3 Reasons Why 2012 Might be the Year of the Gift Card

Holiday 2012 has been an interesting selling season. Consumers are cautiously optimistic, planning to spend slightly above what they did in 2011, though the economy / unemployment are still troublesome and the fiscal cliff could still turn out to be the Grinch who stole Christmas. Undoubtedly, though, the shining star of the season has been the resurgence of gift cards.

While gift cards have been perennially touted as the perfect last-minute gift, a look at this year’s insights shows us that gift card buying patterns are shifting. For 2012, consumers aren’t waiting until Christmas Eve for these purchases; they are checking them off their lists much sooner. According to the National Retail Federation, nearly one-third (32.6%) of Black Friday Weekend* shoppers made a gift card purchase, up a whopping 40% from a year ago (23.1%). Further, as of the first week of December, holiday shoppers overall continue to pace ahead of previous years’ buying habits; two out of five (39.2%) have already purchased these stored-cash cards as gifts this season, up 25% from 2011 (31.4%).

So is 2012 shaping up to be the Year of the Gift Card? You betcha. So let’s take a look at three reasons why gift cards are a “must buy” among holiday shoppers this year.

1. We want gift cards – badly.

While they have been atop consumers’ wish lists since 2007, intent to buy gift cards sputtered during the recession as consumers reached for bargain merchandise that wouldn’t quite reveal the total dollar amount paid. This year, though, a record number of consumers are requesting them (59.8%, much higher than the second most request gift – apparel and accessories – at 49.1%), and a record number of shoppers are responding that they are planning to buy them (59.2%, nearly eclipsing the most purchased category – again apparel and accessories – at 59.7%).

Bonus: Buying a gift card spares the giver and receiver from that awkward “here’s the receipt for the return” exchange.

2. Gift cards are still practical gifts.

Gift cards may be tempting this year because they can still be perfectly practical, which is on what the near majority of consumers are remaining focused in this uncertain economy. Recipients can buy what they want or what they need – and either way, it’s money well spent on behalf of the giver and better than a sweater relegated to the back of someone’s closet, no? Shoppers may have a little extra cash in their pockets this year, but if they are going to spend their hard-earned (and hard-saved) pennies, they’ll do it wisely. And remember, a $50 gift card to a discounter might be one man’s (or woman’s) groceries at Target but another’s new home décor from Tar-Zhay.

Bonus: And speaking of sweaters, gift cards are one-size-fits-all, so no worrying about whether or not Aunt Clara really did lose that 10 lbs. this year when debating between a medium and a large [oy].

3. We can buy gift cards “on sale.”

Back in the day (so…five years ago), buying a $50 gift card meant that the purchaser would fork over $50 cash.  And these days, with retailers and restaurateurs bending over backward to bring customers through their doors, it seems that incentives to buy gift cards are becoming increasingly creative as well as prevalent. Nowadays, a $100 gift card might come with a $20 bonus to use later (Merry Christmas to me, right?) Or, and this is one of the examples I saw a few times during my Black Friday exploits, a pack of five $20 gift cards might be discounted 20% to $80. Gift card purchasers may also be receiving more indirect incentives to purchase, such as grocery stores offering frequent shopper / fuel rewards or salons giving away coupon books for future services with gift cards purchases.

Bonus: Shop wisely and gift cards purchases can still come with that “you’ll-never-guess-what-I-paid-for-it” cachet, which was the feel good saying among holiday shoppers during the recession.

So are gift cards changing the way we approach shopping for holiday gifts? Certainly. However, when and if gift exchanges turn into gift card exchanges, I’ll bet we’ll see a renaissance of more traditional gift giving.

* “Black Friday Weekend” is defined as Thursday (Thanksgiving), Friday (Black Friday), Saturday, and Sunday.

This post originally appeared on Forbes.com as a contribution to the Prosper Now blog.

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Ten Ways to Spot a Layaway Shopper this Holiday Season

While several major retailers, including Walmart, Kmart, and Toys R Us, have lowered or eliminated their layaway fees in efforts to spur holiday shopping, new insights from the BIGinsight™ November survey of more than 9,000 consumers reveal that this tactic doesn’t seem to be leading to a rise in this place-it-on-hold-and-pay-over-time purchase behavior. Just over one in ten holiday shoppers (12.3%) indicates they are using or planning to use layaway when shopping for gifts this season, relatively unchanged from one year ago (12.7%).

With a flatlining number of consumers boarding the layaway train for 2012, it appears that this Great Depression-era policy is more bygone gimmick rather than a modern day marvel. However, further analysis of layaway users uncovers a specific type of holiday shopper. So without further ado, let’s take a look at ten characteristics that help identify this special group of consumers.

