For the person with everything, give the gift of plastic Gift cards

Forget tearing open gifts found under a Christmas tree and leaving shreds of paper and ribbon everywhere. More and more consumers now reach for letter openers to find gift cards.

The National Retail Federation predicts that consumers will buy nearly $25 billion worth of gift cards this year, an increase of about 34 percent from $18.5 billion in 2005.

Once thought of as impersonal, gift cards will show up under more trees this holiday season. These small pieces of plastic have become today’s flexible, safe and “can’t go wrong” gift item.

Some gift-givers and employers prefer giving cards because they are “safe” purchases that seem more personal than handing someone a wad of cash.

Gift for the picky

“I get a gift card for somebody who’s hard to shop for,” said Lesli Baker of Pleasanton. “People get me gift cards because I’m hard to shop for, and I’m picky.”

For retailers, the gift card boom has come with added benefits such as free money when consumers do not use the cards or extra revenues when shoppers spend more than the value of the card.

“People tend to treat themselves when they use a gift card; they buy a luxury item or a non-sale item,” said Chris Donnelly, a partner focusing on retail with Accenture, a consulting firm. “They also tend to spend more than the total value of a gift. In general, if you’re a retailer, those are both good things.”

Extending shopping season

Selling pricier or full-price goods means larger profits for retailers, but it also means an extended holiday season. Most holiday gift cards are used in January, Donnelly said, so retailers have to keep fresh merchandise in stock.

“Smarter retailers are going to take advantage of (the longer holiday season),” he said. “If someone really wants to treat themselves to a cashmere scarf after the holidays, they can probably sell a lot of those at full price.”

A recent survey of American consumers conducted by Accenture found that 72 percent of respondents have given or received gift cards, and about 36 percent prefer receiving gift cards over other gifts.

“If it’s from my mother-in-law, definitely a gift card,” Baker said. “From my niece, I want her to get me gifts. She’s trendy.”

Cards from stores such as Gap, Target and Nordstrom typically are worth their face value and will not lose value over time.

Gift cards issued by credit card companies such as Visa, MasterCard or American Express carry fees and lose value over time.

Sunvalley mall in Concord, for example, sells an American Express card that can be used at the center or any other shopping centers owned by its parent company, the Taubman Centers. The cards have a $2.50 fee when purchased and lose $2 per month if they are not used within 12 months.

Some cards go unused, and the funds return to the retailer or state governments who categorize them as unclaimed property.

The National Retail Federation reports that in 2005, the average gift card was worth $33.42.

Determining the right amount for a gift card can be tricky. Is $10 too little? Is $100 too much?

“The amount I spend depends on how important the person is to me,” said Michael High of Brentwood.

He said he often buys $50 gift cards. Another gift card buyer, Luis Almeyda of Walnut Creek, said his normal target price is $25. Baker said her cards are normally between $25 and $50. Her mom and in-laws are usually on the top end of the range.

Avoiding the guesswork

Almeyda said he started buying gift cards because it takes the guesswork out of finding the perfect item for someone. High agrees.

“I do buy people gifts when I’m in the mood to shop or I know exactly what they want,” High said.

Some retailers, such as Safeway, Longs Drugs and Nob Hill grocery stores, sell gift cards for other retailers on aisle displays near cash registers and on kiosks.

Pleasanton-based Safeway has deals with 200 other retailers ranging from Nordstrom and Sears to Olive Garden and McDonald’s, according to Safeway spokeswoman Teena Massingill.

She declined to provide specific numbers, but she said that sales from Safeway’s “Gift Card Mall” have grown every year since it was started in 2001; Safeway does receive a percentage of the sale.

Buying a gift card during a trip to the grocery store or drugstore makes buying gift cards even easier, shoppers said.

Pick right store, online option

Nordstrom, Target and Macy’s offer a virtual gift card that can be bought and used online, bypassing the need for a piece of plastic. Some cards, such as the ones offered by Starbucks, are used for gifts and as debit cards by regulars.

Choosing the right store for the right person also is important. Some shoppers prefer stores such as Target, Best Buy or Macy’s because they offer wide selections.

Baker, for example, said she would never buy someone a gift card from Wal-Mart because she does not like the merchandise there.

“I think a gift card is a very dull type of gift,” said Susana Scarborough of Oakland. “It shows no imagination. It’s like saying, ‘Well, I have to do this, but I don’t have time.'”