Recessionary Gifts: Utility Gift Card Sales Jump

With luxury and electronic goods posting double-digit sales declines over the holiday season, shoppers still rung up warmth and good cheer in a spate of recession-inspired buying.

Utility companies saw a notable uptick in programs that allow gift-givers to pay the gas and electric bills of friends, relatives or families.

Consumers Energy, a gas and electric utility in Michigan, reported an estimated $265,000 in utility gift purchases by year's end, a 6 percent increase from 2007.

"People are just having a tough time paying their bills," said spokeswoman Linda Taylor.

Unemployment in Michigan is at 9.6 percent, the nation's highest, and the fallout from troubles in the auto industry have yet to fully play out.

The pain felt by consumers in the state is in plain sight, Taylor said.

"Family members want to help others family members that they know are struggling," she said. "It's a better gift than something they don't need, like a new TV."

The deteriorating economy squeezed many past excesses out of the shopping season.

Unemployment has risen to a 15-year high of 6.7 percent as job cuts have taken place every month since January, a total of 1.9 million payroll jobs this year. More than a half-million jobs were lost in November alone.

Those figures played out on store shelves this holiday season, as sales of electronics and appliances plunged almost 27 percent. Retail sales dropped between 5.5 percent and 8 percent compared with last year, or between 2 percent and 4 percent excluding auto and gas sales, according to SpendingPulse, a division of MasterCard Advisors.

The gift cards, much like a holiday greeting card, are sent by the utility to the giver, who can present it personally, or they are mailed directly to customers to notify them that their bill will be credited.

Alliant Energy, of Wisconsin, said its 2008 program will draw in 50 percent more in sales, an estimated $55,000, compared with the previous year.

The quantity of gift certificates and the average gift amount have jumped this year, said company spokesman Scott Reigstad. The program runs year-round, but Reigstad said about 85 percent of sales occur during the holiday season.

David Pop, an employee at Nevada-based Valley Electric, used his company's utility gift program to pay a friend's bill.

"I saw a friend struggling with finances due to the downturn in the economy," said Pop. "I figured this was a way to help."

Taylor, of Consumers Energy, said that while she expects gift purchases to drop off after the holiday boom, first quarter gift sales will likely rise 25 percent compared with the prior-year period as consumers struggle to keep up with bills.