Gift card use growing in Hawaii

An estimated $26.3 billion in gift card sales will provide a major boost in post-holiday revenue

Gift cards may well be the silver lining in what was expected to be cloudy holiday retail weather this year.

Hawaii's retailers reported an upward trend in gift card purchases this year compared to last year.

As consumers return to shops and malls to make exchanges or returns the day after Christmas, redemptions of gift cards and certificates is expected to extend well into January.

Consumers nationwide are expected to spend $26.3 billion on gift cards this holiday season, according to the National Retail Federation, compared to $24.8 billion last year. More than half of consumers polled said they intended to purchase the gift cards.

General Growth Properties reported gift-card purchases up 16 percent over last year at its Hawaii malls.

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Holiday gift cards took off in Hawaii as in the rest of the nation this season, becoming what could be the silver lining in this year's retail sales forecast.

Though local revenue numbers are not yet available, the word from store and mall managers is that gift card purchases were more popular than ever this season, and are expected to extend holiday-related spending well into the end of January.

Consumers are expected to return to malls to redeem gift cards at the same time they are returning or exchanging items.

Retailers usually count gift card purchases as part of their sales when they are redeemed and merchandise is exchanged, so the impact may not be tallied until January and February. What often happens is that the consumer ends up spending more than the gift card amount by shopping for other items as well.

Nationwide, gift card sales are expected to total $26.3 billion this holiday season, compared to $24.8 billion last year, according to the National Retail Federation. The average consumer is also expected to spend more on gift cards this year ($122.59) compared to last year ($116.51)

General Growth Properties saw its gift card purchases jump 16 percent above last year, according to spokesman Matt Derby. That's five percentage points higher than the 11 percent jump in gift card sales tallied year-over year in 2006.

The GGP gift cards -- available in denominations from $20 to $500 -- are accepted at most stores and restaurant at Ala Moana Center as well as Ward Centers, Windward Mall. Prince Kuhio Plaza on the Big Island, and at Whaler's Village and Queen Kaahumanu Center on Maui.

"A lot of people are buying gift cards because it's the gift of choice for Christmas," said Derby. "It's a convenient, last-minute gift which people can use at a majority of mall stores."

In its annual survey, the NRF found that 56.6 percent of consumers intended to buy gift cards or certificates this year, compared to 56.2 percent last year. Some 27.4 percent polled this year intended to buy at least two gift cards, and 17.8 percent expected to spend between $76 to $100 on gift cards.

"It is no secret why gift cards are the most popular items on consumers' shopping lists," said NRF president and CEO Tracy Mullin. "Many consumers pulled back on spending for themselves this year and are hoping to receive a gift card so they can purchase something they may have had their eye on for months."

The NRF projected only a four percent jump in sales this holiday season compared to last year, the slowest growth since 2002.

Many retail analysts and economists expected more sluggish holiday sales due to higher gas costs and the subprime mortgage crisis.

Despite the lukewarm predictions, malls in Hawaii seemed upbeat about the traffic this holiday season, and gift cards were one of the reasons.

Jonathan Kim, manager of Windward Mall, said traffic seemed higher this year according to retailers at the newly renovated mall.

"Overall, our sales were really good," said Kim.

General Growth Properties gift cards can be redeemed at any store that accepts American Express at Windward Mall. Kim said the mall is working on providing its own gift certificates through a bank machine.

Kahala Mall and Pearlridge Center, which are both managed by MMI Realty Services Inc., does not offer a centerwide gift card, but does offer gift certificates.

The gift certificate program was launched three years ago, according to Kelly Kauinana, Kahala Mall's marketing manager. Certificates can be purchased through an automated teller machine.

Kauinana said the popularity of the gift certificates seemed to grow this year at the two MMI-managed malls as well, particularly with last-minute shoppers.

"In general, I think people are more comfortable giving gift cards and certificates," she said.

Individual stores at malls, including national chains like Borders Books & Music, Starbucks, Wal-Mart and California Pizza Kitchen as well as local boutiques like Cinnamon Girl, also offer their own gift cards. More retailers are making the gift cards more personalized, some even allowing consumers to design their own.

Starbucks gift cards were phenomenal this year, according to Johnna Turbin, manager of Starbucks at Kahala Mall, estimating sales at least 15 to 20 percent higher than last year.

This year, the gift cards were available in a small, red mitten with stripes.

"People are redeeming them like crazy," said Turbin. "They spiked the day after Christmas. Generally, I think there are a lot of fans of our brand, and so everybody got Starbucks for Christmas."