Is This the Future of Gift Card Deals?
Over the holidays we saw a number of deals for the purchase of Visa/Mastercard gift cards. While some supermarkets got into the game, the office supply stores like Officemax and Staples were most aggressive. Staples even has another upcoming moneymaking deal.
Since I love these types of deals, I read through many ads and check out a variety of deals. Throughout the past month I noticed a deal at Albertson’s that has been running on and off. The deal looks decent on the surface, however once you get into the terms, things get a little dicey.
The Albertson’s Gift Card Deal
As you can see above, the deal seems simple. If you buy $100 in Visa, Amazon or Google Play gift cards, Albertson’s will give you $10 off of a $25 grocery purchase. With $100 Visa cards costing $5.95, there could be some potential for profit, especially if you use a card that pays 5% at grocery stores.
Problems With This Deal
There are two problems with this deal in my opinion. The first is that you are receiving a $10 voucher good for $25 in purchases. This means you are locking yourself into shopping at Albertson’s. If this is your normal store then no worries, but if not then the deal stinks in my opinion.
The real issue with this deal though is in the fine print. Look closely above. While you must buy $100 in gift cards to get the $10 coupon, only the purchase of $25 or $50 Visa cards applies. This means that you have to purchase 2 x $50 gift cards to trigger the deal.
Each $50 card comes with a $4.95 fee, meaning you are breaking even if you value the coupon that you get at $10. I really don’t think it has that much value since it requires you spend $25.
Analysis
This deal is actually very smart from a business perspective. Albertson’s real customers will see this as a great thing since they are kind of getting the fees waived. These smaller denomination cards do make great gifts.
From a manufactured spend perspective this is terrible. Albertson’s has found a way to have a deal that is attractive to their target demographic while at the same time being unattractive to us. I do think we will see more companies take this strategy, because it makes good business sense.
Conclusion
Hopefully we will continue to see lucrative gift card deals like the recent ones at Officemax and Staples, however I think deals like this one (with more stipulations) will become more prevalent since they make good business sense. What do you think?
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[…] a month ago I posted a terrible gift card deal from Albertson’s. (See: Is This the Future of Gift Card Deals.) In that post I speculated that these types of deal may be the […]
….by the way, Giant Eagle starts another 2 week promotion Jan. 8 for double “fuel perks” on gasoline with the purchase of either a $100 Visa, MasterCard, or American Express gift card. No discounts, no coupons, no rebates – just double credit for gas.
Have to agree with Shawn that it’s smart marketing for Albertson’s – especially since they are probably expecting most customers pick up a couple $25 or $50 Best Buy or Amazon or chain restaurant cards. In that case, it is a $10 win for the customers, since their is no activation fee. For normal spending (and 5% from CF) this would work, but a big skip from the MS front. Hopefully this doesn’t make it up the food chain to my Krogers!
I really don’t see this as the wave of the future! Maybe it makes business sense to Albertson’s, but will it actually increase giftcard sales? How many customers are going to buy a complicated breakeven deal with so many stipulations?
Visa had a much better deal for a month last summer at Giant Eagle grocery stores (OH & PA.) Buy $100 in Visa giftcards (any denomination) and get a $10 coupon off your next $10 or more store purchase. It worked out to $4.05 in free groceries, plus $0.20 off up to 30 gals of gasoline, plus even more if you have a 5% grocery cashback card.
To put a little perspective on why I wrote this, Albertson’s ran this very same deal last year several times except you could buy $100 cards and the discount was $10 off $10. Clearly this adjustment is a calculated decision. I can definitely see other chains trying something similar.
Alberton’s is now owned by the same company that owns Safeway. SW stores use to have the $10 off $10 with these but changed it to $10 off $25. This deal was decent when SW was running it on the variable reloads as well.
This looks like a neutral deal at best, unless you are dragging out a 5% or 5UR card. Even then, it looks like too much hassle for the time–whether you want to manufacture spend or not.
I believe most people will figure this scam out as many get burned by when buying a $100 gift care instead of $25/50. People may make poor choices at first, but reality can be a strong teacher. This deal will linger on the vine before dying a slow death.
I agree. This isn’t really a deal. If more companies move in this direction, we may see a reduction in the number of great Visa/MC gift card deals. Time will tell.
They had a similar deal at Safeway about a month ago. It was select gift cards, spend $100 get $10 off $25 purchase.
I picked up an ebay gift card because I shop at both eBay and Safeway (always get my vgc there) so for me it was a good deal, but it’s definitely not one of those things you should go out of your way for in any way unless it fits your typical routine like a glove.
Wow, the MBA crowd at Albertson’s finally caught on… I wonder if they teach MS techniques at Kellogg school of economics.