Prime Time Crime
(Published in the Chilliwack Times week of Dec. 15, 2008)
Gift cards losing their shine
By John Martin
For many, the Christmas season is often a time of inevitable stress and annoyance. Gift buying, in particular, can be especially frustrating and tie up hours better spent elsewhere.
In recent times, this has been alleviated somewhat by the popularity of that ever-dependable standby: the gift certificate. Redeemable vouchers have become the ace in the hole for many of us, especially men. They're a Christmas lifeline for both the unimaginative and last minute shoppers. While they used to be seen as somewhat impersonal, gift cards have skyrocketed in popularity and have become the gift of choice for many. According to a National Retail Federation survey, almost 90 per cent of shoppers purchased two or more gifts cards during their 2007 Christmas shopping. Bookstores have been selling these for decades. But now you can buy gift cards from gas stations, coffee shops and just about anywhere else.
Though convenient and generally highly appreciated by recipients, they are a much less wise choice this Christmas than in previous years. Retailers are going to be particularly hard hit during this recession and for many, keeping the doors open will not be an option. Commercial bankruptcies are skyrocketing and things are going to get much worse before they get better. Many retailers are struggling just to make it through the Christmas season when they typically do their best business of the year; it's not uncommon for retailers to conduct 40 per cent of their annual trade over Christmas. No small number of them will have to take stock and consider their options shortly into the New Year. Many people holding gift certificates are going to find the doors locked when they go to redeem them in the coming months.
Bulk e-mails have been frantically circulating in recent weeks, warning people of retailers who are filing for bankruptcy and planning to close outlets. Some popular Canadian chain stores are going to be in serious trouble on account of their parent U.S. companies going under. It's worth noting that a retailer who declares bankruptcy may very well carry on business and be in a position to honour any and all gift cards--but it's still risky. And an assurance from a cashier or store manager that gift cards will be honoured no matter what happens is completely reckless and something they have no control over.
The scare began when Sharper Image Corp. filed for bankruptcy earlier in the year and ceased honouring previously purchased gift cards. Reports of impending bankruptcies at other well-known retailers followed and all of the sudden, the gift card didn't seem quite as attractive. People with wallets full of gift certificates could find themselves designated as "unsecured creditors" and be left holding a stack of worthless plastic shortly after Christmas.
Early indications are that many people will revive the long lost tradition of giving cash to those on their Christmas list. This will be a double whammy for retailers, as it will likely be spent on gas and groceries rather than clothes and gadgets.
Consumer advocates are advising people to do their homework before purchasing gift cards this Christmas and anyone who receives one or more of these on Dec. 25 might want to be at the front of the line to redeem them the next morning.
Fortunately, many of us are still easy to please and even easier to shop for. Just be sure it's single malt.
John Martin is a Criminologist at the University College of the Fraser Valley and can be contacted at John.Martin@ucfv.ca