Chris Nobles — armed with a $150 Banana Republic gift card — is facing a dilemma.
“Should I go for a sale, or hold out for something big?” said the 41-year-old Charleston, S.C., resident, who already spent $350 of her holiday gift card money at other stores. “I think I might hold out for a nice (spring) dress.”
Millions of shoppers like Nobles have returned to stores in recent days to redeem their gift cards, helping to lift January sales and soothe retailers who had a modest performance in November and December, according to data released Tuesday. Still, Nobles and others are proving to be just as choosy with their new-found cash as they were before Dec. 25.
“Customers are being just as protective with their gift cards as they were with their own money when buying Christmas gifts,” said C. Britt Beemer, chairman of America’s Research Group, based in Charleston, S.C., citing a recent survey he conducted that showed a still-cautious consumer. “The idea of free money is all in the past. They want value or something very special.”
Since stores don’t record gift card sales until they are redeemed, the way that growing numbers of holders spend them will play a bigger role in profits for the quarter ending in late January for many retailers. To entice shoppers to buy regular-priced goods, companies such as Wal-Mart Stores Inc. and J.C. Penney Co. shipped deliveries of spring merchandise weeks earlier than last year.
So far, the results are encouraging. According to the UBS-International Council of Shopping Centers, sales at 71 stores rose 3.7 percent for the week ended Saturday. The tally is based on same-store sales or sales at stores opened at least a year.
According to the Johnson Redbook Index, same-store sales for the 9,000 store locations it measures rose 3.2 percent for the same period.
Michael P. Niemira, chief economist at the International Council of Shopping Centers, believes the solid sales pace is being spurred in part by a higher-than-expected gift card redemption rate.
According to a survey of 1,000 shoppers conducted by the Opinion Research Corp. for the mall trade association, consumers anticipate redeeming 38 percent of their gift card value during January. That follows a 40 percent redemption rate during the last week of December, double the rate a year ago.
Still, Niemira wonders whether the momentum will slow. Stores also need shoppers to splurge on spring merchandise, as the discounted holiday goods thin out in stores. But consumers seem to be wanting to stretch the gift card value.
According to Beemer’s survey of 1,000 people conducted last weekend, 89 percent of shoppers who used their gift cards bought only discounted items, including apparel, while 11 percent purchased some regular-priced merchandise.
Another survey conducted by the Opinion Research Corp. for the International Council of Shopping Centers was a bit rosier. While it showed 39 percent of those polled reported shopping for deeply discounted apparel in the post-Christmas period, 40 percent said they intended to buy new items. The remainder did not receive gift cards.