Retailers hoping shoppers cash in gift cardsby Martin Moylan, Minnesota Public Radio
With Christmas over, Best Buy, Target and other retailers are eager for shoppers to redeem billions of dollars in gift cards they received as holiday presents.
Retailers generally do not book revenue from gift card sales until a card has been used to buy something or considerable time has passed.
A lot of revenue is at stake. The National Retail Federation estimated total spending on gift cards this holiday season would hit nearly $29 billion. The trade group said 81 percent of consumers purchased at least one card as a gift.
Best Buy spokeswoman Amy von Walter said the company introduced plastic gifts cards in 1995.
"We know they're a hugely popular item, not only for the gift giver but also the recipient," she said. "Many businesses will purchase Best Buy gift cards for their employees during the holidays."
Best Buy doesn't reveal how many gift cards it sells or their total value; the cards do not expire. But the retailer says a card that goes unredeemed for 24 months is unlikely ever to be redeemed.
In its most recent fiscal year, Best Buy booked $54 million in income for cards expected to go unredeemed. Best Buy had $392 million in unredeemed gift cards as of last November.
At Target Corp. the company does not yet have a count on its gift card sales this year, but spokesman Evan Miller said they are popular.
"In 2011, we sold nearly 40 million gift cards, Miller said. "And a little less than half of the cards were sold in November and December. Target guests typically load $35 on to a gift card."
That would equate to about $1.4 billion in sales for Target last year. The company's cards also do not expire, but Target says a small percentage are never redeemed. The retailer says the unredeemed cards don't provide a significant benefit to the company.
Target allows customers to send, receive and store gift cards on smartphones. To redeem an electronic gift card, a customer can use a phone to display a card's barcode, allowing a cashier to scan it.
In some states, retailers must remit the value of unredeemed cards to the state. That is not the case in Minnesota, however.