Gift Cards, why stores want you to buy them

We got a scoop from that Apple was going to be rolling out all new gift cards and different colors moving to solid silver and gold and more. Perhaps this was a marketing idea to somehow make the gift cards seem more attractive by attributing qualities to them that trick the mind into believing that the cards are more valuable than they really are. After all, the sex appeal of our financial world is driven by buying power rather than real capital. So it got me thinking, about the question “Why should anyone try so hard to sell gift cards?”

My first line of thinking is that companies must want the ability to enable their clients to make purchases who are less capable or lack the financial power to buy something through their own channels. It seemed plausible and after speaking to a few friends in retail they confirmed the idea. But over the last four years or so, gift cards have become rampant. I realized that my initial belief couldn’t possibly be encompassing enough to cover all of the different stores that are making pushes into gift cards. So I looked up some of the primary advantages and what I found will make you rethink your holiday shopping experience. Below are the advantages for corporations:

1.  You enable clients to remain loyal to your brand by allowing them to share it and bring others in who may continue (because of their experience) supporting your brand.

2. Gift cards are an easy way to collect money from clients without necessarily having to give anything back in return. The company will make money immediately once you buy the gift cards, giving them the capital and buying power they seek to gain momentum. But you on the other hand may never fulfill your end of the transaction in choosing a product or selection and that give card may sit forever unused.

3. You’re actually giving twice the money to the store you’re buying from. How could this be? Because studies have shown that clients who receive gift cards, are likely to spend double that amount since they already have a headstart on covering their costs during their initial decision making process. For example if you give me a gift card to Best Buy for $100, I’m probably not going to use it on CDs or Video games, I’ll look at the gift card as an opportunity to bring higher priced items closer to my financial ball park. So I might look at a PS4 that I could snag by just throwing in another $150 or $250 of my own money making the decision a great investment. The real winner is the store however because you’re still buying the products at retail price, while somebody is basically helping you split the cost of the total. It simply works, and I’ve discovered that that’st the number one reason that gift cards are popular. Keep this in mind next time you’re shopping around during this holiday season.

The real question now is, can you predict the future of gift cards in consideration of mobile payment solutions like Apple Pay? Are we moving to a fully digital currency?

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Source: Macrumors