"Bad Sign: Shoppers use gift cards for groceries"

[CajunDixie]

If you want to look for the silver lining, it can mean that at least people have the common sense to buy necessities like food in tight times before buying XBox games. That people don't have their heads so deep in the sand that they'll spend their way into foreclosure - that they are TRYING.

While it sucks for WalMart that people aren't using their gift card for cute baby clothes and instead buying diapers, it is a hopeful sign that we haven't slipped so far into lala land that we won't get ourselves out. We CAN as a nation, take a pass on the smelly candles.

Too bad the people that come into my office for assistance don't take a pass on cigarettes, alcohol, cell phones, internet, cable/satellite TV, morning coffees from the local gas station....... Trust me there are still tons of people with an "entitlement" type attitude that don't want to give up their luxuries in order to pay their rent or utilities. They also love to complain about the local churches not helping them even though they don't attend church let alone step inside one unless they want a handout. Since when is it law that churches have to help the so-called poor people pay their rent? As for food the food pantry next door is very busy when they are open and most likely hurting for donations themselves.

 

[sk!mom]

I'm sure that this is happening more with this economy. Although, I must say, I do this at Wal Mart every Christmas. PTA gives all teachers on my campus a Wal Mart gift card. I always go to Wal Mart and buy groceries.

 

[TenThousandVolts]

This is really interesting to me. I usually give my nieces and nephews who are young adults (19-25) GCs to iTUNES, Starbucks, & Borders. This year I know that they each have had more financial struggles than in the past so I opted to give WalMart and Target cards instead- that way they could buy music or electronics if they wanted to- OR they could opt for something more of a "need"- like socks or groceries. I got a $100 Target GC as a gift and I spent it on medication for my kids. Not that I HAD to, but that is how it worked out.

 

[lts862]

Originally Posted by DVCLiz
That's a completely different program, and it's not tied to how major retailers can track their gift card users.

I agree, it's a good fundraiser!!!

FWIW, I'm not talking about "buying" giftcards through your schools (is that called the scripts program). I'm talking about reloading and reusing giftcards that are tracked and have some percentage donated by the grocer supplying the card.

My bad. I WAS talking about the SCRIP program. So these cards, although they look and spend exactly like gift cards are tracked differently? Interesting! Maybe the bar code/number on the card differntiates them?

 

[HunnyPots]

I always use them for gas or groceries. I don't buy wal mart clothes, home decor items, or jewelry (I don't buy jewelry at all) so what's left to spend it on?

 

[ticktock]

Too bad the people that come into my office for assistance don't take a pass on cigarettes, alcohol, cell phones, internet, cable/satellite TV, morning coffees from the local gas station....... Trust me there are still tons of people with an "entitlement" type attitude that don't want to give up their luxuries in order to pay their rent or utilities. They also love to complain about the local churches not helping them even though they don't attend church let alone step inside one unless they want a handout. Since when is it law that churches have to help the so-called poor people pay their rent? As for food the food pantry next door is very busy when they are open and most likely hurting for donations themselves.

I hear you. There seem to be alot of people on these boards that don't have personal contact with the type of people who make up the majority (not all, but alot) of the working poor and the life time welfare recepient. They really believe the hype that the goverment or the rich are what keep these people down when in reality it is the people themselves and their belief systems that hold them back. Thank you for doing a hard and usually thankless job.

 

[allison443]

Also, I believe Target also refuses to participate in scrip... I could be wrong though.

 

[kydisneyfans]

What's even more concerning is that gas sales are included in that .5% growth number. Gas is up over 25%, milk and dairy is up over 25% year to year. With the average item costing 4% more than this time last year, a .5% sales growth number actually means that the number of items sold dropped significantly, it was the higher cost of each item that created the gain.

I work in an industry related to travel, things started to slow last Memorial Day when gas hit 3.39 around here, things collapsed in November, and my sales are down 6% for January.

It is not looking good economically right now.

