Retailers often rely on strong gift card sales to push consumers to return to stores after the holidays and buy more expensive spring merchandise. But many local consumers with gift cards said they would go after discounted items this year instead, foreshadowing more difficult times ahead.
"Retailers in my mind are in trouble," said Britt Beemer, chairman of Charleston, S.C.-based America's Research Group. "When you start screaming 70 percent off and they don't come, you're in trouble."
Rachel Raines, a 27-year-old administrative assistant who was shopping at the Mall at Green Hills on Christmas Eve, said she plans to use her gift cards on sales merchandise. Raines said she hopes clothes selling at 20 percent off before Christmas drop to 50 percent off after Christmas.
"I would probably wait around for the best sales to get the most out of the gift cards," Raines said.
Fewer people this year received gift cards as presents. Gift card sales as a category dropped to 51.5 percent, the lowest level since 2005, according to America's Research Group.
"Clearly the retail world out there is in for a rude awakening because there won't be as many gift cards this year," Beemer said.
Stores to closeTwenty-seven-year-old Nashville resident Sherita Patton, who was laid off from her job earlier this year as a bookkeeping assistant, said that last year she spent more than $500 on gift cards for six of her friends and family. This year, she's not getting any of those people a gift, she said.
"This year, times are hard," Patton said.
People may also have shied away from giving gift cards this year because of several announced store closings, including Sharper Image, Beemer said.
Pedro De La Torre, a 40-year-old strategic and financial planner who was shopping at the Mall at Green Hills on Christmas Eve, said he planned to use any gift cards he received sooner rather than later because of the closures.
"I would use them as soon as possible," he said, especially if he gets cards from retailers who have filed for bankruptcy.
Washington Report: Treasury Department Sidesteps
After-holiday prices reach ‘rock bottom’
Real Estate Outlook: Sales Jump in Ailing Markets
