Starbucks upbeat on record gift card sales on Christmas Eve

By Money Times

Dec 28, 2015 09:07 AM EST

Starbucks Corp is banking on gift card strategy to boost business volume this holiday season. The American Coffee company is expecting a record number of gift-card purchases on Christmas Eve. The gift-card business is propelling more traffic and loyalty to Starbucks cafes.

Considering its 2.5 million gift-card sales in the US and Canada last Christmas, Starbucks is anticipating further growth in the sales this festive season. Starbucks has turned the Starbucks Card to enlist new and repeat customers from the day one. 

Brian Riley, Executive Advisor and a gift-card expert at CEB, said: "Starbucks has pioneered the development in gift cards. They've gone beyond the gift card as a transaction device." CEB is a professional services firm in the US market.

According to a report by Market Watch, Starbucks loaded $5.1 billion onto cards in the US and Canada during October 2014 and September 2015. It's estimated that about 98 percent of money put on Starbucks cards is redeemed, according to Sanja Gould, a spokeswoman at Starbucks.

National Retail Federation says that gift card business has been successful holiday gift for nine years. The Federation reveals that 59 percent of consumers would buy one gift card this holiday season. 

Starbucks anticipates gift card sales to reach a record level on Christmas Eve as customers scramble for stocking stuffers before the holiday. It sold 2.5 million gift cards on December 24 in the US and Canada, as reported by USA Today. It's estimated that one in seven US adults purchased one gift card during last holiday season. This was an increase from one in eight in 2013. 

Starbucks gift-cards enable regular customers to get more rewards depending upon their spending and frequency of visits. CEB states that in 2014, the gift card sales in the US were $124 billion. The unredeemed cards account for 0.6 percent valuing $750 million. 

Riley forecasts that the gift card sales in the US are expected to be $130 billion this year. The unredeemed portion is marginally lower at 0.5 percent valuing $700 million.

Starbucks is selling $200 gift cards that have been encrusted with Swarovski. The crystal-encrusted gift cards are available with $50 worth of coffee loaded on it, according to report by Time. The limited-edition Starbucks Card is studded with deep blue crystals. It comes as part of 2015 Premium Card Collection. 

Starbucks is encouraging its customers to register for getting a Starbucks Card. "It'll protect customers' balance and offer rewards as well. The rewards increase with the frequency of use," said Gould. 

Over one-third of customers pays using Gift cards at Starbucks cafes in the US and Canada. The number of customers using My Starbucks Reward program in the US stands at over 10 million. 

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