The you-pick-it present: Gift certificates booming

This week, Jennifer Handshew won't be wrapping any bulky sweaters or unwelcomed mohair slippers. In fact, she doesn't have a single "object" to place under the tree. Instead, everyone from grandmother to her sister is getting what has become the hottest gift category this season: a gift card.

"They are my saving grace," says the Los Angeles resident. "You don't have to guess pants size, colors, and you can buy them at the supermarket checkout right where they have the gum."

Ms. Handshew's decision not to buy a single physical present is part of the changing culture of gift giving. In a society that doesn't like to make mistakes, gift certificates are almost riskless even if they don't carry the same emotional appeal as that cashmere sweater that a teenager drooled over at the mall. They can be carried on airplanes without the security guards ripping apart bows and ribbons. And, at a time when Americans are trying to cram too many activities into a day, shopping for them is as easy as going to the supermarket or turning on the computer.

Between 75 and 80 percent of Americans expect to buy gift cards, a category that some expect to grow by 20 percent this year, making it the third most popular holiday gift. The concept has caught on so fast that everyone from Broadway show producers to auto parts companies, from Boston Market to Omaha Steaks is offering the gift certificates.

"The stigma of it being a thoughtless gift is gone," says Scott Krugman of the National Retail Federation. "Consumers like receiving them and merchants like them because they cut down on returns."

In a way the gift certificates are replacing the old stand - by cash in an envelope. "They are more glamorous than cash," says Suzanne Shu, an assistant professor of marketing at the Cox Business School at SMU in Dallas.

Even more important, the gifts often get people around what Ms. Shu terms the "mental accounting" people make when deciding if they can afford something. "We walk through life with a budget on how much to spend on different things," she says. "But a gift card feels different."

In fact, the giving of gift cards is becoming part of the holiday tradition for some families. That's the case with San Francisco resident Aimee Grove and her brothers. They have all agreed to give each other $50 gift certificates for Best Buy. "One year, I changed the plan for one of my brothers and bought something else and he was disappointed," she says.

The gift cards seem to be particularly useful to families with teens. Parents and uncles and aunts are quick to admit they don't know what music a 13-year-old listens to, what games teens play, or what movies they want to watch.

"We never knew if we were guessing correctly," says Jennifer Giambroni of Oakland, Calif., who now gives gift cards to her nieces, nephews, and goddaughter. "They have such divergent tastes."

On the opposite side of the age spectrum, receiving the cards also seem to be a hit with grandparents, particularly those on fixed incomes. After years of giving her grandmother gifts that were probably not fully appreciated, Ms. Handshew started giving supermarket gift cards. "Why didn't we think of this sooner?" she asks.

One of the reasons might be the changing nature of the gift itself. Not that long ago shoppers would wade into a crowd in the back of a department store to buy a paper gift certificate. Today, many of the gift cards act like a debit card, making automatic deductions as it is used. This fall, for example, grocery chain Publix shifted from paper to plastic with values of $5 to $500 that can be reloaded with no expiration date.

The cards are continuing to evolve. For example, some retailers are now encouraging buyers to make the cards more personal. Online merchant 4YourSoul.com now offers a gift card that can be personalized with photos and messages. "Since we launched the card before Thanksgiving we've found 55 percent of those buying are putting digital photos and other creative things on the front of the card," says the company's chief customer officer, Jeff Keller, in Chicago, which works with such companies as Barnes & Noble and Napster.

Some businesses are even buying into the idea of giving employees gift cards instead of cash bonuses. These cards vary from ski resorts and theme parks to the fancy chocolate shop in the mall. "The card resonates longer than cash because when you use a product at home you are reminded who gave you that product," says Lee Poskanzer of the Incentive Gift Certificate Council, which promotes their use.

An increasing number of stores are also starting to eliminate the expiration date for usage. Consumer advocates have long warned that the cards need to be used. "People often wait for the ideal special occasion and ... we procrastinate," says Shu. She recalls receiving a gift card for Chili's. What she didn't realize is the restaurant chain reduced the value of the card by $3 a month. "By the time we used it there was no money left," she says, adding that often unredeemed money goes to the state as unclaimed property.

However, even veteran buyers admit giving the cards feels somewhat impersonal. For example, Ms. Grove bought her father a gift card to Suncoast Video because she knows he collects movies. "I felt a little lame; it's not the most creative thing," she says.