In the Cards

“B e prepared” is more than a Boy Scout motto: It is also a mantra that retailers need to pay attention to as they get ready for the oncoming holiday season. And nowhere is that more important than with gift cards.

Gift cards are a growing part of most retailers’ holiday business. What was a $120 billion business last year is expected to grow to some $140 billion by 2016, according to CEB TowerGroup research. “It varies based on the business you’re in, but it is not unusual for as much 50 percent of some retailers’ business in the fourth quarter to come from gift cards,” says Ben Kaplan, president and CEO of digital gifting and incentive platform CashStar.

It’s not just big retail chains that are relying on gift card trade: Many mid-size and small businesses are finding products in the market that allow them to offer gift cards.

Still, there are several new trends in the gift card business that retailers need to be aware of and prepare for if they choose to participate. The most obvious trend for this year is the growth of digital cards, which are stored in consumers’ computers or mobile phones and can be used to make online or in-store purchases.