A GROWING OPTION FOR FLORISTS
With the explosion in gift-card sales, don’t miss out because you don’t
offer them. Here’s everything you need to know to get started with a
gift-card program in your store.
by Morgan Chilson
cards have blasted into popularity in the past few holiday seasons,
delighting both consumers and business owners. These small plastic cards
were estimated to account for almost $28 billion in sales during the
past holiday season, according to the National Retail Federation (NRF),
a retail trade association based in Washington, D.C.
In its November 2006 “Gift-Card Survey,” the NRF found that almost 80
percent of consumers were planning to buy at least one gift card over
the holidays. More than half said they hoped to receive a gift card.
Gift cards offer marketing opportunities for florists because they can
increase store traffic, says Michael Russo, chairman and president of
the Gift Association of America, a gift industry trade association based
in Johnstown, Pa. Statistics show 55 percent of recipients make more
than one trip to the store to use up a card’s value.
What’s more, the NRF says 61 percent of gift-card recipients spend more
than the value of their cards. Gift cards also can increase business
traffic in January and February. Sales are not recorded when the cards
are purchased but when they are used to buy merchandise.
Gift cards aren’t just about the holidays. Mr. Russo says research
indicates the average person receives four gift cards a year, with an
average value of $35 each. In addition, fraud with gift cards is
significantly lower than with paper gift certificates, he says, 1
percent versus 8 percent.
Bruce Nelson, president of St. Croix Floral Co., in St. Croix, Wis., saw
a 25 percent increase in gift-card sales when he got rid of his store’s
paper certificates three years ago and started using gift cards. They
sell well for Christmas and Mother’s Day, he says.
“Customers are just more comfortable with them,” Mr. Nelson explains.
“All the big mass merchants are using gift cards. There’s no reason the
floral industry shouldn’t be.”
These plastic marketing tools have been available at most major retail
stores for a few years. One challenge for owners of small- to
medium-sized businesses is determining if the cost of installing a
gift-card system is outweighed by the benefits.
setting it up through pos
The first important question to answer when considering gift cards is
whether your current point-of-sale (POS) system offers that function. If
so, getting started can be easy.
Two of Teleflora’s four POS systems, the RTI Total Management System and
Dove POS, offer gift-card capabilities, says Quinn Goldstein, director
of marketing for the Los Angeles-based flowers-by-wire service.
Teleflora also offers a gift-card solution for non-POS users through its
Mr. Goldstein says the two Teleflora systems include software that helps
store owners track gift-card sales as well as outstanding balances and
customer information. That information stays in-house at the business
and is not accessed by Teleflora.
Floral Accounting Systems, Inc., a floral industry technology provider
based in Ruston, La., added gift-card capabilities to its FAS 2007 POS
system in October 2006, says Gary Reed, president. As with Teleflora’s
systems, there is no cost for processing gift cards through the FAS
system because it is included in the software.
“There was an immediate response from our customers,” Mr. Reed says.
“The people who make the gift cards were very surprised at the level of
response they got.”
Training employees to process gift cards through the current POS system
is easy, he says, because they work a lot like credit cards. Each store
can decide if there will be an expiration date on the cards or any fees
charged for cards that aren’t used within a certain period of time.
If your store uses a POS system that has gift-card capabilities, there
usually are no additional fees other than purchasing the gift cards.
Costs for those can run from 10 cents to $1 per card depending on
options such as custom artwork, barcoding, magnetic strips or whether
the card is reloadable.
Eunredeemed gift cards:
causing some controversy
One challenge for retailers is what to
do about unredeemed gift cards. While some business owners might
consider this a bonus to their businesses, gift cards with
expiration dates and/or service fees that go into effect after a
certain period of time are causing controversy. As a result,
many retailers are no longer following those practices, says
Bill Horne, president of Valutec Card Solutions, a firm that
offers gift-and loyalty-card programs to retailers.
A few state legislatures have tackled the issue. The focus so
far has been on making it illegal to utilize expiration dates
and service fees, steps that both Florida and California have
There also has been some talk that dollars left on gift cards
should fall under regulation by Abandoned Property Laws, and in
some cases this is so. That would mean that unused gift-card
money would have to be turned in to the state to be held for the
gift-card holders. Each state has different laws on the books
about how this should be handled, so consult your accountant or
For larger stores, the value of unredeemed gift cards can be
tremendous. Some of the larger companies have coined the term
“breakage” for unused gift cards and started showing them on
their books as earnings after a certain period of time.
(Remember, gift cards are not counted as sales until they are
redeemed.) According to The New York Times, Best Buy’s earnings
in 2006 were pumped up by breakage of $16 million.
