(Guest bloggers Darrell Rigby, head of global retail, and Kris Miller, head of North American retail, at consulting firm Bain & Co., weigh in on how how gift cards are spurring more January sales)

January has emerged as a powerhouse sales month. In fact, January sales have grown to nearly 25% of total sales in the NovemberJanuary sales period. From 1995 to 2005, $10 billion in sales have shifted into January from November and December. We expect this trend to continue in January 2007, especially with the increased impact of gift cards–nearly 40% of gift cards are redeemed in January.

Gift cards are more prevalent than ever before. A recent Consumer Reports survey indicated that gift cards would be the second most popular gift after clothing this holiday season. The National Retail Federation predicted that consumers will purchase a total of $24.8 billion in gift cards this seasona $6.3 billion increase over 2005. The average consumer is expected to spend $117 on gift cards, compared to $88 last year.

For consumers, gift cards mean convenience and no guesswork. Creative design and packaging allow shoppers to tailor the cards to different tastes and interests:

Circuit City has partnered with American Greetings to let customers download images onto their gift cards.
eXtremely Gifted gives consumers a choice of gift card gift wraps, many of which are gifts themselves. For example, the Coffee Break wrap comes with a bag of coffee beans, a small stainless-steel coffee tumbler and after-coffee mints; and the Safe Cracker wrap requires the recipient to decode and open a small metal safe to get at the gift card.

For retailers, gift cards work well on several counts. First, shoppers with a gift card frequently spend more than they would without the card. Studies indicate that between one half and two-thirds of recipients spend more than the value of the card. Second, shoppers often redeem gift cards for full-price merchandise. Last January, retailers brought in fresh merchandise in anticipation of gift-card shopping sprees, and will do the same in January 2007. Finally, gift-card sales boost retailers profits by reducing merchandise returns and their associated costs.

For both consumers and retailers, gift cards keep the holiday season going beyond Christmas.