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Study: Retail gift cards

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The Daily

Monday, December 4, 2006
2003 to 2005

During last year's Christmas holiday season, 8 out of every 10 of Canada's largest retailers offered gift cards for their customers, a huge increase from only two years before, according to a new study.

During the 2003 Christmas holiday season, 53% of large retailers had made the cards available. Just two years later, this proportion had ballooned to 82%.

The study, published in the Analysis in Brief series, examined the growing popularity of the cards in a wide range of large retailers.

This group covers Canada's largest food, clothing, home furnishings, electronics, sporting goods, and general merchandise retailers (including department stores). Together these retailers represent about 35% of total annual retail sales, after excluding recreational and motor vehicle dealers.

The biggest increase in the proportion of stores offering gift cards occurred in the trade groups that were slowest to introduce them. These consisted of clothing stores, which include shoes and accessories, supermarkets and other stores, such as pharmacies and book stores.

Among six trade groups examined, the proportion of clothing stores offering gift cards showed the biggest gain. In 2003, 36% of clothing stores were offering the cards; by 2005, this had more than doubled to 79%.

The proportion of supermarkets also jumped from 57% in 2003 to 70% in 2005.

However, clothing stores and supermarkets were still far behind the home electronics and appliances stores, all of which offered gift cards in 2005. The vast majority of general merchandise stores also offered them.

There is yet no estimate of the value of annual sales conducted through gift cards. However, the study found that the retailers with the largest sales tended to offer gift cards sooner.

Stores that introduced the gift cards in 2003 had sales that averaged $11.8 million per store in 2005. This was more than twice the average of $5.0 million among the group that had not offered gift cards at that time.

Even within a trade group, size had an impact. For example, in the clothing industry, stores that had introduced gift cards in 2003 had average annual sales in 2005 of $2.0 million each. In contrast, sales among stores not yet offering gift cards in 2005 averaged only $1.0 million each.

The study also provides a first glance at results for the entire surveyed retail industry, not just the largest retailers. It found that 55% of total sales in December 2005 came from stores offering gift cards.

Certain types of retailers, such as general merchandisers, were more likely to offer gift cards. General merchandise stores that had gift cards accounted for 94% of retail sales within that particular retail sector in December last year.

At the other end of the spectrum, gift cards were largely absent from used and recreational vehicle dealers and new car dealers. Stores that offered gift cards accounted for only about 4% of their sales.

The study used data from two special supplements to the Monthly Retail Trade Survey. This survey produces data on sales and the number of retail locations by province and territory from a sample of about 10,000 groups of retail establishments, representing about 215,000 stores.

Definitions, data sources and methods: survey numbers, including related surveys, 2406 and 5027.

The analytical article "Gift cards: The gift of choice" is now available online as part of the Analysis in Brief (11-621-MWE2006051, free) series from the Publications module of our website.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Monica Weise (613-951-3803), Distributive Trades Division.