Promo - May 2008 - (Page 10)

Amy Johannes RETAIL Recession Rewards Retailers’ gift cards proliferating in a bad economy The economic downturn has spurred at least one positive: an increase in gift card usage. If the number of retail store card displays and direct mail offers for them are any indication, it appears their use is on the upswing at a time when many consumers are cutting back on discretionary spending. “When retailers see the economy turning tougher, they begin to develop their strategy of how to react and how to compete,” says Daniel Butler, vice president of retail operations for the National Retail Federation. Butler’s point about competition may explain why specific retailers declined to answer any questions about results, which can be tracked through a barcode or magnetic strip. “They might extend Sak’s Fifth Avenue gave customers a decorative a sale, add a new prod$50 gift card to be used uct launch, or run toward a qualifying special events,” says purchase. the NRF executive. “They do a lot of different things to promote their business. Gift cards are part of the equation.” While most promotions are planned months in advance, companies might quickly jump into action, given the current economic climate, Butler says. “The gift card industry is growing because the consumer has responded to that use,” he adds. “Businesses find it a convenient way to connect with consumers.” Merchants such as Coldwater Creek have long offered incentives in the form of a card toward catalog purchases. “In this economic environment, store traffic is key,” says Ann Raider, executive vice president of retail partner development, Affinity Solutions, a developer of retailer-focused rewards programs. “Retailers need to get people in the stores or on their Web sites.” Discounts of $25 off a $100 purchase “get people’s attention,” says Dan Horne, associate professor of marketing at Providence College in Rhode Island. “The driving factor is they work.” Ted Bohnen, vice president of retail innovation for Structural Graphics, agrees. “Gift cards are tangible. They go in wallets with your credit cards and money,” says Bohnen, whose employer designs and manufactures interactive packaging and advertising materials. “You did not see retailers send out gift cards four years ago. But now people are comfortable with them.” Sak’s Fifth Avenue did that last month with a gift card in a direct mail piece. Shoppers who spent at least $450 could apply a $50 gift card toward their purchases. Expiration dates, although somewhat controversial (see letter, pp. 18), still serve as an impetus to get recipients to act. “Most retailers want consumers to use cards quickly for a given event,” Bohnen says. Staples uses a hybrid gift card/coupon to attract customers. The office supply store sends out multiple, dollars-off offers. Recipients typically have six weeks to redeem the card. For example, when openlocations, ing new locations retailer Ikea distributes gold envelopes to the first 2,500 people who come to the store. Inside is a card ranging in value from $10 to $250 or a buy one/get one free offer. “It helps create a celebratory atmosphere,” Ikea spokesperson Joseph Roth says of gift cards. “Our customers plan to buy items at Ikea anyway. It’s appropriate.” Meanwhile, Shindaiwa Inc., a commercial outdoor power equipment manufacturer, is doling out $20 gas gift cards with the purchase of select C4 equipment, such as hedge trimmers or its multipurpose tool, through June. It’s the company’s first gift card offer, which vendor SVM is handling. “With gas prices so high, we wanted to call attention to our good fuel economy machines,” explains Jay Larsen, Shindaiwa’s North America marketing manager. “There is a 10 May 2008 / WWW.PROMOMAGAZINE.COM / Promo http://WWW.PROMOMAGAZINE.COM

Table of Contents Feed for the Digital Edition of Promo - May 2008

Promo - May 2008 Contents Editor's Note Eyeballs All the Same... NBC Makes 'Law & Order' a Mobile Game Recession Rewards Comfort Virally Toaster on Wheels Commentary Ay Caramba! The 2008 Interactive Marketing Awards Winners How Bulletproof? Q&A: What a Ride Resource Center The Agency Center Blogging 101 Index of Advertisers

Promo - May 2008

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