Gift cards are one of the safest bets when it comes to holiday gifts, but they are not always surefire.
Maybe your grandma forgot you’re a vegetarian and gave you a gift card to Omaha Steaks. Or perhaps you don’t have an urgent need for more yoga pants so that Lululemon gift card starts collecting dust in your wallet.
Consumers looking to trade or sell their gift cards this year now have one more option. Target Corp. quietly began a gift card trade-in program in most of its stores last month. Knowing that customers will likely have unwanted gift cards after Christmas, the Minneapolis-based retailer will highlight the trade program in its upcoming Sunday circular.
In recent years, there has been a proliferation of gift card exchange websites. They pay cash for gift cards and then resell them at a discounted rate. As this marketplace boomed, retailers began looking for ways to leverage those networks to their benefit.
“We know guests sometimes have unwanted or unused gift cards and [we] want to give them a convenient option to put those unused dollars toward shopping at Target,” said Kristy Welker, a Target spokeswoman.
Here’s how the Target trade-in program works: Customers bring their gift cards to the mobile phone counter in the electronics department. There, a store employee will give them an offer for a lesser amount based on the resale value of that card. For example, a $100 Wal-Mart gift card can be exchanged for an $85 Target gift card, the company says. If the customer accepts the offer, he or she will be handed a Target gift card on the spot. Hundreds of cards from various brands are eligible for the program.
While it is convenient, Target’s offer may not necessarily be the best deal on the market. A $100 Wal-Mart gift card can be exchanged for a $93 check mailed to consumers through the gift card exchange site Cardpool.com, which is also a partner in Target’s program. Or they can get $85 to $90 for it through the site CardCash.com.
Target declined to say how much, if any, of the proceeds Target gets through the exchange. Welker emphasized that the main goal of the trade-in program is about convenience and instantaneous redemption.
Executives with Blackhawk Network, which owns Cardpool, noted that the exchange rate fluctuates over time based on the supply and demand for particular cards.
Teri Llach, Blackhawk’s chief marketing officer, noted that a company survey found that only 38 percent of consumers were aware of gift card exchanges, so there’s still a lot of room for growth. Cardpool generated $80 million in 2014 and has projected it will grow 40 to 50 percent this year.
“It’s still a young market,” she said. “The awareness of this capability is growing. So now retailers are saying, ‘Wait a minute, why am I not participating in this?’ ”
After Christmas last year, Wal-Mart offered a Web-based gift card trade-in program through a partnership with CardCash. That initiative lasted a few weeks, a Wal-Mart spokesman said. The retailer hasn’t said yet whether it will repeat the program this year.
In 2014, GameStop launched a similar trade-in program through Cardpool, and has since rolled it out to its stores as well.
Gift cards have been the most requested gift item during the holidays for the last nine years in a row, according to the National Retail Federation. Total spending on gift cards this shopping season was expected to reach $25.9 billion.
At the same time, Americans have let more than $44 billion in gift cards go unused since 2008, according to a study published last year by CardHub.
The Target trade-in program has a number of vendor partners. The employee who handles the exchange wears a black shirt, as opposed to the red shirts worn by Target employees, and is employed by an outside company called Market Source. That person also helps customers sign up for cellphone plans and handles Target’s cellphone and iPad trade-in program through another partner, Nextworth, also a partner in the gift card initiative.
The gift card program, which is slated to run year round, is available in about 1,500 of Target’s 1,800 stores.