Can the value of a business be determined by the value of its gift cards in the gift card resale market? It sure seems like some patterns can be found. Here are some examples.
CardCash is a marketplace where people can sell gift cards they don’t want. Let’s say that your grandma is a bit out of touch about what stores you shop at these days sent you a $100 gift card to Gap. As of today, CardCash will give you $63 for that card
and resells it for $85 to someone who would love to save $15 on their next trip to Gap:
That’s the business. While it may seem easy to pocket $23 as a matchmaker, this is a high-stakes industry that requires significant investment in fraud detection. The net is far less than the gross.
So, what can we learn from people buying Gap gift cards for $85? To figure this out, I downloaded the full list of 538 stores that CardCash currently lists as having active inventory. I then sorted the list by gift card discounts. Not all gift cards sell for the same rates. Here are some examples of gift cards that have nearly no discount:
For example, if you were booking an Airbnb, you could buy $500 gift cards to save on your trip, but you’d only save $2.50 per $500 spent. A Gap gift card with a $16.56 value would have the same net savings.
On the other extreme, we see gift cards like this:
There are likely a variety of reasons why gift cards from some stores carry so little value. Macaroni Grill and Fazoli’s are two places where people with gift cards may have trouble redeeming them due to store closures. Still, shout-out to the Green Bay, WI Fazoli’s for still hanging on. That’s quite a run.
So, what’s in between gift cards that are as good as cash to those worth 30-40% of their redemption value? Target.
Out of 588 brands, where do you think Target falls? Keep in mind that this is a brand that has been as good as cash to many Americans (especially Minnesotans) for decades. If you gave someone a Target gift card, the recipient perceived it as being as good as cash (they’re going to be shopping there regularly) and as a more thoughtful gift than pure cash.
As of today, Target is tied for 138th alongside Victoria’s Secret, Total Wine, Ace Hardware, and PINK, with gift cards selling at a 4.3% discount. This is ahead of Wendy’s, Panda Express, and Wendy’s (4.4-4.5%) but behind Joe’s Crab Shack, Bubba Gump Shrimp, and Perkins (4%).
To me, it’s wild that REI is so close to Target. I love REI, but everything I buy there is a use of disposable income, whereas Target sells household staples.
Where are Target’s more direct competitors?
This is wild. Target is duking it out with Kohl’s! Think about it: What do you NEED from Kohl’s? Nothing. How can a business that sells toilet paper and groceries be worth nearly the same to gift card buyers as a clothing store?
As someone who’s purchased gift cards online for more than a decade, including thousands of dollars’ worth of Target gift cards, I’ve never seen Target gift cards slump to such low valuations. There have been many times in the past when Target cards have been sold out, or the discount has been so small that it wasn’t worth the time to purchase and load the gift cards.
I haven’t written this to dunk on Target. I’m writing this to point out that consumers are valuing Target differently these days, and that’s concerning to me as a Minnesotan. To me, Target (4.3%) isn’t Perkins (4%), but the gift card marketplace disagrees. To me, Target isn’t Caribou Coffee (3.5%) but the gift card market disagrees. It’s good to see that the gift card market values Target above Taco Bell (4.9%) and Ruby Tuesday (5%), but Target shouldn’t be in the same universe as those companies.
I’m writing this to point out that Target is in a self-inflicted slump. When they decided to stop their merit-based hiring system, they chose to align with the values of their competitors, such as Walmart. This was dumb because Target’s loyal customers proudly shopped at Target to align themselves with the values of a company that was actively working to build a workforce that reflected their customers.
Target normally crushes on providing a wide variety of fun and unique seasonal products, but when they stopped recognizing Pride as a holiday in their stores, they signaled to loyal customers that responding to pressure from homophobic and transphobic bigots was more important to them than doing business with people who think wearing rainbows is cool.
Under pressure from organized bigots, Target decided to rebrand itself as, “We’re Walmart but more expensive and red.” To me, this was a strange decision because America’s bigots likely live closer to Walmart stores than Target stores, so they weren’t going to change their shopping behavior if Target changed. Bigots didn’t want to become Target customers. They just wanted Target to stop serving people that bigots hate. Target decided to cater to non-customers while alienating loyal customers.
Eventually, Target decided that it was flailing and changed CEOs. Rather than bring in a CEO aligned with the values that achieved this:
Target promoted their COO, who knows a heckuva lot about operations. Here’s what he listed as his turnaround goals:
“As we move forward, our strategy is focused on four priorities:”
- Leading with merchandising authority by curating with conviction — bringing together design, style and value in a way only Target can.
- Elevating the guest experience by making every store visit and digital interaction easier, more inspiring and more welcoming.
- Accelerating technology to remove friction, enable our teams and create more personalized, joyful experiences for guests.
- Strengthening our team and communities by investing in our people, building future-ready skills and growing alongside the communities we serve.
To me, this doesn’t address why Target lost customers or how Target will win them back. Changing in-store experiences means nothing to people who aren’t entering the store. The first bullet point is meaningless until Target takes a risk by putting the tastes of demoralized customers ahead of bigots. The fourth point is meaningless until Target returns to their previous pledge to be different from direct competitors like Walmart.
Let’s be clear: one can criticize out of hate, and one can criticize out of love. This is the latter. Target is strongest when it reflects its customers through merchandising and staffing. Target is strongest when people with taste want to work for them, because it provides the country’s largest retail platform for them to share their tastes. Previous Target customers are longing for a day when they feel seen by a company that extracted disposable income from them alongside their necessities. Let’s return to those days.
I think you’ve found a unique way of measuring consumer sentiment. Congratulations! I will need to refer to Kohler Card Index (KCI) in the future. I hope you will continue to track it.
Target may be near REI because of its union busting activities. https://www.ourrei.com/boycott
I was surprised to read that REI “refused to offer REI Union workers wages on the same level as their co-workers at non-union stores.” When I emailed REI to ask about this I got a response saying they disagreed with how the union was characterizing things, but did not respond to the wage question even when it was asked pointedly again. Just like Target, I expected more ethical behavior from this corporation.
Target also offers a 5% discount if you pay with their credit card. Making discounts below that useless for those that utilize them.