This week has seen Arcadia go into administration and department store staple Debenhams collapse.
Experts have blamed the move to online shopping and lack of adaptation to this ever growing way to buy clothes, with coronavirus accelerating their demise.
Those with gift vouchers at Debenhams, or any Arcadia brand – such as Burton, Dorothy Perkins and Topshop – should spend them as soon as possible.
Arcadia announced yesterday that gift cards can only be used in full if shoppers spend double their value, for example, if you have a £10 gift card, you need to spend £20.
Closures: There is a question over whether gift cards are a good idea as a present this year
Although often a popular Christmas present, gift vouchers, gift cards and experience days are subject to expiry dates – and will become redundant should the firm they are for collapse.
This has raised the question whether gift cards should still be bought as presents this year.
No doubt it is a thoughtful gift – but is it a waste of money?
In fact, some retail experts think that even more people will be buying gift vouchers this year due to the coronavirus meaning many people are staying away from the shops.
Richard Lim, chief executive of Retail Economics, said: ‘Due to restrictions around lockdown and non-essential retailers being closed, people are nervous about going out.
‘The traditional gift card is now a digital purchase that can be emailed to family and friends. Arguably, it might be more popular this year than previous ones due to these restrictions.’
Other experts point out that buying gift cards and vouchers can help struggling retailers stay on their feet when people are unable to shop in person.
Melissa Minkow, retail industry lead at digital consultancy CI&T, added: ‘Gift cards are always a top holiday gift, and this year, they’re actually an even more logical gifting decision considering how few in-person holiday gatherings will be happening.
‘The majority of the retailer struggles and closures we’ve seen this year were already in the works leading up to the pandemic. The pandemic was really just the nail in the coffin.
‘Thus, it shouldn’t be any riskier to give a gift card this year than in years past, as long as the gifter has been doing a bit of research before choosing the retailer.
‘There are still many safe bets when it comes to sending a gift card, and with consumers still in such a recession-induced, frugal mindset, the currency will be greatly appreciated.’
Lim admitted, however, that if consumers do buy a gift card from a retailer that falls into administration, they will not be accepted and become worthless.
He said: ‘If people want to buy gift cards and vouchers, it would be a sensible way of giving something to friends and family without going into a physical location.
‘It is about weighing the risk and it is a small risk if you choose the store carefully.
‘However, if you have a gift card with a retailer that is going through issues, it would be sensible to spend your gift card as quickly as possible.’
Department store, Debenhams, has finally collapsed with all stores across the UK due to shut
This can also be an issue with experience days that are now often popular gifts.
Some of the ‘days’ given as a present include expensive stays at hotels, driving a car around a racing track or even riding in a hot air balloon.
With the coronavirus stalling much activity, many people will have been unable to redeem their experience days and are unlikely to know when they will next be able to use them before they expire.
Whilst some firms are extending the vouchers to be used in the future, others will still have the same expiry date.
Not a fan of gift cards
Lee Boyce, assistant editor
In December 2018, I listed five reasons not to buy gift cards as Christmas presents.
They were: the retailer could go under, items you need may be cheaper at a different shop and they can go missing or expire.
On top of this, there is an environmental impact of all these printed cards, often only used once, and a much better Christmas gift is cash (or a bank transfer if you’re not seeing the recipient).
I stand by this. Yes, I want to see retailers survive and gift cards are part of their business model – but, I really would think carefully before buying one this year.
Adam French, Which? consumer rights expert, added: ‘Gift cards can be an easy option when you’re shopping for someone who is difficult to buy for – especially at Christmas.
‘However, after a very difficult year, many high-street retailers are struggling.
‘This year, you need to carefully consider whether it is a good option because when a business enters administration gift cards often become worthless.
‘If you are still considering buying a gift card this Christmas, it is perhaps worth purchasing one that can be used in multiple stores so there are other options should one go bust.’
Many people have been spending their gift cards quickly, data shows, with 98.6 per cent of UK shoppers spending their gift cards within a year and 50.3 per cent redeeming them within a month of receipt, according to the Gift Card and Voucher Association’s 2020 State of the Nation report.
A spokesperson from the Association said: ‘Whilst Arcadia’s recent administration is disappointing for the retail industry, our advice to consumers is to spend your gift cards as quickly as possible whilst these stores are open or contact the gift card issuer or retailer.
‘Similarly, we would always recommend that consumers use their gift cards when they receive them, to ensure that the card can be enjoyed before the expiry date – and particularly in these turbulent times.
‘After all, gift cards are there to be spent, they don’t earn interest and the benefit is to get maximum bang for your buck by using it as soon as you can.
Retailers want customers to spend their gift cards, they’re a brilliant customer engagement and loyalty product and we believe they should be recognised as such.’
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