Safeway Inc’s Blackhawk Network, which distributes gift cards and phone cards, is growing much faster than even Safeway would have predicted a year ago, Chairman and Chief Executive Steven Burd said on Wednesday.

Blackhawk, which Safeway created about five years ago, is the largest distributor of third-party gift cards in North America. It stocks cards at Safeway’s stores and at other chains.

So what’s the deal with the ants?

Burd said the area near the display of gift cards in some Safeway stores looks a bit like an ant farm at Christmastime, with shoppers fighting their way through to get the cards they want. The last eight weeks of the year represent about half of Blackhawk’s annual sales, he told investors at a Lehman Brothers conference.

Gift cards have become a big business, especially when shoppers aren’t sure what to buy as holiday gifts. According to the National Retail Federation, $27.8 billion was spent on gift cards in November and December of 2006, topping its original estimate of $24.8 billion.
 
Safeway’s adding more “endcap” space in some of its stores to make more room for the cards, which should lead to a significant uptick in sales, Burd said.

He also said Safeway wants to create more “growth engines” like Blackhawk related to the supermarket business every two to three years.