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The Gift Card ConundrumDecember 26, 2007January is the big month for gift card redemption so I became intrigued when I saw this tidbit in a December 20 Seattle Times article: “According to Consumer Reports, more than a quarter of gift-card recipients don't use all of them. About $8 billion went unredeemed last year, TowerGroup estimates, which was almost 10 percent of the amount given.” That’s great news for retailers. That’s bad news for manufacturers. Why? It’s because when manufacturers read the figures for holiday retail purchases, they need to factor out $8 billion dollars that will never make its way to them. Think about it. Someone buys a gift card and the recipient fails to use it. That means that it was never exchanged for a product. If not exchanged for a product, the retailer banks the money as 100% profit because it was never turned into merchandise. If not turned into merchandise then a manufacturer never gets their share of those dollars. So, what can be done? Here are a few ideas:
What are your thoughts? Posted by Richard Gottlieb on December 26, 2007 | Comments (1)
December 26, 2007
In response to: The Gift Card Conundrum Joe Mitchell commented: I'm not sure exactly why manufacturers should be able to lay claim to this money as "their share of those dollars." It's sorta like saying that people spend billions of dollars on gas each year, but grocery stores don't get a cut.
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