Retailers are hoping gift cards bought during the 2010 holiday season will convince consumers to come into stores this month and spend some money.
Falling short of previous years, however, the International Council of Shopping Centers is predicting 36.3 percent of gift card redemption this January compared to up to 46.4 percent in the last two years. The reason this matters is because retailers cannot count gift cards as income until they’re redeemed.
One theory of the belated gift card redemption has to do with new federal regulations limiting expiration dates to five years after purchase, banning dormancy fees for a lack of usage until after one year and the forced display of all pertinent dates and fees on the cards.
While retailers have come to rely on gift card redemptions for immediate post-holiday sales income, with the new regulations in place, looking at gift cards as an opportunity to grow sales along with customer loyalty might be a better perspective. The benefits of gift cards certainly outweigh the lack of consistency in redemptions and the ability to predict when it will happen.
Source: USA Today, January 2011
