Stores brace for last-minute gift card surge

updated 3:49 p.m. ET Dec. 20, 2007

INDIANAPOLIS - With only five left before Christmas, stores and malls are expected to see gift card sales soar even more as procrastinators look for quick gift alternatives for relatives and friends.

Americans are expected to spend $26.3 billion in gift cards this holiday season, up 42 percent from $18.5 billion in 2005, according to the National Retail Federation. About 88 percent of shoppers polled by the National Retail Federation said that they will purchase two or more gift cards this holiday season.

Consumers are snapping them up because they're easy to buy, they're more acceptable gifts these days, and they ensure the recipient gets exactly what he or she wants. They're also becoming more accessible to shoppers. Simon Property Group, the nation's largest mall operator, offers more than 25 card varieties.

And supermarkets like Cincinnati-based Kroger Co., the nation's largest traditional grocer, are expanding their selection. Kroger just doubled the number, to more than 200, the gift cards available with a recent deal with Blackhawk Network Inc.

People can buy gift cards "pretty much anywhere you go," said NRF spokeswoman Kathy Grannis said.

Fifty-three percent of consumers say gift cards are socially acceptable presents, up from 23 percent three years ago, said Marshal Cohen, chief analyst for the market research company NPD Group Inc.

"It's easier to give, I can let you pick and chose what you want," Cohen said. "I don't have to get an updated inventory of what you have and don't have."

While shoppers typically spend more than the value of the gift cards, the bad news is that gift card sales mute pre-Christmas business since stores don't record them as sales until shoppers redeem them.

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