A Not So Secret...Secret
If you read the business section of any newspaper or watch any business show, you will see how retailers did last year. Turns out they did well, not great. That may be true, but if are you an Entrepreneur that owns a retail store, food store or card and gift store, the beginning of 2007 could be tough for you. I’m not saying to close up shop and go home, I’m just saying be ready.
All those gift cards that have been sold last year are not recorded as revenue until they are redeemed. Gift cards are rapidly becoming the number one gift for the holidays. All this adds up to more revenue for corporations that offer gift cards (they all do) and the few Entrepreneurs that take advantage of the gift card bonanza.
All the consumers I interviewed in the local malls, shopping centers and restaurants had received gift cards and plan on using them within the next couple of months. Another question I asked was, did you receive a gift card from any of your local businesses? Amazingly, the only gift cards a few of them received were from their local dry cleaner, auto mechanic, and carpet cleaning company. The gift cards were all for Starbucks, not their own company. Don’t get me wrong, it is alright to give a gift card from a popular and quality company like Starbucks, however, where are the gift cards from the local vendors?
It’s what the customer wants! Most of the people I spoke to love the gift card, both giving them and receiving them. It gives the recipient the ability to buy what they want, and it saves them time when searching for that grab bag gift or the gift for their employee or boss. A few very honest people said it is quick, easy and rarely “re-gifted.”
Industry research shows that the majority of gift cards are used to buy items that are more expensive than the value on the card; this means it is a way for the person redeeming the card receive a discount that someone else paid for… the person that purchased the card!
Gift card redeemers will often use their card to buy higher margin goods that are not on sale or being discounted through coupons. This allows for higher margin even if total revenue is the same of down.
Most Entrepreneurs are only offering coupons and discounts to attract customers in the first quarter, corporate America is offering coupons and discounts; however they are incorporating gift cards into the mix as well. So while Entrepreneurs pride themselves on understanding the customer and being able to act quickly to meet their customers’ needs, they are behind the eight ball on this one!
In a recent article on Mybizuniverse.com, we discussed how Entrepreneurs can get involved with gift cards. Why aren’t small Entrepreneurs offering gift cards and using it to kick start their 2007? I can tell you this, at the publishers meeting for this months release of Mybizuniverse.com, we all agreed that we need to investigate gift cards for us to offer by the middle of 2007… we want to do what others in the advertising, publication and seminar business don’t do (see Advice from Entrepreneurs - how to stand out in a crowded market)!
Let us know if you are seeing your January and February unit sales higher or lower than the last 1-3 years(the time gift cards have boomed). Let us know if you are thinking about implementing gift cards. Let us know if you think I’m totally off my rocker!
