Sunday, March 9, 2008

Reality of Gift Cards

On our lecture about promotion we talked about various cards including gift cards. In recent news, Sharper Image heading to bankruptcy decided that they will stop accepting gift cards. This caused outrage and anger by the public and became a hot topic in the news. Just in the past couple of days Sharper Image announced that they will continue to accept the gift card under restriction. For example, a $25 requires you to purchase $50 in products. This example is one of the pitfalls of gift cards. Next time you plan on purchasing a gift card as a gift, think about hidden charges and fees, expiration date, and other restrictions. Also, think about whether the recipient of the gift card actually shops at the store or not. It is estimated that in 2006, $8 billion in gift cards was not redeemed. It is clear that stores are benefiting from the sale of gift cards for the reason of getting cash up front, control over restriction, and profiting from unused gift cards.