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It's a make-it or break it time for retailers. The holiday selling season is always a critical time for retailers, but this year this may be even more true. With several retailers already falling victim to a drop in consumer spending, and filing for bankruptcy, retailers will be navigating through some tricky waters. Consumers are strapped for cash due to high energy and food prices, and unemployment is rising. The recent credit crunch has made it more challenging for retailers and consumers to borrow.

This blog will look at the winners and losers in the retail space. Who has the right strategy to capture consumer dollars? It also will look for trends in consumer spending and how that will impact the economy.

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Nov.14

3:52 PM ET

Friday, 14 Nov 2008

Tech the Halls: Gift Cards Get Gadgets to Lure Shoppers

Posted By:Christina Cheddar Berk

Topics:Consumers | Retail Sales

Sectors:Retail

If you're in the camp that thinks giving a gift card at the holidays is a bit of a cop-out, retailers have upped the ante this holiday season by rolling out gift cards that can double as gifts themselves.

It's a gizmo, it's a a gadget, it's a gift card! Shown here, a digital camera gift card from Target (top) and a speaker gift card from Best Buy.

Two of the most eye-catching are from Target and Best Buy, which have become known in recent years for breaking the mold when it comes to gift cards.

For this holiday season, Target [TGT Loading... () ] has a card that doubles as a digital camera. The 1.2 megapixel camera has 8 megabytes of on-board memory and ships with a USB cord, driver disk and a coupon for 40 free prints. There's no fee for the card, but shoppers must load at least $50 on it.

Not to be outdone, Best Buy [BBY Loading... () ] has a card that works as a miniature speaker to play music from MP3 players, iPods, or any audio player with a mini headphone jack.

The two gift cards are a big step beyond the novelty gift cards Target and Best Buy had last year that featured blinking lights, music and and programmable LED screens.

These types of cards are a way of showing people the possibilities that can come with the gift card, said Jonathan Hart, a sales associate at Best Buy.

"It gets them excited about getting a gift card and allows them to envision the possibilities," Hart said.

Gift cards are an important part of Best Buy's holiday sales. The company sells about 70 percent of its gift cards during the holiday season, with the bulk of those sales coming in the two weeks before Christmas, Best Buy said.

"Electronics are a fairly complex purchase," Hart said. "Some people are not comfortable making that purchase for someone else."

Other gift-card vendors are looking to personalization in order to stir up consumer interest. For example, at Macy's [M Loading... () ] shoppers can customize a gift card with their own photos, while Visa [AXP Loading... () ] and American Express [AXP Loading... () ] allow cards to be personalized for the recipient.

For those looking to give a gift card and grab a bargain at the same time, Costco [COST Loading... () ] is selling a bundle of five $20 Starbucks [SBUX Loading... () ] gift cards for $79.99, which is a 20 percent discount.

Since most gift-card sales won't occur until next month, it's hard to tell how gift card sales will be impacted by the current economic slowdown.

Last year, consumers spent $26.2 billion on gift cards during the holidays, with an average of $40 spent per card, according to industry trade group, the National Retail Federation.

They might seem like a cop-out gift to some, but gift cards are actually at the top of most people's wish lists, according to the a survey conducted by BIGresearch for the NRF. The poll, which was conducted in early October, found that nearly 55 percent of consumers would like to receive a gift card this holiday season.

Recent Holiday Central Posts:

Why You Should Worry About Weak Holiday Sales
Toy Trends: Lean and Barbie Green
Christmas on Consignment: Luxe Without the Guilt

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