 

[Kay1]

Too bad the people that come into my office for assistance don't take a pass on cigarettes, alcohol, cell phones, internet, cable/satellite TV, morning coffees from the local gas station....... Trust me there are still tons of people with an "entitlement" type attitude that don't want to give up their luxuries in order to pay their rent or utilities. They also love to complain about the local churches not helping them even though they don't attend church let alone step inside one unless they want a handout. Since when is it law that churches have to help the so-called poor people pay their rent? As for food the food pantry next door is very busy when they are open and most likely hurting for donations themselves.

There was an article in a Dallas (I think) newspaper during the last recession that I tried to find a link to but couldn't. It was about people like the ones you describe showing up for assistance. When the counselors went through their budgets they found sky-high cable and phone bills, country club dues, private school tuition, etcetera, but the people were convinced they were entitled to help with these bills, partly because they had donated money during better times.

 

[lts862]

Also, I believe Target also refuses to participate in scrip... I could be wrong though.

Target does not participate in our (Great Lakes) SCRIP program (they have another method of giving to the schools), but Walmart just signed on with our SCRIP program (in the last 2 weeks). They only give 2% but it is something!

 

[gina2000]

I think the stats are troubling. The NE is in crappy shape. Stores are empty. And I do believe Walmart's tracking system is a valid stat. They know where their profit margins lie and if "gift" cards aren't used to buy discretionary items, their profitability goes down.

While I'm not as bearish as dvcgirl, I do think this recession will be shocking to a generation of people that didn't live through the late seventies/early eighties. And I do think one must hunker down and be careful with spending and vacationing.

 

[KarenAylwood]

I think the stats are troubling. The NE is in crappy shape. Stores are empty. And I do believe Walmart's tracking system is a valid stat. They know where their profit margins lie and if "gift" cards aren't used to buy discretionary items, their profitability goes down.

While I'm not as bearish as dvcgirl, I do think this recession will be shocking to a generation of people that didn't live through the late seventies/early eighties. And I do think one must hunker down and be careful with spending and vacationing.

I don't necessarily think dvcgirl's attitude is bearish. I always love reading her posts- they are both honest and very straightforward. And this situation is definitely a bit "bearish" to begin with.

I was just thinking about this the other day- I'm in my mid 20's and this is the first time that a financial downturn has occurred during my self-supporting years. My parents have had ups and downs financially and from seeing that, I've developed relatively good spending/saving habits. I feel so sad seeing many of my friends who had once revelled in nice things now worrying about how they're going to pay for groceries or gas.

Many people on the budget board are budget minded, therefore it's not surprising to hear that many of us use giftcards for groceries/necessities no matter the state of the economy.

I agree that Walmart's stats give a true picture of the low to middle class spending habits, and these are the classes hit hardest by economic hard times.

 

[aspcamhreditor2]

Someone weighed in on the scrips gift card thing and the re-loadable gift card thing for school fundraisers. However .... unless I missed it ... I'm not sure anyone made the following point...

I am one of those who used gift cards at WalMart and Target in recent weeks for "necessities" ... needs instead of wants. These were scrip cards that I bought SPECIFICALLY for normal grocery & household shopping at Walmart. Our elementary school makes a big deal out of promoting that angle ... if someone is going to be spending $100 at Walmart anyway, why not get the $100 gift card throught the school so someone benefits from money you'd be spending anyway?

We plan to do A LOT more of that in the future so we'll be contributing to the impression of "OMG the economy sucks because people are using gift cards for groceries" ... when the reality is, we're just expanding our ability to contribute to our school without taking it out of our own pocket.

 

[fkj2]

If Disney released a PR that said attendance at its resorts and theme parks was down 25%, everyone would probably notice. It might be anecdotal evidence that the economy would be slowing and people were conserving finances by eliminating or shortening their vacations.

