What Retailers Need to Know About Gift Cards

It’s called the season of giving. According to the numbers, it might more accurately be called the season of giving gift cards. It’s been almost two decades since the emergence of the pre-loaded plastic presents, and while sales peaked in the mid-2000s, CEB TowerGroup research shows that gift card sales still grew to $124 billion in 2014, a 5 percent increase over the previous year.

Despite their popularity, CardHub estimates that $44 billion in gift card value has gone unredeemed since 2008. It’s a confusing statistic for both retailers and consumers, as demand disagrees with actual spending. It’s also mutually ineffective: vendors don’t profit, and gift-givers’ money goes to waste.

So where does all that money go? And are gift cards still a good option for retailers and shoppers?