Bolstering Profits By Giving Away Gift Cards

After experiencing poor sales figures due to the recession many retailers are attempting to get back in the black by exploiting gift cards. Gift cards have traditionally been popular with customers but retailers are using them in innovative ways. For over a decade the sales of these cards has increased but recently they have experienced a decline. Many stores are pulling out of the stops in order to reverse this trend, and it may be working.

Luxury retailers are even running giveaways that involve a gift card worth fifty dollars. Initially this may appear strange to simply give away money but when discover that the vast majority of people will purchase more that what the card’s value is it is really a very smart business decision. Promotions that rely mostly on coupons can have an adverse effective on the image of a luxury store which illustrates the switch to gift cards. Combine this with branded gift card packaging that can reinforce a store’s brand and image and you can see how impressive this kind of promotion can be.

Discounts can get more consumers to a store but businesses are looking to bolster sales with gift card promotions as an alternative. These promotions can work the same as discounts however customers will use them to buy items that are at full price. This communicates the notion that everything is discounted but the mark downs might not have to be as large. This perception causes most shoppers to spend more than the original card’s denomination. A recent study revealed that this can be as high as forty percent more than the cards value.

In an effort to boost sales even more some retailers are offering gift cards to customers that spend over a certain limit. For example a customer spending four hundred an fifty dollars might receive a one hundred dollar gift card. If that person spent forty percent more than that the store could achieve another forty dollars in revenue. You can easily see how this can very quickly add up when amplified by many customers.

Other approaches that are being employed to increase revenues are discounting the gift cards that shoppers buy as gifts. This could entice someone to buy the card from one retailer rather than another and businesses still have an opportunity to make a profit since a certain number of the cards will never be used. Some estimates put this figure as high as ten percent.

To offer even greater choice in gift cards a few stores are offering cards that allow many gift givers to load up money onto the card. These are especially useful for merchandise that is a bit more pricey.

Coupons and the like for the most part have a one time use but gift cards can be used towards the purchase of a few different things until the card has been used up.. This can be especially useful for cards that have large values. Stores that have a website generally allow the option of redeeming the cards on the on-line branch of the store. The multiple incarnations of these cards will continue to make them popular with customers.

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