By DAVID KAPLAN

Copyright 2007 Houston Chronicle

How big is the gift card boom?

One indicator: Wal-Mart is offering “express lanes” exclusively for holiday gift card buying.

And another: Gift cards keep getting spiffier. They can light up, play music and be personalized with family photos. They also can come inside an imaginatively designed envelope, frame or Christmas stocking. One online company packages gift cards with Christmas tree ornaments.

So it may not be a surprise that in a recent Deloitte poll, 39 percent of consumers said they’d prefer receiving gift cards over merchandise.

“This holiday more than ever, gift cards are going to be a big, big deal,” said Love Goel, CEO of Growth Ventures Group and a former top executive at Federated Department Stores.

Retailers, too, are wild about gift cards.

A large chunk of gift card recipients spend more than the value of their card when they are in the store, and in other instances, the recipient never uses the card, and the retailer just keeps the money.

Marketing tool, too

Also a gift card is a guarantee that two people will walk in their store: the card buyer and its recipient. Gift cards also serve as marketing tools because consumers carry a retailer’s brand in their wallets.Retailers also can track data from the card’s magnetic strip.

Younger people, in their teens and 20s, actually prefer getting gift cards, Goel said.

“They’re a lot more practical bunch than we ever were,” he said.

The stigma associated with gift cards is vanishing, Goel said, with fewer people feeling that giving one is thoughtless.

A survey of more than 14,000 people commissioned by audit and consulting firm Deloitte found that 69 percent of consumers plan to buy at least one gift card this year, compared with 66 percent last year.

A report released last month by the International Council of Shopping Centers concluded that the “most significant story” in holiday spending for 2007 is gift cards, with nearly one in five holiday gift dollars going into purchasing them.

Apparel is still the category leader for holiday gift buying, followed by the combined category of music, CDs and DVDs, while gift cards rank third.

Gift card sales are expected to total more than $26 billion this holiday season, up more than $1 billion from last year, according to a BigResearch survey commissioned by the National Retail Federation. In 2003, holiday gift card sales totaled about $17 billion.

More and more retailers aim to put the gift in gift cards by making them attractive or amusing.

Target aims to make its gift cards a “fun gift on their own,” company spokeswoman Anne Rodgers said. The retailer is offering gift cards that can light up or make noise.

There is no extra charge for fancier cards, she said.

Accessorizing

This year, giftcertificates.com is offering accessories with gift cards. A customer can order a gift card that comes with a tree ornament. The card and ornament arrive packaged and wrapped, said Dan Chicoine, giftcertificates.com director of communications.Personalizing gift cards, either the card itself, or the greeting card that accompanies the gift card, with family photos is a major industry trend, he noted.

Wal-Mart and Borders are among the retailers offering customized gift cards with personal photos.

Borders customers can go online and choose from more than 100 pre-designed greeting cards that will be used to hold a gift card.

By offering so many options, Borders hopes to make gift card giving more personal, said Kolleen O’Meara, a company spokeswoman.

Drug and grocery chains often carry a wide array of gift cards. Kroger, which offers many cards — including those from Best Buy, Chili’s and Barnes & Noble — charges no extra fees to customers for carrying the cards from retailers in its stores.

In many instances, a gift card from a retailer does not carry a fee or deplete in value over time. Consumers are advised, however, to read the fine print before purchasing cards.

The best gift card deals are generally those issued by an individual retailer, noted Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment banking firm in New York City. When a financial institution offers a gift card, it more likely carries stipulations and fees, he said.

An increasingly popular kind of gift card is one that can be used across a variety of stores, Goel said. Many banks and malls offer them, although those often come with fees.

The American Express gift card, for example, has a fee of $3.95.

Easier on shopping

University of Houston student Laura Bobrick likes giving gift cards because she’s always crunched for time, and they make it easy to get her shopping done.She enjoys receiving them, too, because she gets to pick out exactly what she wants, although sometimes it makes it seem like the gift was rushed, she said.

“A little $10 gift card is a great stocking stuffer, but not a primary gift,” said Christa Hartman, an account manager for KOVE-FM.

The gift card is a modern version of something that’s been around for decades: the paper gift certificate.

And at Variety Fair 5&10 in Rice Village, they still offer them. A gift certificate is just as good as a plastic gift card, maintained Cathy Klinger Irby, owner of the old-fashioned store.

When a person spends less than the value of his or her Variety Fair gift certificate, Irby writes the balance on the certificate and gives it back.

And, she said, “We can reload it by writing another gift certificate.”

david.kaplan@chron.com