By Barbara Thau
The economic malaise will slow sales of gift cards—one of the decade’s fastest-growing holiday bright spots—and gift card home furnishings purchases are expected to plummet, according to Deloitte’s Annual Holiday Survey.
The expected decline in gift card home purchases reflect the uphill battle the home category has fought all year, largely fueled by the housing crisis, said Stacy Janiak, vice chairman and U.S. retail leader of Deloitte LLP.
Deloitte’s survey polled shoppers on what types of products they will spend their gift card dollars on, and “the home area is a category where spending will be down the most,” Janiak said. Gift card spending on home and holiday furnishings is expected to sink 49 percent, the survey said.
“I read this as being somewhat of a reaction [by shoppers] to putting more money into an asset that for many people is declining in value, or by people who are struggling to know if they’re keeping that asset,” Janiak said.
Shoppers are planning to buy fewer cards on average this season: 5.3 cards this year, compared with the 5.5 cards they planned to buy in 2007.
What’s more, consumers plan to spend less on gift cards and less per card: $28.43 per card on average compared with $36.18 last year—the reverse of last year’s trend, the survey said.
Janiak stressed that despite the decline in anticipated usage, gift cards remain the number-one gift purchase.
Still, it comes as little surprise that gift cards for stores are less popular this year with 47 percent of shoppers planning to buy them, down from 54 percent last year, the survey said.
Twenty-three percent of those surveyed said they were concerned about the store closing before they were able to use a card.
That finding comes as the retail industry wraps up a year defined by a wave of major bankruptcies and liquidations across distribution channels from Linens ’n Things and Mervyns to Sharper Image, Circuit City and Fortunoff.
Instead, consumers are opting to purchase more necessity-based gift cards. Gift card purchases for gasoline are expected to rise to 17 percent from 13 percent last year, the survey said. And 12 percent plan to buy supermarket gift cards.
“There is a focus on value and necessities,” Janiak said.