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Gifting necessities seen as big holiday hit

Forget the wish list. Shoppers may be giving the gift of necessity this holiday season, buying up cards for gas, groceries and even utilities to help friends and family through lean times.
/ Source: The Associated Press

Forget the wish list. Shoppers may be giving the gift of necessity this holiday season, buying up cards for gas, groceries and even utilities to help friends and family through lean times.

The gift card has become ubiquitous during the holidays, providing an easy way for shoppers to make sure recipients get exactly what they want. But as job cuts grow, portfolios shrink and economic problems deepen, many people may just want help getting by.

"What we are finding in general is that practical gifts are in this year," said Ellen Davis, spokeswoman for the National Retail Federation. "So there's no dispute that will trickle into the gift card market."

Gift cards are once again expected to be the most-requested present for the season, the trade group said this week, even as total spending on them is expected to slip this year as shoppers limit how much they spend for the season.

People began using their gift cards more on necessities last year, Davis said, a trend that is expected to intensify this year.

One of the most popular uses for gift cards is to pay for gas, Davis said. And that is likely to grow, not just for gas stations, but at grocers, discounters, wholesalers and others retail outlets that sell gasoline.

Some grocers, like Safeway and Kroger, have promotions that offer gas saving incentives to the buyer who purchases the gift card — so the giver gets something as well.

And some utilities say they are expecting that their gift cards and certificates, typically popular among aid organizations and as property manager-to-client gifts, will become more common for everyday consumers as people struggle to pay for heat or electricity.

Linda Wilson, spokeswoman for the Northern Wasco County Public Utility District in The Dalles, Ore., said more families who've never needed help are seeking assistance with their bills this year. When that happens, sometimes friends or neighbors will step in and help.

"It will not go to waste like another sweater or ugly tie," Wilson said.

While it's too early to track sales for the season, supermarkets, discounters and other retailers who sell life's necessities are still expecting strong gift cards sales amid the otherwise bleak season.

"We are seeing increased interest this year in gift cards as gifts," said Haley Meyer, spokeswoman for grocery chain Supervalu. "I think a big part of that is the economy, especially since every day brings another round of news stories about the tough economy."

Other major retailers such Wal-Mart Stores Inc. declined to say whether consumers were spending more of their gift cards on necessities such as groceries. Target said it doesn't have information on how consumers have or might be using the cards in certain categories.

But Kroger Co., the nation's largest traditional grocery chain, said it sold out of its holiday-themed gift cards last year. Kathy Kelly, the company's president of personal finance, said Kroger saw double-digit growth in gift cards following a stimulus check promotion this year that hasn't dropped off and is likely to carry through to next year.

Publix, a grocery chain in the Southeast, said it has seen corporate orders for gift cards drop as many employers scale back the number of cards they give as gifts to employees and clients. But it hopes consumers consider them as gifts during the tough times.

Another increasingly popular option is network cards, which have a prepaid cash balance and can be used nearly anywhere credit cards can.

Prepaid cards were a $155 billion market in 2007, according to David Robertson, who follows the credit card industry as publisher of The Nilson Report, a trade publication for the consumer-payment industry. Network cards represent 4 percent of the market.

Robertson said there has been a growing movement away from store-specific cards and toward network cards. With people trying to make their dollars go further, he said the network card market is likely to grow.

"People are going to want to give a gift, it might be as big as the gift they gave last year, but one way to enhance the value ... is to give cash," he said. "But the cash is on the card."

But there can still be some fun in the functional gift. Recipients who have been tightening their belts all year are likely to enjoy using gift cards without guilt, experts said — even if it is for Cheerios instead of cashmere sweaters. And they may even score a few post-holiday deals.

"People love the idea of going out and buying something for themselves," Davis said.