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Report: Retailers More Likely to Offer Incentivized Gift Cards Over Holiday Discounts

According to a survey by Bankrate, most people would prefer to receive a real gift this holiday season, rather than gift cards. But even so, Mercator Advisory Group predicted in a report this week that more and more retailers will be offering gift cards and gift card incentives rather than discounts this holiday season.

The reason, in part, may be the fact that in most surveys, more than 50% of consumers say they will give at least one of the closed-loop cards as a gift this year.

The amount spent on gift cards this season will total $48.3 billion between Nov. 1 and the end of the year, Mercator said, a 3% improvement from the $46.9 billion spent last year. By comparison, in 2014 consumers spent an estimated $51.5 billion, the most ever.

Of that total for this season, Mercator estimated that 10% to 15% of that total will be digital gift certificates, rather than tangible plastic a card.

“Retailers are expecting that shoppers will be in a buying mood, and Mercator expects that the growth in general sales will be accompanied by growth in gift card loads,” wrote Mercator analyst Ben Jackson.

One reason for the predicted uptick is the trend of using gift cards in order to create more visits and thus spend more money. The theory is that offering a discount inspires only one visit. But by offering gift card incentives, the visit total doubles — once during the purchase of the card and once by the recipient to spend it.

According to Investopedia, those who do use the gift cards spend 20% more than the value on the card, on average. Consumer Reports and CBS also reported that gift card holders are twice as likely to pay full price for an item.

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