Curious about what’s in store for merchant-branded gift card sales this holiday season? Read on for details about year-to-date gift card sales trends and First Data’s forecast for the 2009 holidays. In addition, discover a few good ways to maximize your holiday gift card sales and some expected trends for merchant gift cards this holiday season.

The current economic downturn and the associated drop in consumer spending continue to pose challenges to merchants’ gift card programs. Gift cards remain very popular items; however, most merchants have experienced year-over-year declines in gift card activations through the first nine months of the year.

Gift card transaction data dating back to December 2007 suggests that sales of holiday merchant branded gift cards will increase slightly in 2009. Although year-to-date sales are down, the remainder of 2009 will be compared against months in 2008 when retailers absorbed the shock of the financial market meltdown that occurred in mid-September 2008 (catalyzed by the Lehman Brothers’ bankruptcy). In 2008, year-over-year comparable gift card sales were up through the first three quarters of 2008, and then declined precipitously during the holiday season. First Data does not expect a similar disruption in gift card sales this year. Rather, we anticipate a more normal increase in holiday gift card sales and forecast that sales of holiday merchant branded gift cards will be flat or up by up to 5 percent in 2009. Additional information that factors into our forecast:

  • Retail sales picked up noticeably in September, according to the Federal Reserve’s recent survey of economic conditions.
  • With merchants slashing inventories:
    • Fewer merchandise choices will make gift cards a more appealing alternative.
    • Consumers will likely face more out-of-stock situations, which often result in gift card sales.
    • Gift cards will experience less competition from heavily discounted merchandise.