10 Worst Gift Cards You Can Give This Holiday Season
Gift cards have become almost an afterthought around the holiday season, but that doesn't mean you should just pick one up without any consideration to the retailers behind it.
All it takes is one failed retailer to turn a $25 gift card into a worthless piece of plastic. There are a lot of retailers, restaurants, grocers and other companies fighting through bankruptcy that may not be around by this time next year. Thus we don't recommend spending $25 to $500 on“gift” that can never be redeemed.
But, despite 25% of shoppers telling the National Retail Federation last year that they think gift cards are impersonal, they're going to be all over the place this year. With 62% of shoppers telling the National Retail Federation that they wanted to receive a gift card, there's a lot of opportunity to get it wrong. A full 16.3% of potential gift-card buyers worried about the card expiring, while 2.1% didn't like the idea of the retailer in question going bankrupt.
Considering that about 10% of all gift-card givers don't even know what company the people they're buying for would want a card from, there's a strong chance that you could stick someone with a card from a business that won't make it far beyond 2016.
While we used to consult ScripSmart about this, even that site's founder didn't want to put the effort into parsing out card value anymore. However, by taking a look at retail performance this year and considering some of the weaker options on the table, we came up with ten gifts cards you aren't going to want to pass along if you have any sense of holiday cheer left in you:
Sears
This card is our perennial pick, largely because the folks who own Sears and Kmart are only occupied with keeping them as minimally alive as possible. They keep paring off holdings like Land's End and Sears Auto Centers, they've turned the real-estate sales of their closing properties into a business of their own and they just continue to get lapped by competitors like Amazon, Target, Walmart and Kohl's.
Sears and Kmart stores look like '80s and '90s relics, because they are. While brick-and-mortar competitors spend up to $8 per square foot painting, updating registers and replacing tiles, the International Strategy and investment Group says Sears spends only $1 to $2 per square foot updating its facilities. If your Kmart or Sears has lasted this long, do'nt worry: They'll get around to selling it eventually.
Target Visa Gift Card
Target is in nowhere near the same shape as Sears, but it is closing about 13 stores this year in a tough retail climate.
The suburban-chic Tar-zhay days of the late '90s and early 2000s are long gone, but this card seems to want to will them back -- even if consumers freaked out by a data breach a few years ago aren't as nostalgic. It can't be used for online Target purchases, it costs $5 just for the privilege of buying one, customers can't check the card's balance at all store locations and it can't be purchased online.
Oh, and there's no online support for the card whatsoever. That's a late 20th-century approach to a retail sector where customers are paying with a tap of their smartphones, if they're going into stores at all.
City Sports
They aren't going to sell you one. Nor are they going to keep one of their shirts around so you can look adequately sporty during your run along the Boston Esplanade, Central Park Reservoir or the Schuylkill River.
Nope, City Sports is closing its 26 locations after not being able to hang with Modell's, Sports Authority, Dick's Sporting Goods, Lululemon, REI and just about any other sporting goods chain that hasn't yet overextended itself.
Rite Aid
You may as well just buy a Walgreen's gift card. It'll cutout the middle man.
This debt-laden retailer was in the middle of remodeling hundreds of existing shops into “wellness” stores and wouldn't have been finished until 2020 at the earliest. In the meantime, Rite Aid existed as dimly lit, metal shelved has-beens whose last heyday came during the first Bush presidency.
Rite Aid's gift card was just as depressing. You couldn't buy it online, you couldn't use it online, the expiration date was a mystery, it couldn't be consolidated with another gift card when the balance gets low and it couldn't be redeemed for cash unless state law required it. However, now that Rite Aid has been bought out by Walgreen's and roughly 3,000 of its stores are on the chopping block, those cards are even more worthless than ever.
Ross
Clearance store chain Ross seemed like it was positioned perfectly to take on T.J. Maxx, Marshall's, Home Goods and Nordstrom Rack in the frugal post-recession marketplace.
Instead, it clings to its '80s logo (like Sears), fractured Ross/dd's Discounts identity and clunky gift card. Stop charging 44 cents to mail these out! It's bad enough that a lost or stolen card leaves cardholders out of luck. There are no replacements and little explanation of expiration dates or fees. You can't even check the balance online.
This non-refundable, non-reloadable card is the equivalent of putting some cash in an envelope and sealing it. If you're even considering this as a “gift,” just give the cash instead.
Romano's Macaroni Grill
No, casual dining that doesn't have a few dozen beer taps or televisions attached to it isn't doing so well lately. No, “Italian” joints like Olive Garden and Maggiano's Little Italy aren't faring much better than Red Lobster these days.
