In just a few short years, gift cards have become the top holiday choice for presents.
Cards with a magnetic stripe encoded with a preset amount of money ready to be spent at a specific store have grown in popularity with teens and adults alike.
Dan Horne, a marketing professor at Providence College in Rhode Island, is nationally recognized as an authority on gift cards.
In an interview with The Times, Horne said a predicted slight dip in gift cards sales this year is not because of their waning popularity, but because of the soft economy.
"Consumers are still buying the cards," Horne said. "Cards will down about 5 percent this year, but retailing itself is off 3 to 5 percent. So, there is no real surprise there."
Gift cards are a $100 billion-a-year business. Once the domain of department stores, gift cards can now be purchased for movie theaters, pizza delivery and for downloading songs on the Internet. Gift card malls, a kiosk with a variety of branded cards, are now common in supermarkets and drug stores.
The Internet has been ripe with unfounded rumors about the volatility of gift cards with some retail companies facing financial difficulty.
The Retail Gift Card Association formed in October with a mission to create consumer-centered policies and procedures for members that will let consumers continue to confidently buy and use the cards.
Carman Wenkoff, co-president of the association, said the group formed to make sure gift cards remain a positive experience for consumers.
"We started forming before the first bankruptcy reports came out and since then have been talking about options for how we can make sure we are completely aligned with consumer advocacy groups," Wenkoff said.
Members of the association include well-known names such as Amazon, Applebee's, Best Buy, Home Depot, Kohl's, Limited Brands, Marriott, Nike and Subway.
While some retailers may reduce the number of outlets in 2009, Wenkoff believes most companies will be there for consumers.
"There has yet to be an instance when overnight a retailer has closed its doors and could not honor a gift card," Wenkoff said.
Horne said those receiving gift cards, especially younger consumers, are likely to redeem their cards quickly.
"When I've talked to the retailers, I've told them the positioning strategy is that there will be great values after Christmas. Whether they listen to me is up to them," Horne said. "Our research shows that consumers are really into value. You can promote value and certainly there will be more value in January when stuff will be even more on sale."
But Horne said consumers should be safe with trusted names.
"My advice to consumers is to be reasonably assured that you're going to buy a gift card from somebody who is in pretty good shape," he said.