Paper or plastic? No, not your grocery bag - your gift certificate.
Retailers in growing numbers are starting to replace those seemingly unchanging paper gift vouchers that look like oversize checks with plastic, credit card-size gift certificates that function much like debit cards."As strange as it sounds, people associate money more with plastic than with paper because of the credit environment we're in now," said Roxanne Kosanda, who is in charge of gift cards and other customer programs for Neiman Marcus.
The high-end, Dallas-based retailer became one of the first stores to offer a plastic card instead of a paper certificate back in the fall of 1994. Since then, other stores have picked up on the idea, some adding various features such as allowing customers to reload, or add to, the card or turning the cards into collectibles.
"It has virtually made the paper certificate obsolete," Kosanda said. "The old paper certificates were almost like bonds that you would buy from a stockbroker and keep in your drawers for years. The cards are much more fun."
Blockbuster Video, Kmart, Rite-Aid and many other retailers already have the gift card, and several major stores are planning the switch soon. Old Navy introduced its gift card at the beginning of the month, while the Gap plans to offer one in early October.
Retailers say the plastic gift card is more convenient than paper certificates.
"It certainly gives us a much more exciting product to market as opposed to a paper gift certificate," said Sheila Field, senior vice president of marketing and promotions at Macy's. "It's credit-card size, so it's easier for customers to manage in their wallets. It doesn't get lost or crumpled up."
In addition to convenience, stores say the cards offer shoppers more options because the amount of purchase is debited at the register, and the customer can reuse the card, receive cash back or, in some cases, add money for future purchases. It functions similarly to a debit card but can be used only at that store.
For the Gap, the ability to use and reload the card at any of its stores nationwide is a big plus. "If a parent is sending a child off to college, they may want to make a purchase of a gift card because they can load it as a parent in Los Angeles for a student in college in Pennsylvania," said Gap spokeswoman Rebecca Weill.
Stanley W. Anderson, president of Anderson & Associates, a Colorado consulting firm that tracks smart cards, said the cards have the potential to be used for more than just simple transactions.
For example, he said, retailers can use their computer systems to track how the money is spent. "Once you capture that, the question is what you do with this information," he said. The gift card is not considered as valuable as discount, or "loyalty," cards, such as those offered by some grocery stores, because they contain no personal information about the recipient.
Many companies that have switched to plastic say cards have helped increase sales. Though they have no specific figures, they say the number of gift cards sold has increased, and the card recipients often spend more than the face value of the card. Many companies are planning to do away with the paper option.
Neiman Marcus' Kosanda attributes much of the cards' popularity to their design and said people were starting to collect them much as they do telephone cards. The company offers about 18 versions of the cards each year, including holiday and special occasion cards.
Blockbuster also is going the collectible route. The Dallas-based video giant, which started offering gift cards in late 1996, reported that the popularity of the cards had caused gift certificate sales to double in the fourth quarter of 1997. The sales are expected to remain strong throughout 1998.
In June, the company introduced a line of cards featuring films from the American Film Institute's list of the 100 best American films of all times, but Blockbuster is really banking on the debut of four "Titanic" gift cards timed with the film's video release Sept. 1.
The cards will be released in limited numbers to maintain their collectible status.