More retailers tout gift cards as 'gift of choice': StatsCan

More and more companies banked on hurried holiday shoppers choosing convenience over sentiment, with 82 per cent of the country's largest retailers offering gift cards last Christmas, according to a Statistics Canada study released Monday.

Gift cards,plastic cards loaded with a cash value, have continued to grow in popularity over the past two years, with the percentage of retailers offering the cards for sale jumping by 29 points, the federal agency said.

"Gift cards have become a more frequent gift of choice for lots of shoppers and retailers are responding," authors Daniel Bahta, Rhonda Tsang and Monica Weise wrote in their report Gift Cards: The Gift of Choice.

The study suggested gift cards have grown in popularity for shoppers short on time or those without a sense of what their gift-giving recipient would like.

"Gift cards dont need to be wrapped, and they are easily mailed," the study said. "Recipients can use their cards to supplement their purchase to buy merchandise they might not otherwise have purchased, or purchase better quality merchandise."

Trade groups, including clothing stores, supermarkets and pharmacies, had initially been reluctant to offer the cards which proved popular in electronics and appliance stores, the study noted.

But over a two-year span, more retailers adopted the convenience cards. In 2005, 79 per cent of clothing stores offered the cards, up from 36 per cent in 2003. Similarly, supermarkets experienced an increase from 57 per cent in 2003 to 70 per cent in 2005.

Benefit to retailers

Statistics Canada does not have an estimate of the value of annual sales tied to gift cards, but the study found that retailers that introduced the cards early on benefited financially.

"Stores that introduced the gift cards in 2003 had sales that averaged $11.8 million per store in 2005," the authors wrote.

"This was more than twice the average of $5.0 million among the group that had not offered gift cards at that time."

The study also found that gift cards were largely absent in certain retail segments, including recreational vehicle dealers and new car dealers.

But many retailers touted gift cards as a method of building store loyalty and drawing in new customers. The cards are also being used by other retailers as purchase incentives, with pharmacies offering cards for repeat purchases or minimum purchase amounts.

Retailers have come under criticism recently for expiry dates imposed on the cardsthat clear the remaining balance within a prescribed time limit.

Ontario and Manitoba have both introduced legislation that would forbid expiry dates on the cards, with both arguing the consumer should get what they paid for and should be able to redeem their card at any time.