Gift cards set to grow despite REDGroup voucher woes

Retail experts say controversy over gift vouchers issued by the collapsed REDGroup Retail, owner of booksellers Borders and Angus & Robertson, shouldn’t dampen enthusiasm for gift-card vouchers in the long-term.

Ferrier Hodgson, administrators of REDGroup Retail, yesterday gave gift card recipients just under a fortnight to use their vouchers. Gift card holders are also required to spend an amount equal to the value of their voucher in order to redeem them.

Ferrier Hodgson has stressed that it is under no legal obligation to honour gift cards purchased before its appointment as voluntary administrator in mid-February, adding that customers who choose not to use their cards can join the line of creditors.

The Australian Centre for Retail Studies’ Lisa Tartaglia is doubtful the troubles with REDGRoup Retail’s gift cards will damage the popularity of gift cards in the long-term.

She says gift cards have become increasingly popular, particularly online and at Christmas time, and consumers have embraced the ability to choose the amount of money they put on their cards.

“It’s so hard to buy for people these days and you run out of ideas,” Tartaglia told SmartCompany.

“It used to be department stores, but over the years more retailers are expanding their offering.”

Some of the bigger gift card sellers in Australia are department store group Myer, Wesfarmers (which owns Coles, Bunnings, Officeworks, and Target) and the Federal Government-owned Australia Post.

An Australian Post spokesperson said it no longer sold gift-cards associated with REDGroup Retail, and declined to answer whether it had experienced any backlash from the company’s collapse.

Australia Post said growth in voucher sales topped 20% last year, and it has sold more than two million cards since their introduction in retail outlets in October 2007.

“Our new business strategy aims to offer new products and services through our outlets, which represent the largest retail network in Australia,” the spokesperson said by email.