Hispanic Gift Card Use Soars – Cards in General an Opportunity for Retailers

November 6, 2007

This article is included in these additional categories:

African-American | Hispanic | Out-of-Home | Retail & E-Commerce | Youth & Gen X

Retailers are seeing increases in the cash value and use of gift cards among Hispanics, with card use increasing by one-third; moreover, for the 2007 holiday season alone, the average US gift card purchaser expects to spend $203 on gift cards, up from $186 in 2006, a recent study finds.

Hispanics received gift cards with the highest average value – an average balance of $71, compared with $41 for Caucasians and $60 for African-Americans, according to the Comdata Stored Value Solutions (CSVS) fifth annual gift card survey of US consumers. That total for Hispanics was a 33% increase over last year.

The study also found that 26% of Hispanics surveyed report giving gift cards to children as a budgeting tool or in lieu of an allowance:

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“Our survey shows us that Hispanics are enthusiastic consumers of gift cards,” said Bob Skiba executive vice president and general managers of CSVS. “Hispanics represent an exciting growth area for retailers.”

Among other survey highlights related to Hispanics:

  • Hispanics are most likely to purchase gift cards for personal use: 40% report buying cards for themselves vs. 30% of Caucasians and 24% of African-Americans.
  • 31% of Hispanics report purchasing gift cards at gift card malls, which provide a variety of card options at one location, compared with 26% of Caucasians and 33% of African-Americans.

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  • Hispanics are most likely to spend more than the value on their cards, adding their own money to increase their purchasing power: 69% of those surveyed say they spend more than the amount of the card, compared with 52% of Caucasians and 44% of African-Americans.
  • Hispanics are buying cards through several channels: 38% via the internet, 31% at gift card malls and 6% at charity fundraisers and other events; 90% of Hispanics still purchase cards at a specific retailer.
  • Hispanics buy cards with higher initial values and are most likely to reload cards: 40% buy for themselves and their children vs. 30% of Caucasians and 24% of African-Americans.
  • Many Hispanics like enhanced features and special packaging:
    • 24% prefer cards that also function as a DVD with music.
    • 75% appreciate a card that is presented in unusual packaging.

 Among other highlights of the Comdata SVS study:

  • For the 2007 holiday season alone, the average gift card purchaser expects to spend $203 on gift cards, up from $186 in 2006.
  • The average amount per card increased from $46 in 2006 to $53 in 2007.
  • 38% of those surveyed who have never purchased a gift card are very or somewhat likely to purchase gifts cards this holiday season, representing an 81% increase in new card users over last year.
  • 53% of card users often or always spend more than the amount originally loaded onto their cards. They are also most likely to redeem their cards over two visits, increasing store traffic and the potential for sales over the value of the card.
  • 85% purchase gift cards because they want the recipient to be able to select their own gift, while 57% don’t know what to buy.
  • Department stores are still the most popular place to purchase a card, followed by clothing and book stores, then restaurants.
  • There was a 40% increase in cash card purchases compared with last year.
  • One-half of gift card purchasers are more likely to buy a gift card that comes in a box, with ribbon and tissue, or in a tin.
  • 48% of gift card purchasers would be likely to buy a gift card that is a CD or DVD with multi-media content.

The market for children’s gift cards is also growing.

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  • Approximately one-third of all gift cards purchased last year were purchased for children or teens.
  • 4% of cards purchased were for children under the age of five.
  • Of those who have purchased gift cards for children, 35% are the child’s parents, followed by 30% who are aunts or uncles.

The survey shows that the convenience of gift card malls is clearly a selling point for consumers:

  • Last year, 94% of purchasers bought cards at a specific retail location. In 2007, only 88% prefer a specific location.
  • Last year, 22% made purchases from gift card malls, and this year, that number increases to 27%.
  • 53% of all recipients report spending more than the value of their cards, and one in five says they pay retailers to reload their cards. On average, they reload cards with $47, up from $32 in 2006.

About the study: The survey results are based on 800 internet survey responses collected during September 12-18, 2007. A summary is available at the Comdata website.

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