Gift cards have surged in popularity, with 8 in 10 of Canada's largest retailers offering gift cards to their customers during the 2005 holiday season according to a new study from Statistics Canada. In comparison only 53% offered gift cards in 2003.

The study, which examined the growing popularity of the cards in a wide range of large retailers*, indicates that offering gift cards equate to more business.

Stores that offered gift cards in 2003 had average sales of $11.8 million per store, which was more than twice the $5.0 million average amoung stores that did not offer the cards at the time. When the entire retail industry was taken into account researchers found that 55% of total sales in December 2005 came from stores offering gift cards.

While there is no estimate of the total value of annual gift card sales, the study found that retailers with the largest sales also tended to offer gift cards sooner.

Survey highlights:

• The biggest increase has been with 'trade groups' such as clothing stores, shoes and accessories stores, supermarkets, pharmacies and bookstores, who were also the slowest to introduce gift cards.
• Clothing stores saw the biggest increase in any of the six trade groups that were examined, with the number of stores offering cards almost doubling to 79% in 2005, up from 36% in 2003.
• Supermarkets also saw significant increases, up to 70% in 2005 from 57% in 2003.
• Home electronics and appliance stores are still significantly ahead of trade stores, with all large retailers offering gift cards.
• The vast majority of general merchandise stores also offer cards.

Even with the strong growth, gift cards are not popular in all retail segments. For example they were largely absent from used and recreational vehicle dealers and new car dealers. For these stores that did offer gift cards, their sales accounted for only about 4% of the business' total sales.

*  This group covers Canada's largest food, clothing, home furnishings, electronics, sporting goods, and general merchandise retailers (including department stores). Together these retailers represent about 35% of total annual retail sales, after excluding recreational and motor vehicle dealers.

Source: Statistics Canada

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