Gift cards opt small - Westfair Communications

Richard Moskowitz is giving some free advice with the gift cards his “kitschy kouture” store Knoyzz is selling this year ”“ don”™t wait too long after the holidays to redeem them, because the most original stock on his shelves may have been snapped up by someone else.

In mid-November, the National Retail Federation released survey results showing that the 2007 holiday shopping season was off to a slow start ”“ with gift cards possibly to blame.

“Because gift cards are never out of stock, consumers feel that they can wait until the last minute to start shopping,” said Phil Rist, vice president of BIGresearch, which conducted the NRF survey. “Retailers may continue to wrestle with the best ways to bring people into the stores early next year.”

Knoyzz started off with gift certificates in 2003 at its first location in Rye Brook, N.Y. By the time Knoyzz expanded to Westport two years later, it was selling a gift card to which clerks had to manually affix a white strip detailing the card”™s balance.

Last year, however, the company purchased an Intuit Inc. module that works with the company”™s QuickBooks software used by Knoyzz.

Knoyzz now offers standard-issue gift cards for sale online and at its stores, which include locations in New Canaan, Mount Kisco, N.Y. and Glastonbury, Conn.

“While smaller, independent retailers have been slower to adopt gift cards because of point-of-sale integration efforts, these retailers are increasingly making prepaid gift cards available to meet growing consumer demand,” said Stephen Parento, vice president of global prepaid product management at Purchase, N.Y.-based MasterCard Worldwide.

It is becoming relatively inexpensive for smaller retailers to set up such programs, said Rich Kabobjian, who heads Deloitte & Touche L.L.P.”™s consumer products practice in the Tri-state area.

Still, proprietors appear to agree that the segment has had a relatively small impact on their business, with Kabobjian suggesting that is because independent chains do not offer the same multitude of locations as big-box chains, who can sell a card in Connecticut that can be redeemed at a California store, and vice versa.

“Obviously they are limited in terms of their ability to offer gift cards because the (gift) recipient might not know of that particular spot,” Kabobjian said.

What”™s more, independent stores are less likely to win space on carousels sprouting up in chains like CVS that offer a multitude of cards from different retailers, said Dave Sievers, principal and practice leader for the consumer-products practice at Stamford-based Archstone Consulting.

In three years offering gift cards, sister department stores Mitchell”™s of Westport and Richard”™s of Greenwich have not experienced any more customer interest in the cards than what that generated for their gift-certificate program, according to Russ Mitchell, co-president of the company.

“It”™s a growing business,” Mitchell said of the cards. “It hasn”™t been dominant business.”

Big chains might begin to see the same consumer trend. BIGResearch data suggest that after a 34 percent lift between 2005 and 2006, gift-card purchases will increase a more modest 6 percent this holiday season.

With gift cards no longer considered cutting edge, major retailers are vying for an added edge. Â Circuit City may have been the first U.S. retailer to offer a gift “card” containing entertainment content ”“ a DVD-ROM the company distributed last year that in addition to storing monetary credit toward purchases, also had including a videogame, music, a movie trailer and ads. Home Depot followed suit with a gift disc containing home-improvement tips.

Don”™t discount the possibility of independent shops following suit.

“Smaller retailers are generally very entrepreneurial and have a good feel for their business,” said Dave Sievers, principal and practice leader for Archstone”™s consumer products practice. “The technology being relatively cheap, you see it proliferating and being used in a pretty creative manner.”

In the meantime, Knoyzz”™s Moskowitz suggests an alternative to the gift card, which some see as an impersonal gift.

“A lot of people like to shop that way, but there are a lot of people in our market that like to open a box,” he said.