Sunday, December 31, 2006

Gift cards are awesome for corporations

As with pretty much anything else you see being pushed on TV or the mass media, like car leases and diamonds, here's something to chew on about gift cards - they are a source of big money for corporations. I wrote about gift cards earlier here. Without going all tinfoil-hatty, its pretty obvious that gift cards are a good deal for companies - they get all the money immediately from someone who likes them enough to gift someone else a gift card from that store, but they also get a few visits from the recipient.

But anyway, here's the new article I found about gift cards a few days ago. Retailers profit from unused gift cards.

Last winter, Best Buy Co. reported a $43 million gain in fiscal 2006 from cards that hadn't been used in two or more years. Limited Brands Inc. recorded $30 million in 2005 revenue because of unredeemed cards.

About 6 percent, or $4.8 billion, of this year's gift cards will go unused, estimated Laura Lane, vice president of unclaimed property services for Keane Co., a compliance and risk management consulting firm.

Consumer Reports put the figure even higher, estimating that 19 percent of those who received cards last year had not used them because the cards were lost or expired.

Research shows that most consumers will spend more than the card is worth, using their own money to make up the difference.
Gotta love consumers!

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