Retail Detail. Sneaky: Retailers Are Looking to Stick it to Gift Card Holders

January 3, 2008 • Shopping


Buyer beware! Now that you have that holiday gift card from Aunt Ida burning a hole in your wallet…don’t expect the massive sales to be there. Since retailers slashed prices before Christmas, they are looking to stick it to those with some mad money to spend…gift card holders! As holiday gift cards prod more
shoppers into stores this week, retailers are clearing shelves with
their traditional deep discounts. In an emerging trend aimed at increasing profits, they’re also making room for fresh, new merchandise
at full price.

starting to see stores use deep discounts as a loss leader," said
Dennis Tootelian, a marketing expert at California State University,
Sacramento. "Then they’re bringing in more trendy, new merchandise at
full price. People with gift cards are more willing to pay that because
they feel like the card is free money."

Retailers’ woes are usually good news for shoppers. Stores today are offering
more discounts compared with the same time last year, industry watchers

On Wednesday, for example, No. 2 U.S. retailer Target
Corp., which announced it expects to see a sales decline during
December, lowered prices on popular video games to $37. Mervyn’s LLC
opened its stores at 6 a.m. with clearance prices such as 60 percent
off women’s sweaters. Nordstrom Inc. took a third off regular-priced
men’s apparel. Such sales blow out the leftover holiday merchandise,
but at the expense of profit margins.

in the past two months bought 625 million cards worth about $26.3
, according to industry estimates.

used to loathe gift cards because accounting rules can make them a headache. A card
sale counts as a liability on balance sheets because a merchant can
report the revenue only after the card is redeemed or expires.


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