Dec. 10, 2007— It's holiday season again, and that means a slew of specialized print products hitting the market, from POP displays, to themed advertising, to wrapping paper. But one product has seen explosive growth over the past few years, and is on track to continue to see huge gains: gift cards.

The gift card, which was once a gift of last resort, has become a staple of holiday giving. It has evolved from a plain piece of plastic with a logo to include shapes and designs for every season and holiday, and is different for every retailer around the world. It is a branding tool, a customer loyalty tool, and a huge opportunity for commercial printers.

Printing News had the chance to talk with a big player in this market: Archway Marketing Services Inc. Archway is a certified distributor of financial networked cards. Leading companies leverage Archway for marketing operation management of gift cards, POS, and other marketing collateral.

Mike Moroz, president of Archway, is responsible for overall service delivery for the company's clients, and for driving Archway's North American business. He is passionate about helping companies solve logistical problems, and thrives on maintaining a company that is flexible enough to meet the changing needs of its clients. Since joining the company in 2004, he has spearheaded the reorganization of the company's senior management team, reconfigured the sales process, and increased the number of new client engagements. He took the time to give a little background on the gift card market, and what commercial printers can do to take advantage of this growing, and potentially lucractive, market.

Q. Exactly how big is the gift card market? Can you give some statistics on the market and its growth this year, as well as projected growth for next year?

A. According to TowerGroup, a leading financial services research firm, the entire gift card sales industry including gift cards, prepaid cards, secured cards, etc. generated more than $80 billion in 2006, and that volume is expected to exceed $100 billion in 2008. The gift card market is forecasted to reach $421.5 billion by 2010.

Within this market, universally accepted preloaded cards, such as Visa, represent the greatest growth segment, according to Mercator Advisory Group's study "Prepaid Market Forecasts 2007 to 2010," Nov. 2007.

Q. What role do commercial printers play in the gift card market? How much are they involved in the design and distribution of the cards?

A. The gift card market tends to be a niche print market. As retailers realize gift cards are a huge opportunity for them to reinforce their brands, the design of gift cards continues to evolve, driving the need for more creative-based card options. Today, there are gift cards for all occasions, but we are seeing the most growth in the fun, non-traditional cards that include multi-dimensional shapes, cards that light up, and micro-chipped cards.

Basically, if you can imagine it, someone will create and package it; however they need to understand the basic requirements of producing a gift card.

Because of the need to protect the consumer from fraud and ensure a good brand experience, there are rigorous requirements for printing and distributing gift cards. The material used to produce them needs to be state-of-the-art to protect the bar codes—or the magnet strips on the back of the cards—and the design on the front. Gift cards often spend a lot of time in consumer's wallets, purses, and pockets, and being swiped at the point of purchase. Cheap materials will wear off, causing them to be unreadable—which in turn, creates a bad experience at the brand and retail level. Marketers consider gift cards as mini, traveling billboards for their brands, so care needs to be taken during production.

The financial implications of losing a card in the supply-chain can be astronomical. Archway's commitment to the industry has driven us to develop best-in-class systems and facilities, allowing us to track each individual card from receipt at our facilities to the end user, whether that is a retail store or a consumer. There is no room for error in this market. Again, the distribution process requires many checks and balances to make sure cards are at the right place at the right time to drive consumer purchases.

Q. What role does Archway play in this market? How did you get involved? How has the company evolved over the years?

A. Archway plays a critical role in the supply chain of gift cards. There are many crucial factors that are important in inventory management, forecasting, and tracking of individual cards. Retailers need to make sure they have the right cards, in the right place, when the consumer wants to purchase it. Archway is able to manage the supply chain for retailers, making sure they receive the right cards from the printers, quality check the product, auto-replenish stock at the retail locations, and forecast supply needs to place orders with printers to avoid out-of-stock issues. We've built a robust system based on RF technology and other e-tools to help suppliers and retailers meet their goals, and keep the consumer engaged and happy.

Archway has a long history of supplying our retail clients with marketing operations management (fulfillment, distribution, logistics, decision support tools, etc) of POP, marketing collateral, and other signage. This foundation created a natural platform for us to evolve as the leader in the gift card market. We recently became Visa certified, which rounded out our certification by financial networks, allowing us to provide distribution services to gift cards and financial cards.

Q. What is the biggest trend in gift cards? Why?

A. The biggest trend we are seeing is in design. Traditionally, retailers have used one or two card designs. As the market grows, we have seen a shift from multiple holiday designs to new exciting shapes and packaging of cards (card holders, envelopes, etc.). Now most retailers have up to 20-30 designs, depending on the occasion or time of year. Examples include, house warming, Father's Day, Hanukkah, baby showers, graduation, and weddings. These multiple designs allow consumers to feel like they are customizing the gift card to the recipient more than if they gave a generic card design.

Q. What future trends are you watching for in this market? Why? In your opinion, how could commercial printers get involved/take advantage of that?

A. Financially secure cards, and travel cards that can be preloaded and reloaded will drive the future trends in the card market. These types of cards require certification for printing and distribution. Certification is a lengthy and expensive process. Commercial printers could either invest in certification, or partner with the lead gift card printers and distributors as a way to grow their revenue base.

Q. How would a commercial printer get involved in this market? What suggestions would you offer to a printer interested in learning more?

A. There has been explosive growth in the gift card industry. However, the relatively tight manufacturing capacity of gift cards and complexity of the distribution methods has formed a marketplace where companies are not using one single supplier to deliver all aspects of the program. If a commercial printer wants to get involved in this market, the first thing they should do is find a partner who can handle the distribution and management of the cards.

I would also recommend that a commercial printer attend the Prepaid Card Expo in Las Vegas next March, and look into joining organizations like GiftEx North America, an independent company specializing in gift and prepay card information, analysis, and support, to learn more about the industry. This is an emerging market, and there is still a lot of untapped opportunity to be discovered whether it is in cards, or the packaging and displays that go with the cards.

Q. Are there other things commercial printers should consider in the card market?

A. Beyond printing, supply chain partners play a crucial role in gaining consumer wallet share. Cards are a reflection of the retailer, and a consumer requires a good experience to continue to engage with brands. Make sure you work with partners that are certified by financial networks like Visa, MasterCard, Discover, and American Express. This will ensure that your partner is undertaking painstaking measures to protect the brand experience, and reduce the risk of fraud. In the end, it will make you look like a hero to your customers.