If your current POS system doesn’t support gift cards, you still
can start a program although the costs may be higher. Mr.
Nelson’s POS system through FTD Group, Inc., does not support
the service, so he uses a separate vendor. A spokesperson for
FTD confirms that their POS systems do not currently support
Mr. Nelson elected to use a gift-card processing system from The
Card Group, in Deer Park, N.Y., that runs like a credit-card
system. He purchased one terminal for the floral shop and one
for the garden shop. It would be better, he says, if it ran
through his POS system because sometimes having only two
processing machines can slow customer service.
There are several factors to consider when choosing a
stand-alone gift-card system:
Type of system. Some vendors sell gift-card systems that work
through many POS platforms. Others offer separate machines that
scan the cards. (Mr. Nelson notes that his works this way and
does tie up a telephone line.) Manual systems also are
available, requiring the input of the customer’s name and
information into a computer. Some systems utilize a scanner
attached to a personal computer. Before buying, determine if you
might want to use the system for loyalty cards or promotional
cards, and make sure the software supports that.
Accounting. Determine what reports can be generated by the
software. Those can include number of cards sold, amounts
outstanding and amounts redeemed. Some companies collect the
information and generate reports for business owners while other
companies offer software packages for owners to run the reports
themselves. Additional programs can track buying behavior and
Cost. Most companies offer several programs based on usage. For
instance, Valutec Card Solutions, a gift- and loyalty-card
program company based in Franklin, Tenn., has a flat-fee program
that includes 100 standard cards (which would be printed with
your business name but not your logo) and up to 4,000
transactions per year for just less than $500. It is considered
one transaction each time a card is swiped. Some companies,
however, charge either a fee each time a card is swiped or a
monthly fee that covers all transactions.
marketing with gift cards
“I think a gift card, instead of being a payment tool, is really
a merchandising tool,” says Bill Horne, president of Valutec,
which is part of Metavante Corporation, the banking and payments
technology subsidiary of Marshall and Ilsley Corporation (NYSE:
MI). “You can use it as a gift card, a loyalty card or a
promotional card. We’re having tremendous success in the floral
industry using them as promotional cards. Instead of waiting for
the traffic to come to their store, the florist will do a
targeted mailing with, for example, a $10 card.”
Another idea is to run a “Hole in One” special with a local golf
course. A furniture company client has a $10,000 card for that
purpose, Mr. Horne says. They bought insurance in case they have
to pay out, but it’s been a terrific way to bring attention to
their business. A floral shop could offer flowers for life, he
Mr. Nelson tried a new promotion for Mother’s Day where
customers who bought gift cards valued $25 or more received $5
off 10-inch hanging baskets. He also is using the cards with
fund-raising groups. The local high-school drama club bought $20
gift cards, and he charged them only $16 each. That way, the
group benefits from the sales, and he pulls in more customers.
In addition, customers typically keep gift cards with their
credit cards, and they see the floral company logo every time
they open their billfolds, so the cards themselves are ideal
marketing tools. Gift cards also can be used for in-store
credits, making sure that money comes back to your store.
Matthew Troy, owner of Troy’s Garden Nurseries in Bedford, N.Y.,
instituted a gift-card program in his business more than a year
ago, and although he hasn’t tackled special marketing programs
with it yet, the card program immediately began to pay off.
Troy’s typically sold five or six paper gift certificates
annually, but by the end of last year, the business had sold
more than 200 gift cards.
“The cards make it more convenient for people,” Mr. Troy says.
“They are sitting on the counter, where people can pick them up
and handle them. Before, there was just a sign behind the
counter saying that we had gift certificates.”
Mark Anderson, founder of FloristWare, an order-taking and
point-of-sale system with headquarters in Ann Arbor, Mich.,
offers a loyalty program through his company’s POS system. The
next upgrade also will incorporate gift cards but not the
traditional plastic cards; his system aims for environmental
friendliness by offering virtual gift and loyalty cards to
The customers’ profiles are input into the system, and the
florists then contact them by e-mail, telephone or mail about
the virtual gift card. For loyalty cards, the profiles also are
set up, and the florists can use them for marketing purposes.
Customers receive points based on their purchase amounts as
determined by the florists, Mr. Anderson says.
Loyalty cards enable florists to have different marketing
options. For instance, some stores offer double points on
Tuesdays and Wednesdays or if customers order Valentine’s Day
gifts by the end of January, Mr. Anderson says.
Morgan Chilson is a freelance business writer residing in
Topeka, Kansas. You can contact her by e-mail at
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