When you can't figure out what to get a friend or family member for a birthday, Christmas, or even as a thank-you, gift cards are often the last resort. But, for a growing number of people, gift cards are now the first choice.
Count me among that number. Gift cards are such an easy solution; I don't have to browse, compare, evaluate, or otherwise allocate any significant quantity of valuable intellectual resources (at least, I hope my intellectual resources are of some value). Last year, I got cards from retailers such as Home Depot (NYSE:HD), Wal-Mart (NYSE:WMT), Blockbuster, CVS (NYSE:CVS), and Limited Brands' (NYSE:LTD) Express store -- and soon, the special pieces of plastic won't be just for Christmas or Father's Day or whatever. I eventually plan on using cards just for the sake of simple budgeting concerns; for instance, if I want to put money aside for a major electronics purchase, I might acquire a few Best Buy (NYSE:BBY) cards over time leading up to the buying event.
Which brings me to a press release I noticed regarding Yum! Brands' (NYSE:YUM) Pizza Hut chain. It's obvious the company wants to push the cashless-transaction paradigm, and it is smart to do so. Not only can it make transactions more efficient and increase the average check value -- something Selena Maranjian wrote about concerning McDonald's (NYSE:MCD) infatuation with the plastic side of things -- but also it can keep people coming back, since Pizza Hut wants to make certain that consumers realize the card is reloadable. And here's a simple yet powerful attribute: A person is limited to storing value on the tool in increments of $5. So you can't put exactly what you want on it, which I interpret as beneficial for the Hut's potential return-on-investment on the program, since one would have to assume that the financial powers that be have determined the optimal economic dynamic at which to run said program.
The press release also mentions Pizza Hut's participation in the trend of making cards available at non-Pizza Hut locations. In this case, you can pick up them up at some Walgreen's locales. This wider distribution scenario is a wonderful way of expanding awareness of the brand. Overall, promoting this initiative aggressively should increase traffic and sales, and it is an interesting way for the company to differentiate itself from delivery rival Domino's; according to the company's website, the pizza delivery chain offers gift certificates as opposed to stored-value cards, as one would expect. Over time, that difference might offer an incremental advantage for the Hut.
Want some more toppings with this Take? Try the following:
Do you like gift cards, or do you think they are too impersonal? Do you think the use of gift cards is a valuable budgeting tool, or am I an idiot for wanting to store money on a card instead of in a money market account at a bank? Share your thoughts on the Yum! Brands discussion board.
Fool contributor Steven Mallas owns none of the companies mentioned. He also can't wait for a reloadable McDonald's card.
