Does Macy’s or Best Buy have a better approach to gift cards?


By all indications, gift cards are a booming business. The National Retail Federation’s (NRF) 2021 holiday survey found 56 percent of respondents wanting a gift card as a present, up from 54 percent in 2020 and the most requested holiday gift for the fifteenth straight year.
In 2020, NRF found gift givers planning to purchase between three and four gift cards, with overall gift card spend expected to reach $27.5 billion, or about 3.5 percent of overall holiday spending. The cards also support non-holiday occasions. Blackhawk Network found that they have been more popular as birthday presents.
At Macy’s, the only gift cards available are those linked back to purchases at the retailer. Best Buy, in contrast, offers not only its own gift cards but those for Macy’s, Amazon.com and more than 150 other retailers, restaurants and entertainment businesses.
Macy’s is not alone in its approach. Other department stores and retailers, including Gap, T.J. Maxx and Williams-Sonoma sell only their own gift cards.
Best Buy promotes a wide range of cards near cash registers in stores in addition to offering an extensive selection online. Options include gaming cards (Xbox, Roblox, Nintendo), travel cards (Delta Air Lines, Hotels.com, Uber), movie/music cards (Netflix, Spotify, AMC) as well as more than 60 restaurants and retailers, including a potential competitor in Amazon.
Big box chains, grocers, drug stores and c-stores are best known for selling a wide variety of gift cards.
Both Target and Walmart offer a wide range of third-party cards but have a limited selection of retailer cards for competitive reasons, refraining from selling cards from Amazon or Macy’s. Walmart doesn’t sell cards from Home Depot and Lowe’s, but Target does. In softlines, both sell Nordstrom gift cards, but Walmart also offers Gap, Saks, Foot Locker and DSW.
Costco only offers four retail gift cards beyond its own: Build-A-Bear, Fanatics, Instacart and Jiffy Lube.
Most grocers sell gift cards from Target and Amazon, despite being food competitors. In 2018, H-E-B decided to pull Amazon from its gift card mix. The Texas grocer said at the time, “H-E-B does not merchandise the Amazon gift card due to limited space in a competitive gift card set where we are offering more local gifting options per customer requests.”
- Earlier Start to Holiday Shopping Season Embraced by Consumers – National Retail Federation
- NRF says 2020 holiday sales grew 8.3 percent despite pandemic – National Retail Federation
- Do retailers need to jump on the e-gift card bandwagon? – RetailWire
- Consumers Plan to Spend More and Gift More This Holiday Season According to Blackhawk Network 2021 Holiday Forecast – Blackhawk Network
- Best Buy Gift Cards – Best Buy
- Target Gift Cards – Target
- Walmart Gift Cards – Walmart
- Costco Gift Cards – Costco
- Amazon Gift Cards Participating Retail Store – Amazon.com
- Kroger Gift Cards – Kroger
- H-E-B No Longer Sells Amazon Gift Cards – Facebook
DISCUSSION QUESTIONS: Would you encourage retailers to sell only their own gift cards, offer a curated mix or sell as many gift cards as possible? What’s your view on selling gift cards from a direct or peripheral competitor?
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13 Comments on "Does Macy’s or Best Buy have a better approach to gift cards?"
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VP of Strategy, Aptos
Chief Accelerant, Incendio
The more, the merrier! Since retailers get a fee for every gift card they sell, why wouldn’t they take advantage of the moment where they’ve captured the customer’s attention?
Director, Retail Strategy, CI&T
I would encourage retailers to sell a wide range of gift cards. Gift cards aren’t usually a trial moment for a new brand, they’re typically a gift for someone who’s already loyal to that brand. So offering a competitor’s card shouldn’t threaten your brand in the gift card space. The way the whole retail industry is going, competitors will need to embrace each other’s presence everywhere because all the world is a one-stop shop now with omnichannel capabilities. Brands fearing competition by being next to each other is an outdated perspective for a retailer to have.
Principal, KIZER & BENDER Speaking
Selling gift cards is a big money maker for retailers. Aside from the fact that the bearer usually spends more than the face value of the card, many shoppers require more than one trip to the store to spend it.
I’m with Macy’s: Sell only your own gift cards and keep that business. Why would a retailer knowingly send a customer to a competitor’s store to purchase something they could likely get from you?
Chief Customer Officer, Incisiv
If there is a direct correlation to the brand (e.g. gaming cards at Best Buy) it is smart to offer options like that to the consumer. We did a study on gift cards this year and while the segment is growing, there is a disconnect between retailers preferring legacy physical cards and consumers who want the ability to add gift cards to their digital wallets. The space is ripe for disruption – and just adding more and more cards from disparate retailers isn’t going to win in the end.
Retail Industry Strategy, Esri
I’ve participated in many a debate about this in my merchandising years. Customers clearly like the ability to buy gift cards from a number of retailers, restaurants and entertainment providers in one stop. At the same time, it somehow feels like not a great plan to send revenue to your competition, while they’re in your store. I remember a debate when my employer stopped selling the Amazon Kindle because of competitive issues. It seemed inconsistent that we still had Amazon gift cards at the check lanes. My recommendation is to offer a curated selection of gift cards that leave out direct competitors. In my experience, I think a bit of curating would also make these presentations easier for the customer to shop.
Managing Director, GlobalData
For Macy’s, selling gift cards that drive shoppers to competitors makes little sense. Though selling gift cards for restaurants and non-competing chains is somewhat more logical. Best Buy and specialty retailers have fewer direct competitors so the range of gift cards they can sell is much wider.
Senior Retail Writer
It depends on the store’s target audience and what the customer demand is. Retailers looking to be a one-stop shop can achieve that goal better by offering a broad selection of gift cards. Shoppers can pick up a forgotten birthday gift along with their normal shopping, or holiday shoppers can get most of their gifts from one store.
Gift cards take up such little floor or counter space, the cut retailers get for the sale makes it worthwhile.
For grocery and box stores, offering an array of gift cards makes sense. For Best Buy, I can see the gift cards being an add-on or impulse purchase. Like an iTunes gift card to go with new headphones or a Nintendo gift card to go with a new gaming console. However for specialty shops or higher-end stores, there’s not a real need to carry other retailers’ gift cards, let alone competitors.
Principal, KIZER & BENDER Speaking
Good point, Meaghan! Best Buy + iTunes makes sense. But Best Buy + Amazon? Nope.
Chief Marketing Officer, PerimeterX
CFO, Weisner Steel
I think the two approaches represent the evolution (devolution? … I’ll not repeat here my perpetual rant against them) of cards: originally one actually shopped at a specific retailer, but if they were unable to find what they wanted, the card was given in its stead, a placeholder, if you will, for the actual gift. Now that cards have become the (actually less useful) replacement for giving a check (i.e. a showing of how little effort one has put into the effort) the Best Buy approach makes more sense: retailers should sell what people want … however much
MissMr. Manners may disapprove.Principal, KIZER & BENDER Speaking
Selling customers your competitors’ gift cards because you want to sell … more gift cards? How does that help the store? Do yourself a favor and go to the National Retail Association study on gift card redemptions. Any retailer after reading that study will promote THEIR CARD rather than any competitor cards. I know I would!
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
Why would you want to sell the gift cards of direct or retail competitor? I realize the income potential of selling gift cards, but why competitors’ cards? Offer curated or complimentary gift cards, but not competitor gift cards.