Wal-Mart's Grinchy Glitch

You've probably heard the news that Christmas didn't quite save retailers, with last-minute spending falling short of hopes. Retailers have high hopes that after-Christmas sales will save the day, partially driven by gift cards, but maybe not for Wal-Mart (NYSE: WMT). Not quite yet, anyway.

The Associated Press reported that Wal-Mart was having problems processing gift cards Wednesday. This was because of a glitch in a third-party verifier's system, which added up to delays in gift-card verifications. The discounter said it's working on the issue and it's sorry about the inconvenience for customers.

It's no secret that in a sluggish holiday season, retailers hope those who received gift cards in their stockings will come to stores now and load up on merchandise (although admittedly, many of these will be lower-margin sales as retailers mark down goods to move them, which Foolish colleague Kristin Graham pointed out last month is a Grinchy subtext to the happy gift card story). And this has been a big year for gift cards; research firm NPD Group said consumers handed out a lot of them -- 61% of consumers gave one, a significant increase from the 48% who gave them out last year.

Meanwhile, a Bloomberg article said that plenty of gift cards are now available for practical purposes like living expenses, a boon when things are tough for some consumers -- think of pre-paid debit cards from Visa and MasterCard (NYSE: MA), gift cards to fill 'er up at ExxonMobil (NYSE: XOM) or Chevron (NYSE: CVX), or Highmark's "Healthcare Visa Gift Card," which lets people apply their gift cards to prescriptions, Lasik surgery, and other health-related expenses. When it comes to practicality for struggling families, a Wal-Mart gift card fits the bill, because it can buy so many necessities, much more so than a gift card for discretionary items at places like Best Buy (NYSE: BBY) or Gap (NYSE: GPS).

The current climate may have represented a golden opportunity for Wal-Mart, and for some of its struggling customers, to enjoy a post-Christmas shopping spree. However, this glitch may have inconvenienced some shoppers -- and deeply disappointed them, too. Looking like a Grinch is no good for a retailer's brand. 

• Are gift cards actually a holiday Grinch?
• Wal-Mart started the holiday price wars early this year.
• Avoid retail disaster in 2008. 

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