Ten Characteristics of Layaway Shoppers

1. Layaway shoppers wouldn’t place in a Santa look-a-like contest. Nearly 75% more likely to have children in the household compared to average holiday shoppers, while layaway users might be more prone to play Santa this year for the kiddos, they just won’t look like the jolly old guy. Six years younger on average than typical holiday shoppers, layaway-ers are also far less likely to refer to themselves as “retired.”

2. Despite tighter budgets, layaway-ers intend to spend more this holiday season. As might be expected, those utilizing the budget-friendly aspects of layaway tend to earn less (about $49,000 per year) than holiday shoppers in general ($56,000/year). Despite this, though, two out of five (41.6%) layaway shoppers intend to spend “more” on the holiday season this year than they did back in 2011. Just 21.0% of shoppers in general are working within expanded holiday budgets this year.*

3. Layaway shoppers have a holly jolly outlook for the economy… Consumers reported that they were feeling better about the economy in November, but the sentiment among layaway users is downright giddy: 54.7% say they are very confident/confident in chances for a strong economy, much higher than typical holiday shoppers (40.4%). The issue of employment, though, is another story. About a third (32.7%) of layaway shoppers fears an increasing in the number of layoffs over the next six months, higher than holiday shoppers in general (22.0%). Layaway-ers are also slightly more concerned about becoming laid off themselves.

4. …Yet remain conservative with their everyday finances. Lower average incomes and greater concerns for layoffs are likely playing into layaway shoppers’ penchant for scrimping and saving in their everyday lives. Compared to holiday shoppers in general, more layaway-ers are making plans to pay down debt (38.6%), decrease overall spending (35.4%), and increase their savings (32.5%) over the next three months. Additionally, a higher proportion (28.6%) is attempting to pay with cash more often, which brings us to point #5…

5. Cold hard cash is key with layaway shoppers. For holiday purchases specifically, while debit cards are the preferred method of payment among layaway shoppers (49.9% plan to use them most often), more than a third of (35.5%) still plans to utilize cash most often, 40% higher than holiday shoppers in general (25.2%). Layaway shoppers are 60% less likely to use credit cards most often for holiday purchases than typical holiday shoppers.*

6. These early birds are getting the worms… Arguably one of the brightest benefits of using layaways services is the ability to place a hold on hot holiday merchandise before it flies off the shelves. So it shouldn’t come as a surprise that – as of early November – seven out of 10 layaway users (69.1%) had begun their holiday shopping as opposed to just 52.8% of holiday shoppers in general.*

7. …But still plan to bargain-hunt with the best of ‘em on Black Friday. And speaking of early bird tendencies, layaway shoppers are quite the night owls too: the majority (56.3%) is planning to shop Black Friday weekend, making them 75% more likely to brave the crowds than typical holiday shoppers (31.5%).*

8. Layaway shoppers use their connections to find best deals. While traditional advertising circulars are their top source for keeping track of holiday sales and promotions, layaway shoppers are more likely to connect on Facebook or Twitter, use retailer apps, and refer to coupon websites (i.e. RetailMeNot.com, FatWallet.com) compared to holiday shoppers in general.*

9. While they embrace their inner fashionistas, it’s electronics and toys that are bound for the layaway bins. While layaway shoppers are more likely to lean to familiar fashion labels and the newest trends/styles versus holiday shoppers in general, apparel is less likely to be put on hold compared to electronics and toys.

10. Discounters are most likely to get those layaway dollars. When it comes to the retailers shoppers are utilizing for layaway services, discounters score a definitive win here. Nearly two-thirds (65.5%) of holiday shoppers planning to use layaway this season will head to Walmart, while 42.2% say they will sign up with Kmart. Fewer will make use of the programs at Toys R Us (21.2%), Sears (15.2%), Burlington Coat Factory (12.4%), Marshall’s (12.1%), or TJ Maxx (9.9%).

* Source: National Retail Federation/BIGinsight™. For more insights on the holiday season, visit the NRF’s Holiday Headquarters.

This post originally appeared on Forbes.com as a contribution to the Prosper Now blog.

2011 Wrap-up + New Holiday Insights

For the final BIG Call of 2011, we presented new Holiday Insights (as reported here by the National Retail Federation) as well as 13 month snapshots for Consumer Confidence, Employment Outlook, Practical Purchasing, and Personal Finances.

