Sunday, December 30, 2007

The Profitability of Gift Cards

A bit more on gift cards as excellent gifts... from the perspective of retailers:
Wasted coupons will be chalked up as the shops' own Christmas present. One US chain, consumer electronics company Best Buy, this year booked a profit of $19m (£9.5m) from unclaimed gift cards.

Retailers also gain from tokens that are cashed in, as customers top them up by an average 40% of their face value.

Spending is even larger on coupons given to staff by companies as an incentive. At electrical stores, the average employee voucher is put towards a widescreen television.

Since an average of six weeks pass before a voucher is redeemed, it serves the the retailer as an interest-free loan.
Not too shabby....

1 comment:

  1. California just passed a law requiring gift-card issuers to refund amounts of $10 or less left on a gift card as cash. I am given to understand that tens of millions of dollars in profit are realized from people not bothering to spend that last $1.34 left on their gift cards.


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