Forget all the worrying about what to buy that special someone for the upcoming holiday season (even though we say diamonds every time). Apparently money, gift cards and similar “currency” are the favorite gift on the holiday wish list of most people. Research from the American Affluence Research Center (AARC) indicates that the wealthiest 10 percent of US households will spend $24 billion on such gifts this coming holiday season.

 

According to the AARC’s ongoing mood and spending plan tracker, the Millionaire Monitor, spending on gift cards alone will be about $5.6 billion, with cash and check giving topping out at $19.1 billion.

 

The monitor estimates that each of the affluent households in the survey (some 12 million US households with a minimum $1 million net worth) will spend an average of $470 on gift cards.

 

Cynically, gift cards are a good option for retailers to offer. As the AARC points out, they “lock in sales and revenue for the retailer without having to worry about some of the competitive challenges that gift shoppers often pursue.” There’s certainly far less work in selling a gift card worth $1,000 than a piece of jewelry of equal value, making it a much more efficient revenue-generating option.

 

In addition – and this is the bit the stores and not the consumers like – retailers can benefit from what is known as “breakage” – cards that are not fully redeemed or used. For example, a card worth $500 that is used on a pair of earrings worth only $350, or a card that is not used before the expiry date.

 

Further, giving a card for $500 in a store filled with beautiful jewelry is quite likely to encourage the recipient to spend over and above the value of the card they received, making it a very merry month for the retailer once the holiday season rush has died down.

 

And, just because consumers fall into the affluent category, it doesn’t mean that they don’t like a little incentive to sweeten the deal when making purchases for others. The Millionaire Monitor survey found that about a third of those questioned said they would spend more in total for holiday gift cards if they were offered a $10 card for themselves for every $50 in gift cards they purchased. So, for every $100 they spent on gift cards for others, for example, they would receive a $20 card for their own use.

 

In fact, such is the power of “free” that over 20 percent of respondents said they would spend more for gift cards at the stores that offered the $10 bonus reward for themselves. Creative jewelry retailers could easily take this concept and come up with an offer that makes everyone feel they are getting a great deal on their holiday shopping.

 

With predictions from the National Retail Federation (NRF) that sales will increase 3.7 percent to $630.7 billion — significantly higher than the 10-year average of 2.5 percent, this just might be a good holiday shopping season, and that really is the best gift of all.

 

Have a fabulous weekend.