The PR that Walmart released is just another form of anecdotal evidence that things are slowing. While yes, some may be using GC for necessities out of convenience, but the overall trend is that some of those who received them are using them for what they need rather than what they want. Walmart researches just like Disney does to determine patterns of consumer behavior that affects their spending.

dvcgirl, not unlike myself, is significantly concerned about the economy. To deny that many--but not all--are using Walmart's GCs out of necessity instead of pleasure is not being realistic.

If anyone really wants to know the true condition of the US economy--no, make that global economy, read some of the credible sources: Businessweek, Barron's Financial, cbs.marketwatch.com, WSJ, Fortune, Reuters, etc. That Bernancke had to lower rates 125 basis points on the fed funds rate within virtually a week's time should be screaming economic slowdown to everyone. It certainly is to the banking system. Why do you think the stock markets have declined instead of risen? That's anecdotal evidence too; the markets get it: Things might not turn around as they have in recent memory.

If these monoline insurers--who insure the bonds that companies issue for financing their operations--go belly up (and some say when, not if) it may make the subprime fiasco look like a walk in the park. Add in those who are holding Option ARMS, commercial real estate, and just about anything else that requires a system of credit, and we're talking potential major problems not only here but worldwide. This housing bubble wasn't just in the USA. Don't you think Euroland and Asia's problems will affect financial stability? And as far as these foreign banks investing in our banks, doesn't it bother anyone that they're buying OUR assets? And cheaply too, with the decline of the US dollar.

Nobody is pulling the alarm because they've got nothing better to do. There are some of us (and quite a few economists) who are concerned how big this black hole of frozen credit markets could be. Hindsight is 20/20. Don't some of you want to be one of those looking ahead?

 

[lts862]

Someone weighed in on the scrips gift card thing and the re-loadable gift card thing for school fundraisers. However .... unless I missed it ... I'm not sure anyone made the following point...

I am one of those who used gift cards at WalMart and Target in recent weeks for "necessities" ... needs instead of wants. These were scrip cards that I bought SPECIFICALLY for normal grocery & household shopping at Walmart. Our elementary school makes a big deal out of promoting that angle ... if someone is going to be spending $100 at Walmart anyway, why not get the $100 gift card throught the school so someone benefits from money you'd be spending anyway?

We plan to do A LOT more of that in the future so we'll be contributing to the impression of "OMG the economy sucks because people are using gift cards for groceries" ... when the reality is, we're just expanding our ability to contribute to our school without taking it out of our own pocket.

EXACTLY!!!

 

[aspcamhreditor2]

dvcgirl, not unlike myself, is significantly concerned about the economy.

I believe that pretty accurately summarizes MANY of us right here on this forum ... myself included. I don't think that anyone's opinion that there could be some hidden factors not being considered in the overall gift cards article means there isn't a problem. Yes ... I understand usage of gift cards purchased as a school fundraiser may be a small segment of the trend. However, I always believe in looking at the whole picture before just embracing any particular position. I also understand just what a great marketing tool this slumping economy is in terms of promoting the gift cards available through school fundraisers. I firmly believe more and more will make that same purchase decision because it's actually pretty economically sound... "giving" to the school by simply buying the "needs" you'd already be getting anyway is pretty darned attractive to all of us feeling the budget crunch. I think factors exactly like that will continue to drive some of the gift card spending in part.

I also believe there are a couple of other reasons that contribute to the numbers of that study ... timing of the period the article covered, percentages vs. overall numbers (which I'd be willing to bet the farm is rising dramatically), other reasons folks might have gift cards, etc.

Those qualifiers don't mean that the overall trend in gift card usage doesn't give further support to the notion that the economy is worsening. However, I don't think that the gift card useage is quite the harbinger of doom that the articles makes it out to be because I do believe that some employment of gift cards is actually sound. Whether everyone wants to admit it or not, SOME gift cards ... some NOT all ... are being purchased specifically for "needs" buying. Just because I believe that doesn't mean that I fail to understand the seriousness economic situation. In fact, I think my understanding of just why gift cards may be used in the fashion means I understand just how tight things are getting ... IMO.

