Posted on: Tuesday, December 7, 2004

Trendy to accessorize gift cards

By Mike Barbaro
Washington Post

Blanketing the checkout aisle this holiday season: the guilt-free gift card.

Best Buy is rolling out a card that plays movie previews. Barnes & Noble is pairing one with a set of stone bookends. And the Container Store is offering an entire line of decorative gift-card holders.

From department stores to discounters, retailers are using innovative technology and clever packaging to give gift cards a more giftlike form.

The goal: to make shoppers feel good about giving the gift of plastic — a present that, despite its popularity, has yet to shed its reputation as an unimaginative substitute for a traditional present, industry analysts say.

Gone, for many retailers, are the days of a simple plastic card presented in a simple paper envelope.

"That wasn't always enough for consumers who are hesitant to give a gift card," said David Gaston, president of Chicago-based Gaston Advertising Inc., which helps retailers design gift-card programs. "People want to make an impact with presentation."

Gift cards are hardly hurting for customers. U.S. consumers are expected to spend $17.3 billion on gift cards this holiday season, up $100 million from last year, according to the National Retail Federation, a Washington-based retail trade group.

Intense competition for consumers' gift-card dollars is spurring this year's innovation. With credit card companies, malls and even restaurants now offering gift cards, retailers say a boring card is a big risk. A smattering of options during Christmases past has now mushroomed across the industry.

"Having the right assortment is very important," said Anne Pratt, director of gift-card services at Best Buy.

Shoppers say they want gift cards to pack more punch. Alexandria, Va., resident Kathy Smarrella, 37, "hates" giving members of her family a gift card in an envelope. "It doesn't seem to involve any thought," she said.

So like many other gift-card givers, Smarrella discovered her own fix — packing the card inside a big box or affixing it to a traditional gift. "It means more to people that way," she said.

Retailers are doing the same, creating a trend.

Godiva created a four-piece box of chocolates with a slot, tucked beneath the lid, designed to hold a gift card. The chocolates are sold separately from the gift card (for about $5), but the idea has caught on.

J.C. Penney this year rolled out a series of stuffed animals, each designed to hold a gift card ($1.99 with a gift card over $10). The Container Store this year introduced a variety of gift-card holders, priced from $1.79 to $4.99. There is the Polka Dot Gift Card Box, a Perforated Gift Card Pouch and Mesh Gift Card Box. Audrey Robertson, a Container Store spokeswoman, called the new line a chance "to further personalize a gift card."

Why do gift cards — which are, after all, just cash loaded into a piece of plastic — suddenly require so much personalization?

Linda Dunlap, chairwoman of the department of psychology at Marist College in Poughkeepsie, N.Y., said gift givers want gift recipients to remember their gesture. Trouble is, when the gift is a gift card alone, the money runs out and the card is tossed.

But when the gift card comes with, say, a stuffed animal, there is a "constant reminder that a gift was given," Dunlap said.

That's part of the logic behind a pricey new Barnes & Noble gift-card package. The store is offering a new $1,000 card. It comes with a pair of stone bookends, each etched with an image of Shakespeare, all delivered in a leather box with satin lining.

"Would you want to give someone $1,000 cash or this?" asked Marie Toulantis, chief executive of Barnes & Noble.com. "This is a much nicer alternative."

Not all of this year's gift-card innovation is focused on packaging. Best Buy and Target say they have turned the card itself into an interactive toy.

Both retailers have a gift-card CD-ROM. Like traditional gift cards, they can be swiped at a cash register, but when placed in a computer, they launch video games and movie clips.

Another Target gift card has a sound chip. When the SpongeBob SquarePants gift card is squeezed, the Nickelodeon cartoon character begins to laugh — loudly.