No, the Romano's Macaroni Grill you know probably won't exist in that fashion for much longer. Sold by Ignite Restaurant Group earlier this year and bought up by Redrock Restaurant Partners, Romano's also started implementing Romano's Kitchen Counter service this year -- bringing you all the same food without the wait staff. Apparently, that's the company's take on Panera-style fast-casual and it's running with it. Considering that the chain is looking more toward the Middle East and South America than to the U.S. market, folks thinking of picking up a gift certificate here might want to consider that they are not just not giving their friends or loved ones a dinner out; instead, they may be sticking them with a gift card for a chain that's showing little interest in being a full-service restaurant here anymore.
Brooks Brothers Gift Card
It isn't just the discount and clearance stores that get stingy with their gift cards.
Big-ticket suit showroom Brooks Brothers seems to think gift cards are beneath it and treats this one like a poor cousin from the suburbs who just brought a two-liter of Mr. Pibb and some Takis to dinner. In the past, you'd have to pay $5 just to buy a Brooks Brothers gift card, a practice that was dropped last year. Sure, Brooks Brothers has improved its gift card policy. It will replace a lost or stolen card through the company's Treasury department if a customer can produce a receipt. Of course, if the customer made the purchase with cash and can't produce a receipt, he's out of luck. Also, you can't use it to pay down the balance of a Brooks Brothers credit card and you can't consolidate used cards. On the bright side, there is no expiration date on the cards.
Considering that even Neiman Marcus, Coach and Saks gift cards do a better job of addressing the issues above than Brooks Brothers does, the men's clothier simply looks like the cheapskate of the luxury class. Gift cards aren't charity: They're a potential introduction to your brand. If you turn your nose up at them, it's just going to turn consumers toward shops that actually put some effort into their cards.
Office Depot
That $1.2 billion “merger of equals” between Office Depot and Office Max is still in the process of closing redundant store locations. However, this is an entire corner of the retail industry that's seen better days.
The big-box office supply stores are feverishly attempting to shift online and, as it stands, there are exactly two of them in a retail landscape that loves itself some consolidation. Besides the fact that giving a gift card for offices supplies is one of the most boring gift ideas on the planet, investing in the future of this particular segment of the marketplace just seems unwise, for reasons we'll expand upon...
Staples
Stores closing: 225 through 2015
Closing 12% of North American stores since last year and shifting to online retail doesn't exactly inspire confidence. Nor does the fact that roughly half of all Staples sales come from online orders of big-margin products like paper, ink, toner and printers that are seeing reduced demand.
While it's great that Staples is embracing online retail, it's also aware that Amazon has beat it there and will force it into deep discounting just to survive. Staples execs claim they want to broaden the store's reach by offering tablets and other electronics, but those are low-margin products already being offered by similarly troubled chains including Walmart, Target, Sears and Best Buy. It just doesn't look good.
Barnes & Noble
The company is closing 223 stores by 2023 and has already decimated its list of locations in its hometown of New York City. You really want to give your bookish relatives and friends reason to go into a bookstore, but with Borders long gone and Amazon going in for the kill by opening its own physical bookstores (the first just opened in Seattle), if you aren't a feisty independent bookstore with a meticulously curated selection, you're a dinosaur.
This fact isn't lost on Barnes & Noble, which has closed roughly 20 stores a year over the last three years. Its Nook readers have been clobbered by Amazon's Kindle and by various tablets, resulting in a scenario where the Nook has been spun off into its own business. B&N's book sales are being beaten by Amazon on both price and availability. The losses are mounting, and its 600 or so stores are struggling.
Meanwhile, the American Booksellers Association notes that since 2009 more independent bookshops have opened than closed in the United States. While the independents have seen some sales growth, Barnes & Noble's fortunes have sunk. It seems fitting for a Goliath that drove so many other little bookshops out of business, but there's little to celebrate about having one less place to buy a book.
RadioShack
We've said it before ,and we'll say it again: nobody shops here anymore.
You know it, the landlords who host RadioShack know it, and the chain itself is finally aware of the fact. Now in Chapter 11 bankruptcy, it's paring off about 1,800 locations. But that's what it gets for coming up short on inventory, customer service and even the tech-geek items that built its foundation. It could have been the premier maker space, but it wanted to sell burner mobile phones instead of 3-D printers and spend $8 million on a Super Bowl ad instead of workshops.
It's meeting the same fate as the strip malls it called home, and it feels similarly antiquated and useless.
This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.