 or $100 at the store,” Saquella said.

Fifty-seven percentof consumers plan on buying gift cards this season, with 88 percent of consumers purchasing two or more gift cards, according to the NRF.

“Many consumers pulled back on spending for themselves this year and are hoping to receive a gift card so they can purchase something they may have had their eye on for months,” Tracy Mullin, NRF president and CEO, said in a statement.

Gift Card Sales

Year Sales

2007 $26.3 billion (predicted)

2006 $24.8 billion

2005 $18.5 billion

2004 $17.3 billion

2003 $17.2 billion

Source: National Retail Federation

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