Store gift cards as corporate currency?

In the beginning, there were paper gift certificates, made popular mainly by department stores going all the way back to the 1930s. Then in 1995, borrowing from the pre-paid phone card technology, Mobil Oil created the first plastic card with a magnetic strip to record gas purchases. But in that same year, it was none other than Blockbuster that created the first gift card that could be purchased and loaded with a desired dollar value for store purchases and rentals. Little did Blockbuster know that it was originating what this past Christmas delivered over $100 billion in purchases to retailers and on-line merchants.

What major retailer doesn't sell a gift card these days? No longer limited to being bought in the sponsoring store, huge varieties of gift cards can now be purchased everywhere from your corner grocery store to hundreds of online venues at the click of a mouse.

Think about it… A wallet-sized card pre-loaded with a desired denomination that can be spent in stores or on-line at any time. Sound like currency? Sure, but could it be currency for the retail issuer of the card as well? Currency that can be spent like cash for operations, cost of goods sold, or other non-budgeted needs? Manufactured money!

Evergreen Trading just completed its third transaction in which we purchased a large quantity of retail gift cards directly from its retail issuer. This time around it was Boston Market, the home-style cooking restaurant chain with over 500 locations nation-wide. Or, as my 7 year-old says, "My favorite restaurant. Ever." 

As with our other clients, the cards were purchased in bulk and resold to corporate partners as well as our large network of friends and family. The retail gift cards are sold at enough of a discount to create a healthy demand while maintaining a price point that allows Evergreen Trading to fund the transaction. In the end, Boston Market has an infusion of newly created funds for variety of needs.

Sounds like currency to us!

As with most corporate trading transactions, the client simply purchases a pre-determined amount of its planned broadcast, print, outdoor or interactive media. In fact, media vendors, (either for that client or others) can also be a good recipient for gift cards, taking some in trade for the advertising we place through them.

We have another idea for gift cards that can add to the value of integrating them into a corporate trade program. We are currently having discussions with some of the country's largest charitable institutions regarding their purchase of discounted gift cards for resale.

It could work like this: Evergreen Trading purchases a large amount of gift cards from a national retailer. The entire amount or a portion of the cards are sold at a deep discount off of face value to a charity or non-profit cause. The cash flows can be arranged to make an initial purchase easier for the charity/non-profit. The charity/non-profit can then use the cards as a fund raiser, selling them for anything over their purchase price. Selling deeply discounted gift cards for consumer electronics, sporting goods or restaurant dining could be one of the easiest fund raisers ever.

Whether a retailer uses their gift cards to fund non-budgeted expenses, boost their bottom line, or to benefit a beloved cause, corporate trade can transform these little plastic rectangles into a powerful corporate currency.

About Mike Lake

Mike is the Senior Vice President of Marketing for Evergreen Trading. When not playing jazz trombone he is probably obsessing about writing content that will capture the attention and interest of business people and fellow learning junkies everywhere.

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