Dim Outlook for Holiday Gift Cards Sales

The outlook for spending on gift cards is going the way of forecasts for the upcoming holiday season: not great.

Despite word that gift card sales had increased in the six months leading up to April, sales are projected to stay flat at $24.9 billion and decrease by 5%, according to Archstone Consulting’s 2009 Gift Card Trend Report.

The average value of cards is down by $6, or 11.5% to $46 and people are buying cards that can be used for necessities, such as big-box retailers, restaurants and department stores, reflecting the ongoing economic worries many consumers are experiencing.

Archstone recently forecasted that this year’s holiday retail sales will decline by 1.0% compared with the 2008 holiday season, representing the first back to back decline in holiday retail sales in the last four decades, a somber reflection of continued challenging economic times, Archstone said.

“Gift cards are still the gift of choice among consumers, but gift card purchases reflect the challenging economic times; values per card are down, and the focus (similar to last year) is on the pragmatic not frivolous,” Dave Sievers, a principal at Archstone Consulting, said in a release.