Scott Rick, Ph.D.

Scott Rick Ph.D.

Retail Therapy

I Love You. Here’s a $25 Olive Garden Gift Card.

Gift cards are a convenient way to not be appreciated.

Posted Nov 29, 2013

In all likelihood, you will either give or receive a gift card this holiday season. Some of you may even give and receive the same gift card; I’ve often found that giving a $25 iTunes gift card is the best predictor of receiving a $25 iTunes gift card moments later. Indeed, according to a recent survey of over 9,000 consumers by the National Retail Foundation, about 80% of respondents planned to purchase at least one gift card in the upcoming holiday season. Understandably, the National Retail Foundation celebrates this surge in popularity for what they call “the most flexible and convenient of gifts” (cash enthusiasts may dispute that claim).

Gift cards are often critiqued as impersonal, but the thoughtfulness behind gift card purchases is unclear. Surely, many gift cards are given by people who do not want to devote much thought to the purchase. They may even be re-gifting a gift card that they themselves received earlier; the provenance of a gift card is murky. However, some gift card purchases must be thoughtfully made by people who just want to ensure that the recipient finds something they like. Some of us are lucky enough to have many people to shop for, and it is difficult to predict what will make everyone most happy. Guessing wrong is no fun for either the giver or the recipient (just ask my wife about the glittery purse I gave her a couple of years ago; or, better yet, don’t!). Aside from the potential waste created, an off-target gift could signal that the giver doesn’t understand the recipient. Gift cards help to manage that risk, provided that the gift card is purchased from a retailer the recipient likes. Of course, cash could be personalized too (for example, by attaching a note suggesting a possible use for the money), while still allowing the recipient maximum flexibility.

Givers of gift cards also run the risk of not receiving credit for the good that is ultimately purchased. When physical goods are given as gifts, the recipient may come to associate the good with the giver (e.g., “those nice mittens that Susie gave me”). The identity of gift card givers may be less easy to remember, however, particularly if multiple gift cards are received and set aside for a post-holidays shopping trip. Unlike old-fashioned paper gift certificates, there is no “from” area on gift cards on which to write the giver’s name. Certainly, I for one must confess that I’ve redeemed some gift cards with an imperfect recollection of where they came from.

Even if the identity of gift card givers is recalled correctly, psychologically they may be given credit for only a portion of a gift. Research by Rebecca White suggests that gift card recipients routinely apply them toward purchases that exceed the value of the gift card. While it is certainly pleasurable to watch large amounts of money get deducted from our total bill, the giver may only be given credit for providing a lucrative coupon, rather than a complete gift. Giving a $50 sweater as a gift may be viewed as more thoughtful than giving a $100 gift card that ultimately helps to offset a $150 purchase of three sweaters.

Whether a gift card is viewed as thoughtful or not ultimately depends on a host of factors, including the nature of the holiday (a Home Depot gift card makes more sense for Christmas than Valentine’s Day), the giver’s track record (a gift card from a serial gift card giver may be a source of amusement), and the nature of the relationship between the giver and recipient. At the very least, I think we can all agree that a gift card is more thoughtful than no gift at all.