Merchants Look to Lure Gift Card Recipients As 2006 Wanes

Disappointed by holiday sales, some retailers are turning to advertising to induce gift card recipients to use their cards before New Year's Day, according to press accounts. Chains are using both TV and newspaper ads in the effort. Wal-Mart Stores Inc. and Sears Holdings Corp. have turned to TV to promote gift card redemptions, while Home Depot Inc. promises in a print ad to donate 5% of a card's value to U.S. troops if the consumer redeems the card by Jan. 28, according to a report by Reuters. With accounting rules preventing merchants from recording gift card sales as revenue until the cards are redeemed, the rush is on to push consumers to use their cards soon so merchants can record the value in 2006. A survey released last month by the National Retail Federation estimates U.S. consumers will have spent $24.81 billion on gift cards during the holiday season this year, up 34% from the $18.48 billion poured into the plastic in the runup to Christmas in 2005. Estimates are that around $12 billion of this value?or about half?will remain unspent as 2007 dawns. Despite?or perhaps partly because of–the surge in gift card sales, retail sales generally fell flat between Thanksgiving and Christmas, with merchants ringing up an increase of 3% over the same period last year, according to MasterCard Advisors' SpendingPulse service, which tracks retail sales. Seasonal sales in 2005 were 5.3% higher than in 2004, according to the service. Consumers, however, will have spent an average of $116.51 on gift cards in the weeks before Christmas, compared with $88.03 last year, according to the NRF survey.