To deny that many--but not all--are using Walmart's GCs out of necessity instead of pleasure is not being realistic.

I don't think anyone did that. I know I merely pointed out that there might little things CONTRIBUTING to the gift card situation. I see the trend within my own very small elementary. And, if it's happening here, it's happening other places.

My concern over the economy and our own tightening budget is EXACTLY what prompted me to decide to purchase the fundraiser gift cards for larger amounts. I knew I'd need to spend that money anyway so might as well let my kids benefit by contributing to the PTA. With increasing gas prices and skyrocketing hay/horse fee/bedding prices, our ability to give to the school is being reduced. My use of a scrip card helps counter that.

Additionally, I am opting to do other things that may also impact the overall gift card "crisis" ... if that's what we are calling this matter. For example, I try to help my father with portions of the equine bills at his section of our farm. It used to be I often gave him cash or a check. In today's world, however, it is way more convenient and easy for me to send him gift cards. Now, he's using gift cards for "necessities" ... however, the money behind those gift cards is the exact same as it would have been had I written him a check instead.

So ... yes, I do think that a small portion of the increased use of gift cards for "needs" purchases may be partially due to the fact that they are just soooo much more readily available and easy to use. Besides ... CHECKS have gotten pretty danged expensive for me to order. Why use one of those at MY cost when if I can just give my dad the gift card that works JUST the same ... only saves him a trip of going to the bank before he goes to the feed store. And, it's not inconvenient for me as I'm buying those when I'm already at the feed store for my own purchases.

Another way we are particularly contributing to the "crisis"... I specifically suggested gift cards for Christmas gift ideas for members of my family to many friends and family when they asked for ideas. I now have said gift cards tucked away and plan to use them to purchase things like supplies for our upcoming WDW trip as well as gas. All of that will "look" like needs ... food, fuel, medicines, etc. Frankly, I don't need any more lotions or ugly candles. My family is way opposed to giving cash and would never give the kids money to spend on a vacation. However, they are warming up to give cards. Now, I can take that gift card, buy gas or food and have more money to spend once I get to WDW. The effect is the exact same as if I had spent my OWN money at Walmart and my family had given us cash for our trip as a gift.

If I'm doing things like that, so are others.

So ... while the overall gift card usage scenario might have negative connotations, there are segments of the gift card useage that seem to me to point to not-so-UNhealthy budgeting and spending decisions.

 

[dvcgirl]

I believe that pretty accurately summarizes MANY of us right here on this forum ... myself included. I don't think that anyone's opinion that there could be some hidden factors not being considered in the overall gift cards article means there isn't a problem. Yes ... I understand usage of gift cards purchased as a school fundraiser may be a small segment of the trend. However, I always believe in looking at the whole picture before just embracing any particular position. I also understand just what a great marketing tool this slumping economy is in terms of promoting the gift cards available through school fundraisers. I firmly believe more and more will make that same purchase decision because it's actually pretty economically sound... "giving" to the school by simply buying the "needs" you'd already be getting anyway is pretty darned attractive to all of us feeling the budget crunch. I think factors exactly like that will continue to drive some of the gift card spending in part.

I also believe there are a couple of other reasons that contribute to the numbers of that study ... timing of the period the article covered, percentages vs. overall numbers (which I'd be willing to bet the farm is rising dramatically), other reasons folks might have gift cards, etc.

Those qualifiers don't mean that the overall trend in gift card usage doesn't give further support to the notion that the economy is worsening. However, I don't think that the gift card useage is quite the harbinger of doom that the articles makes it out to be because I do believe that some employment of gift cards is actually sound. Whether everyone wants to admit it or not, SOME gift cards ... some NOT all ... are being purchased specifically for "needs" buying. Just because I believe that doesn't mean that I fail to understand the seriousness economic situation. In fact, I think my understanding of just why gift cards may be used in the fashion means I understand just how tight things are getting ... IMO.

