Are gift cards a safe reward?

Are gift cards a safe reward? With news about brand closures, you may be concerned as to the validity of a gift card when a business can seemingly vanish overnight. It’s an issue that the UKGCVA – UK Gift Card & Voucher Association – have been keen to investigate. According to their panel session at RBTE, retailers who close down and have distributed gift cards are being encouraged to continue to accept them to appease consumers.

Panellists were asked if stores closures were bad for the gift card industry. Panel moderator Gail Cohen, director general of the UK Gift Card & Voucher Association, said that her association had been involved in this several times over recent years with HMV, Austin Reed and ToysRUs, and the latter retailer had accepted gift cards while British Home Stores honoured 50% of the gift card’s value.

“We encourage them to take gift cards and we encourage consumers to spend your cards, and don’t save them as they are money and if someone is actively going into receivership, then spend them,” she said. “We will send messages to consumers where possible.”

Statistics from the UK Gift Card & Voucher Association show that 98.5% of gift cards are redeemed in a year.

Cohen said: “We’ve talked to our retailers and to government and it is a subject that does come up, and as soon as something happens we’re in touch with the individuals.”

Hayley Santus, B2B and gift card manager at B&Q, said the incentive was to keep the customer happy, and B&Q was accepting old Kingfisher vouchers if they are sent to head office, where the value was transferred on to more modern gift cards.

Clive Williams, director of Prepaid Consultancy Services, said buying a gift card is essentially pre-paying for goods, and “if you put a deposit on anything and that business goes into administration it is the same thing.”

On a general question about gift cards, Tony Rich, corporate sales manager at Pizza Express, called the concept a “magnificent tool for the brand” which opens the revenue stream and locks in spend from customers who do not spend with other retailers, and can bring in new customers when they are used as a gift.

On a question on what was new, Williams said that mobile “is a huge channel wherever you go and an opportunity for everybody”, and with mobile wallet solutions there are opportunities to get into the loyalty space.

See the original feature here.