Ominous Signs for Gift Card Tuesday

We all know about Black Friday -- the day after Thanksgiving where people finally buy enough to put businesses in "the black." In recent years we have had Cyber Monday (the Monday following Thanksgiving in which people make most of their holiday online purchases) and I have been talking about Gift Card Tuesday both on the radio and online.

On the first Tuesday of February 2009, retailers will announce how much they made from gift cards sold in November of this year. Companies don't know based on the cards sold, ironically, but from the purchases that comes from the cards. Gift Card Tuesday will not be very pretty this time I am afraid.

This is due to several reasons. The first reason is obvious -- spending has reached a new low for consumers on this holiday season. People are extremely fearful about their finances and are reducing costs at every opportunity.

A second reason is closely associated with the first and that is the concern about the large number of retail businesses that are going under. There is sense that many more will go under right after Christmas and people will be stuck with cards that have little to no value. What could keep these companies in business -- an influx of new customers buying cards -- may not happen because consumers believe these business may become history. One of those interesting paradoxes of business. Because of this paradox, many more businesses may join the ranks of Circuit City (see video above) that are now out of business.

With the many other more urgent and pressing headlines, we haven't seen much about the economic impact of gift cards lately. I am sure we will in February.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Expect a New "Benchmark" Day: Gift Card Tuesday

Most people are familiar with Black Friday (the Friday after Thanksgiving when retailers finally go into the black because of the huge Christmas sales) and Cyber Monday (the Monday following Thanksgiving in which people make most of their holiday online purchases), now get ready for "Gift Card Tuesday." Tuesday was the day that I first heard reports of the impact all the gift cards sold in November was having on the economy (stores report the dollars in cards redeemed, not purchased). Those results were huge and actually turned the financial picture around for several retailers. This day was chosen by me because that is when I started to see stories on the impact; the economy watchers may connect the gift card impact to another day of the week. Regardless, this day will become huge in sizing up the economy's performance.

For decades the only measure of holiday sales that mattered was Black Friday. With the advent of the Internet we have seen the rapid rise of Cyber Monday. Gift Cards is now the new major player. Over time I believe gift cards are going to become the biggest factor, followed by Cyber Monday (with many purchases paid for with those cards) and then Black Friday. The Internet will continue to turn the economy -- and the world -- upside down.