Academic journal article Journal of Economics and Economic Education Research

An Emerging Trend in Retailing: Innovative Use of Gift Cards

Academic journal article Journal of Economics and Economic Education Research

An Emerging Trend in Retailing: Innovative Use of Gift Cards

Article excerpt


An emerging trend in the marketplace, "Gift cards are a saving grace to holiday shoppers struggling to find that perfect item" (Canadian Business 2006/2007, p. 17). Americans now use more than 840 million credit cards and annually charge one-trillion dollars, which is more than what they spend in cash (Toffler and Toffler 2006, p.278). Indeed, besides the use of credit cards, Gift cards actually began as paper gift certificates; but during the 1990s evolved into plastic cards with magnetic strips (Hudson 2005). In the late 1990s, major retailers initiated "closed-loop" or "retailer-specific" gift cards (Horne 2007). Then major credit-card companies followed suit (Acohido and Swartz 2007) by issuing "open-loop" or "network-branded" gift cards (e.g., Visa gift card or Master Card gift card) (Horne 2007; Fest 2010). Gaining popularity as holiday gifts, gift cards were ranked as the "second-most-popular item after clothing" in 2005 (Yang and Lewis 2006). Now, nearly three-fourths of consumers in the United States either purchase or receive at least one gift card annually (Promo 2006). Consumers spent $100 billion on gift cards in 2010, up 22 percent from $82 billion in 2006 (Acohido and Swartz 2007; Byrnes 2008; Steiner 2011) in contrast to $45 billion in 2003 (Harris 2005). An estimated 5.1 billion merchant gift cards (issued by retailers) and bank gift cards (issued by Visa, Master Card and American Express) are used worldwide (Acohido and Swartz 2007).

With their growing popularity, gift cards are becoming more personalized. For example, with increasing shopping options, including self and home improvement, gasoline, air travel, and tattoos, gift cards are providing consumers opportunities to give "more personalized presents" (Petrecca 2006; p. 1B). In addition, the cards' features are becoming more personalized. For example, Wal-Mart allows consumers to put their photo or a text on gift cards (Jacobson 2005). Visa also provides options to personalize Visa gift cards with personal photos or stock images and engraved messages by visiting at a cost of $5.95 per card (Edwards 2007). Furthermore, the widespread use of smart phones and iPads will likely increase the number and variety of digital gift cards (virtual gift cards) (Murphy 2010). As consumers start using more digital gift cards, retailers will probably provide even more personalization options and use social media to promote and sell gift cards (Murphy 2010).

Gift cards benefit not only the gift givers and recipients but also, most importantly, the merchants. For example, most shoppers tend to spend more when they are given gift cards (Shambora 2010). Therefore, revenue is generated not only by consumers purchasing the cards but also, in turn, by recipients who spend more than the gift card's face value (Horne 2007). Retailers also benefit from float, card fees, and totally/partially unclaimed gift cards (Bernstein 2006, Young and Lewis 2006, Horne 2007).

Retailers can use information about currently available gift cards and the emerging trends among them as a competitive advantage by becoming more innovative with their own cards to promote their business, recruit increasing numbers of customers, and generate additional revenue. Therefore, this study's purpose is to analyze the characteristics of gift cards retailers issue.


This study's sample of 559 cards came from a gift-card collection which one of the authors gathered over several years. The majority of the cards were from Wal-Mart, while the rest were issued by various other retailers.

The sample of gift cards was content analyzed by number and frequencies. Specifically, gift cards were categorized by their major titles (e.g., gift card, shopping card, wish card and cash card); company-related features (e.g., company logo and contact information); physical characteristics (e.g., graphics, hologram, and scent); functionality (e. …

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