Cards prove to be gifts that keep on spending

Filed under: Retail |

Several weeks after the holiday season, retailers are seeing no slowing in consumers’ use of gift cards.

According to a National Retail Federation survey conducted by BIGresearch, consumers have plenty of money left on their gift cards: shoppers said they had spent less than half the value (37.3 percent on average) by the second week in January.

Because retailers are not able to count a gift card as a sale until the value is redeemed, companies are encouraging consumers to use their gift cards as soon as possible.

Retailers also know that customers redeeming gift cards are likely to spend more than the value of the card. According to the survey, half of shoppers (50.9 percent) who have redeemed holiday gift cards said they spent additional money to purchase an item.

“January and February tend to be slow months for shopping, so retailers will be doing everything possible to bring customers into the stores to spend holiday gift cards,” said NRF President and CEO Tracy Mullin. “It is in the retailers’ best interest to encourage recipients to spend gift cards before they become lost or misplaced.”

Though gift cards were expected to be a common holiday gift, they were even more popular than projected.

According to the survey, consumers spent an average of $164.81 for gift cards, up from the $146.20 they were expected to spend. As a result, gift card spending during the holidays was $27.8 billion, higher than the $24.8 billion initially estimated by NRF. Men spent the most for gift cards ($176.84), while young adults 18-24 spent the least ($118.12).

According to the survey, gift cards for department stores were the most popular, accounting for 37.9 percent of purchases. Restaurants (26.8 percent) were also a popular choice, in addition to bookstores (18 percent), electronics stores (16.2 percent) and discounters (14.8 percent).

While shoppers can easily purchase gift cards at a variety of locations, most consumers (76.7 percent) chose to buy gift cards from stores where the card could be used. Only 17.3 percent purchased store gift cards from other retailers, like convenience stores and supermarkets, and about the same amount (17.7 percent) purchased a gift card online.

“As gift cards increase in popularity, retailers are looking for more convenient ways to sell them,” said Phil Rist, vice president of strategy at BIGresearch. “Many time-strapped holiday shoppers chose to buy several different gift cards at once by purchasing gift cards at supermarkets or convenience stores, which is a trend we expect to continue.”

Final release of Vista

The rollout of Microsoft’s Windows Vista operating system will hit stores soon.

According to a study conducted by IDC and commissioned by Microsoft, between now and the end of 2007, Microsoft and its partners are expected to invest about $400 million in Vista products and services.

Windows Vista, Microsoft’s first major new operating system release in six years, already is available to business users. A consumer version of the operating system is expected to go on sale next week.

Some retailers are planning a big push. CompUSA Inc. and Best Buy Co. hope that the release of Vista will help extend a strong holiday sales season for computers.

Still, no one is expecting the same impact as Windows 95 a decade ago, when people camped outside stores.

Retailers also plan to use the unveiling to sell service offerings and hardware add-ons to consumers.

CompUSA is charging cut-rate installation fees and offering a money-back guarantee to customers who bring in their machines before the launch. The chain also will pitch unlimited tech support for one month for $29.99.

Best Buy expects plenty of service business from Vista — such as upgrades and installing additional memory to run Vista.

In addition to each other, the retailers also will be competing against Microsoft itself, which will for the first time sell a new operating system online, although relatively few computer users are expected to download Vista from the Internet.

Albertson’s to close 2 more

About 150 jobs will be lost because of the closing of two Albertson’s stores in Colorado Springs.

Including the seven other Colorado stores, the closures will result in the loss of about 750 jobs, said spokeswoman Christine Wilcox.

The company closed three local stores last year. The first round of closures included: 3970 Palmer Park Blvd., 1710 Dublin Blvd. and 302 Main (Security). The second round will include Grocery Warehouse stores at 4304 Austin Bluffs Parkway and 5845 Constitution Ave.

Wilcox said that Albertson’s Inc. was sold to three other entities last year, one of those being Albertsons LLC that the Rocky Mountain region reports to.

She said that after the first announced closures, some underperforming stores were allowed to remain open.

“Unfortunately, we were not able to do that for all,” she said. “That’s the reason we had to close the Colorado Springs locations.”

The four remaining local stores are at 7055 Austin Bluffs Parkway, 8750 Union Blvd., 455 E. Cheyenne Mountain Blvd. and 4405 Centennial Blvd.

New pizza chain coming

If you are tired of the same, familiar pizza and are ready to try something new, you might get the chance — one of these days.

Washington pizza chain, Garlic Jim’s Famous Gourmet Pizza, has announced a sub-franchise agreement to open 25 stores in Denver and Colorado Springs by 2011.

The first store is scheduled to open in May. Currently, the company has 93 units under development or contract.

From 2004 to 2006, Garlic Jim’s has grown from two to 36 units.

Joan Johnson covers retail for the Colorado Springs Business Journal.