Canadian Retailers Love Gift Cards

So how do people really feel about gift cards? According to a CBC News report from December 2008, “retailers love them and many consumers like getting them.” It was estimated that in 2006, Canadian retailers earned nearly $56 billion in holiday sales. One of the biggest reasons for such sales success was gift cards. The report notes that, in the same year, 82 per cent of retailers sold gift cards.

“They’re amazing gifts,” insisted one of our clients, “There are many things that gift cards allow customers to do that you can’t do with a normal gift. Like, in my spa and salon business, you can’t put a manicure under someone’s Christmas tree! You need to give your loved one a gift card so that they can get that manicure. My business does so much better because of gift cards.”

The CBC News report makes mention of very similar benefits. “It\’s tough to safely put 30 litres of gasoline under a Christmas tree,” it reads, “but you can give your kid a $25 card from a service station chain.” The same, of course, can be said for the food industry. Gift cards that provide money for meals are widely successful. What type of business do you run? Do you see any reason to not sell gift cards to your customers?

There are, in fact, numerous advantages that gift cards give retailers. The CBC News report notes that they actually encourage your customers to spend more money. Naturally, a gift card is a gift. So the money being spent with the card doesn’t really belong to the card’s recipient. This gives them a greater ease to spend some of their own money in addition to the denomination on the gift card.

Customers Will Spend More. According to the report, “Studies show that people spend more on gift cards than on gift certificates. The average card denomination is $50 — twice the amount people would spend on the average gift certificate. And armed with that gift card, you\’re more likely to spend more than its face value when you shop — as much as twice the value of the card.”

Customers Are Less Fussy. CBC also notes that research has shown that gift cards help customers to relax and be a lot less frugal. A J.C. Williams Group study, in fact, found that 40 per cent of shoppers using gift cards bought items at full price. Meanwhile, only 16 per cent of shoppers using other methods of payment agreed to pay full price for their purchases.

Customers Return Less. “Retailers are also partial to gift cards because they tend to decrease the amount of merchandise that is returned,” says the CBC News report. This makes sense as the gift being purchased with the card is generally for personal use. Many people who receive gifts during the holidays often get things they wouldn’t buy for themselves. Thus, there is a high rate of returns following Christmas.

Customers Do More Post-Holiday Shopping. Since most customers get gift cards for the holidays, they help for retailers to avoid the drastic sales drop that usually occurs in the weeks following the Christmas season. Most customers redeem their cards at some point in January or later. Canadian POS Corporation can get your business selling gift cards in no time. Simply give us a call at 1-877-748-2884.