Key Takeaways:

Consumer Confidence: It’s been a bumpy ride this year, but consumers are closing out 2011 with nearly the same perspective on confidence in a strong economy as they did 365 days ago. There’s still a long way to go, though, before consumers begin to have warm and fuzzy feelings about the economy again.

Employment: Although the official U.S. unemployment rate reached a two year low in November, consumers have a nearly identical outlook for the job market now as they did at the end of 2010. Concern for the job market is still very real, which will play into the decisions consumers make in 2012 regarding their debt, savings, and spending as well as who they plan to vote for in the upcoming Presidential election.

Practicality: While consumers feel roughly the same way that they did headed into 2011, times over the past 13 months have been tougher, yet they’ve been better, too. Cautious spending will likely stick around in the New Year.

Personal Finances: Paying down debt and decreasing overall spending remain the top financial goals, but the importance of increasing savings is growing as we close 2011. It looks like consumers will begin 2012 with a more fiscally conservative mindset than they did for the start of 2011.

Holiday: Fewer consumers have completed holiday shoppers compared to this time last year. As of the first week of December, one in three shoppers either hadn’t started yet or has completed less than 10% of their purchases. Since displacing credit cards in 2005, debit cards continue as the most popular payment method for the holiday season. It appears that consumers do seem to be continuing to make a conscious effort to stay off the credit cards and stay on budget.

To listen to the recorded webinar, click here.

© 2011, Prosper®

BIGinsight™ is a trademark of Prosper Business Development Corp.

All is Not So “Merry and Bright” for Charities this Holiday Season

 

…but here comes Santa Claus Gen Y!

In a weak economy, Americans tend to cut back on everything, and unfortunately that includes donating to the less fortunate. This holiday season, our diffusion index for charitable contributions (those who will spend less than last year subtracted from those who will spend more) is negative, at -15%! (Check out the report here) 27.9% of consumers are planning to spend less on charities this year vs. 12.9% who plan to spend more. The majority (59.2%) plans to spend the same as last year (although that could mean zero dollars for some).

Despite the Grinchy economy, there is one group of consumers getting into the giving spirit this year…and quite unexpectedly, it’s Generation Y! Yep, those fresh-out-of-college and struggling to find work 20-somethings plan to spend MORE overall on charitable contributions this holiday season! 23.9% admit they will spend more, 61.2% plan to spend the same, while only 14.8% say they plan to spend less. That gives us an overall diffusion index in the black at 9.1%! Boomers, on the other hand, are cutting back the most – see for yourself!

Perhaps this shouldn’t be such a surprise—some of those in Generation Y live with their family, and most don’t have children yet. Many of them DO have jobs in innovative companies snatching up tech-savvy employees. Whatever their situation, members of Gen Y appear to have a bit of spare change. The top reason these youngsters gave for giving more this year was “Even though times are tough, there are others that need help more than I do,” with over half (55.4%) saying so. Another 40% simply have more to give.

These reasons ring true in my life as well. I am happily employed and do not have children (just a hamster, but he has only a tiny mouth to feed). There aren’t many children in my extended family either, and due to a variety of reasons (most of which involve debt), my extended family just isn’t giving gifts this year to anyone over the age of five. If you check out the report, you will see 15.3% of my Gen Yers are also cutting back on gifts for family and friends.

My immediate family has decided to give practical gifts. Top on my list is a crock pot and a gift card to my local grocery store! So, after saving up for the year and not having anyone to buy for, my family has picked out a few of our favorite charities to donate to. We are trying to get involved in toy drives and collections for local food pantries as well. It just feels like the right thing to do, especially at this time of year. It’s hard to imagine that there are people in my neighborhood that only want shampoo or a blanket for Christmas while so many others around the country are thinking about a new tablet or smartphone.

I realize that I have been blessed in my life, and I want to give back what I can to those who really need it. I may not be able to offer gold or even a pa rum pum pum pum on a drum (I am NOT musically gifted) but I can give someone the gift of warmth or a hot meal or even a roof!

Here at BIG, we want to know what you are doing this holiday season. Let us know if you are cutting back on donations in this rough economy or if you are able to help out others in their time of need. What are some of your favorite charities? Do you get involved in your community or church around the holidays? Are you taking care of yourself and your family first before helping others? We like to hear from you!

BIG Call – October 2011

Slides from the October BIG Call are now available!

John Mariotti was our special guest speaker this month. You can view his take on the latest data, including Confidence, Practicality, Personal Finances, the 90 Day Outlook, and Holiday 2011 Spending, by clicking through the slide show below.

To listen to the recorded webinar, click here.

© 2011, Prosper®

BIGinsight™ is a trademark of Prosper Business Development Corp.