Companies Cut Gifts, Reward Employees Instead

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BOSTON (TheStreet) -- 'Tis the season for fruit baskets, cheese trays and logo-emblazoned tchotchkes.

A bellwether of the economy comes each holiday season when companies decide how much they allocate to gifts for clients, vendors prospects and employees. Holiday parties, bonuses and other seasonal boosts to worker morale are also part of the end-of-year spending plan.

Is Scrooge back on the sidelines? Not just yet, perhaps.

A recent survey of its membership by the Advertising Specialty Institute, which represents 26,000 sellers and suppliers, found that nearly six out of 10 respondents said they plan to spend about the same as last year on corporate gifts for employees and prospects or clients. Nearly one-third (31%) plan to spend less, and only 12% plan to spend more, a net decrease.

Small-business owners have their own outlook on gifting.

Research by American Express found that 44% of small-business owners will be giving their customers gifts this holiday season, down 3% from last year. The mean price of customer holiday gifts, however, is $740, up from $455 last year.

"It is undeniably a really challenging time still for a lot of companies," says Alice Bredin, small-business adviser to American Express OPEN. "Business owners feel this year, maybe more than in other years, the importance of thanking customers and making sure they really feel appreciated. This is not a time where anyone wants to lose a customer, and the competition is really fierce for all those buyers out there. So if you have a customer, you want to make sure you are really thanking them."

"In small companies, business owners really do understand the value that each and every customer brings to their success," she adds. "Thanking those customers is something that has always been really important to them."

Overall, gourmet foods and wine continue to represent about a third of the business gift market. According to market research firm Packaged Facts, about $2.7 billion worth of food was presented as corporate gifts last year, a 3.8% increase from 2007.

ASI's survey found that food or beverages were the most commonly cited client or prospect gift, followed by calendars, gift cards, writing instruments and desk accessories. Gift cards are the most commonly cited gift for employees, followed by cash bonuses, apparel, food and calendars.

More than one-half of companies plan on decorating gifts with their logo. Amazon Kindle and Apple iPod covers are hot gift items, ASI says, as are high-tech gadgets such as charging docks and USB hubs.

"Every holiday season, companies make critical decisions over what to give and how much to spend on gifts for employees and clients," says Timothy Andrews, president and chief executive of ASI. "Our survey shows that as the economy rebounds, gift giving remains an integral part of company feel-good campaigns as business owners discover ever more creative ways to pass along their name and logo."

In its survey of the smaller segment of small-business owners, American Express' ranking of top gifts varies a bit. Cards and calendars rank highest, followed by gift certificates, company-branded items, baskets of fruits or foods, charity donations, flowers or plants and wine or liquor.

"Like consumer confidence, corporate gift giving has inched back somewhat, with corporate buyers regaining their optimism in the economy," says Jeffrey Becker, CEO of Clients First. "Where there was no movement at all a year ago, now we're seeing people saying 'thanks' to their customers with holiday giving and other rewards."

His company specializes in promotional items and recently launched promohoot.com -- with a Groupon-style "deal of the day" feature on items that are overstocks, limited quantities or discontinued items. Its December unveiling was, in part, intended to cater to last-minute corporate gift-buying needs.

In consumer-based programs, there's a new level of confusion in corporate rewards. Suddenly, there are so many consumer-based contests and rewards that people question whether there will actually be a reward to claim, or if it will be worth their effort to try to claim a reward (or if the company will even be in business to collect from).

"People are looking for gifts that are more personalized than value-based," Becker says. "From writing a greeting in chocolate to engraving an iPod, you can see personalization is a big component this year."

Corporate gift giving may no longer be limited to the holiday season.

"We have seen growth in branded corporate gifts during other times of the year, when the gifts are not expected," Becker says. "These promotions are more memorable and increase up-sell and cross-sell opportunities for many businesses that use this strategy."

As for gifts to employees, job search website CareerBuilder -- owned by Gannett, Tribune Company, McClatchy Company and Microsoft -- maintains that employers did intend to offer more holiday perks, in the form of bonuses, parties and gifts, than last year.

In a recent survey, it found that nearly one-third plan to give holiday gifts, up from 26% last year. Among those giving gifts, 65% plan to spend the same amount for workers as in previous years. Six percent say they are not planning to give holidays gifts this year, even though they have in years past.

Home furnishings company Ikea took an interesting route to pumping up employee morale. Earlier this month, it gave all-terrain bicycles to all North American employees.

A more elaborate gift to employees was the holiday party thrown by Go Daddy in Phoenix earlier this month. The company -- which specializes in domain registration, website hosting and Danica Patrick videos -- rented out Major League Baseball's Chase Field and transformed it into a giant amusement park, complete with a ferris wheel, bumper cars and a merry-go-round. Musical performers at the event included Jewel, George Thorogood and the Destroyers, and ZZ Top.

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