I'm really just looking for trends. And if Walmart is reporting that this is new...I'd say it's significant. They also could be using that as an excuse for why their sales really stunk. Either way, it's also significant in the context of the fact that retail sale for January are the worst in 40 years. I mean, it's obvious that I do a lot of reading on the economy, and I've been expecting us to slip into a recession for a year. I'm surprised it took this long. But even as bearish as I am on the economy, hearing that sales are the worst reported in 40 years....that's pretty significant.

With the corresponding credit crunch that's going on, I'd say that we're not going to bounce on out of this recession as easily as we did in 2001. Not without cheap and easy credit accessible to all. As long as housing continues to tank and banks keep hoarding their cash, that's not going to happen. 72% of GDP is consumer spending. 14 trillion dollar economy with nearly one trillion pulled out in *each* of the last five years in home equity loans....and that access to cash is over for a lot of people, for a long time. I just don't see any way we get out of a nasty recession this time.

 

[gina2000]

I don't necessarily think dvcgirl's attitude is bearish. I always love reading her posts- they are both honest and very straightforward. And this situation is definitely a bit "bearish" to begin with.

Bearish is a term which is indicative of economic direction. It has nothing to do with attitude and everything to do with market opinion.

 

[runwad]

If Disney released a PR that said attendance at its resorts and theme parks was down 25%, everyone would probably notice. It might be anecdotal evidence that the economy would be slowing and people were conserving finances by eliminating or shortening their vacations.

The PR that Walmart released is just another form of anecdotal evidence that things are slowing. While yes, some may be using GC for necessities out of convenience, but the overall trend is that some of those who received them are using them for what they need rather than what they want. Walmart researches just like Disney does to determine patterns of consumer behavior that affects their spending.

dvcgirl, not unlike myself, is significantly concerned about the economy. To deny that many--but not all--are using Walmart's GCs out of necessity instead of pleasure is not being realistic.

If anyone really wants to know the true condition of the US economy--no, make that global economy, read some of the credible sources: Businessweek, Barron's Financial, cbs.marketwatch.com, WSJ, Fortune, Reuters, etc. That Bernancke had to lower rates 125 basis points on the fed funds rate within virtually a week's time should be screaming economic slowdown to everyone. It certainly is to the banking system. Why do you think the stock markets have declined instead of risen? That's anecdotal evidence too; the markets get it: Things might not turn around as they have in recent memory.

If these monoline insurers--who insure the bonds that companies issue for financing their operations--go belly up (and some say when, not if) it may make the subprime fiasco look like a walk in the park. Add in those who are holding Option ARMS, commercial real estate, and just about anything else that requires a system of credit, and we're talking potential major problems not only here but worldwide. This housing bubble wasn't just in the USA. Don't you think Euroland and Asia's problems will affect financial stability? And as far as these foreign banks investing in our banks, doesn't it bother anyone that they're buying OUR assets? And cheaply too, with the decline of the US dollar.Nobody is pulling the alarm because they've got nothing better to do. There are some of us (and quite a few economists) who are concerned how big this black hole of frozen credit markets could be. Hindsight is 20/20. Don't some of you want to be one of those looking ahead?

Yes this bothers me a lot and I'm surprised that this isn't discussed here on the budget board...see what you can dig up on this dvcgirl, will ya

 

[dvcgirl]

Yes this bothers me a lot and I'm surprised that this isn't discussed here on the budget board...see what you can dig up on this dvcgirl, will ya

I've read quite a bit on this, Bank CEOs are circling the globe begging for capital infusions these days. Part of me thinks that this isn't such a good idea. Another side of me understands that beggars can't be choosers. I read an interesting article yesterday in the Financial Times about the Sovereign Wealth funds beginning to get cold feet......can't say I blame them.

http://www.ft.com/cms/s/7bfc8ee8-d5b1-11dc-8b56-0000779fd2ac.html