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PUBLISHED: 4:52 PM on Wednesday, November 22, 2006
New features help boost sales of gift cards
They're red and white and smell like candy canes.

Scratch 'n' sniff peppermint gift cards are one of the innovations retailers are offering as the holiday season approaches.

Last year, gift-card sales during the November-December period increased 20 percent, to $18.5 billion, according to data from MarketResearch.com.

A Consumer Reports poll found that 60 percent of Americans plan to purchase a card this holiday season.

"They aren't just a piece of plastic anymore," said Bob Skiba, vice president of Comdata, which provides gift cards to 650 retailers. "Today, there are themed cards, puppet cards and a whole host of products to make them more personal."

Electronic gift cards emerged in the late 1990s, replacing paper certificates, Skiba said, which were cumbersome and prone to fraud.

The trend started with major chains such as Target and J.C. Penney. Now smaller, regional merchants and restaurants have caught on.

"It's amazing how many people buy our gift cards," said Craig Gualtiere, owner of a coffee shop. He switched from hand-written gift certificates to an electronic gift card four years ago. Sales have soared.

"We've doubled our gift sales," he said. "Instead of cash bonuses, a lot of employers now prefer to give gift cards."

Skiba said the business-to-business segment of gift cards is up dramatically. "Instead of getting a calendar from your insurance company, you're more likely to get a Starbucks gift card," he said.

Gift-card malls - kiosks outfitted with cards from various retailers - also are boosting sales.

After launching its gift card program last Christmas, some supermarkets intend to beef up its gift card offerings this year, spokesman Owens said.

"It was a big success, so we plan to promote gift cards heavily this year," he said. Some supermarkets sell dozens of gift cards, from upscale department store Nordstrom to low-cost carrier retailer Old Navy.

"We believe the cards allow guests to do one-stop Christmas shopping," Owens said.

Skiba said women are the driving force behind gift-card sales.

"Female-friendly cards are the next big phase. Women like gift cards because they are tremendously efficient."

From a home computer, shoppers can go to such Web sites as American Greetings to create their own cards, complete with photos and personal messages.

And scents are popular, Levery said.

"We did an orchid-smelling gift card for Mother's Day," Levery said. "It sold very well."


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