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Fallout Over Toys ‘R’ Us’ Gift Card Redemption Policy

Reading Time: 2 mins
By Published On: May 23, 20180 Comments

Toys ‘R’ Us Australia’s Facebook page has been hit with thousands of angry comments from consumers that are outraged by the struggling toy store’s new gift card redemption policy.

On Tuesday, Toys ‘R’ Us announced its Australian operations had been placed in voluntary administration, under the helm of advisory and restructuring firm, McGrathNicol. As part of a statement to the public, the company said that gift cards would be redeemed, but only if a consumer was spending double the value of the card in one transaction.

“Gift cards and vouchers will be honoured provided customers spend an additional equivalent amount in store (in other words, to utilise a $100 gift card or voucher in full, customers must spend at least an additional $100 in store),” the statement said.

Since the statement was published on Facebook on Tuesday morning, a deluge of angry customers has jumped online to complain about the “lack of respect” the policy is affording its customers.

“They’ve already taken the money for the gift card, they’ve got the cash, so there’s no reason they shouldn’t honour the card. It’s just theft,” one angry user wrote on Facebook.

Another frustrated customer claimed the policy is a “JOKE,” as the gift cards were purchased with the assurance they would be able to redeem them.

“When we purchased the card, you didn’t tell us any of this information. Your company was happy to receive our money with no hesitation, yet now you want us to spend more to be able to use what is correctly ours already,” she vented.

Toys ‘R’ Us isn’t the only retailer to toughen their guidelines for gift card usage after falling into administration, as dozens of Australian businesses have done this in the past, including the likes of Angus & Robertson and Borders. The global book retailers gave local customers less than two weeks to redeem their vouchers when administrator, Ferrier Hodgson handled the company’s bankruptcy in 2011.

Angus & Robertson and Borders also stipulated that customers would have to match the value of the gift card dollar for dollar, and that it was under no legal obligation to honour cards purchased before the business entered administration.

Toys ‘R’ Us Australia’s financial problems come after its US parent collapsed in September 2017. After failing to successfully negotiate a sale of the Australian branch of the business, local operations have been placed into administration, as administrators reportedly search for a new buyer.

According to industry analysts at IBISWorld, the collapse of the toy retailer shouldn’t come as a surprise, as the toy and game retailing industry has been under immense pressure in the past few years.

“Similar to the United States, external competition for Australian toy and gaming retailers stems from discount department stores, such as Kmart, as well as online-only retailers such as Toy Universe and Online Toys Australia.”

With an estimated 20.4 percent market share in the Australian industry, IBISWorld expects Toys ‘R’ Us’ failure will act a wake-up call for other businesses operating within the space.

“Existing retailers are anticipated to learn from Toys ‘R’ Us’ failures. These retailers will likely review their product ranges to reduce cluttered inventory and start focusing on niche markets.

“Most importantly, many of these incumbent operators are anticipated to shift their emphasis towards creating experience-based destinations for consumers, such as creating in-store play areas to generate brand value,” IBISWorld said in a statement to the media.

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