Unique gifting option for the festive season

Republished here on: 29 October 2012

As appeared in the The Economic Times on 29 Oct 2012:

By: Milan Sharma

Similar to debit cards, the pre-loaded gift cards can be used multiple times across different retailers–

Confused about what to gift someone this festive season You certainly dont want to spend time looking for something that ends up in the pile of recycled gifts.However,going the easy way by picking store vouchers can limit the choice for the other person.After all,vouchers are for onetime use and have to be redeemed for the entire amount.This is why gift cards make for a more savvy choice.These are prepaid cards,which can be loaded for a certain amount,ranging from 500-50,000.They are similar to debit cards and can be swiped at any brick-and-mortar or online store that accepts plastic.Another benefit is that you can swipe a gift card only for a partial value and use it multiple times till it is valid.

Typically,there are two kinds of gift cards in the market.A closedloop card is merchant-branded one and can only be used at a single retail store or chain,such as the ones issued by Caf Coffee Day or Fastrack.Then there is the open-loop card,which can only be issued by a bank along with a credit card company like Visa or MasterCard.These can be used across all stores.
Most gift cards are valid for a year.You can approach a store or bank directly to buy a gift card,or search for one on portals like Woohoo.in,Giftcardsindia.in,Indiaplaza.com and Infibeam.com,which will deliver it for free.Some banks also sell gift cards on their websites.

! Expiration issues

Though gifts cards can be reused,they come with a validity period.Most are valid for a year,in line with the guidelines of the Reserve Bank of India for prepaid instruments.However,some gift cards may have a shorter period,such as the merchant-branded ones from Woohoo.in, which are valid for 360 days.While validity dates are stamped on most gift cards,if yours does not have one,write the expiry date behind it with a permanent marker yourself.Some gift cards also come with the condition that they have to be swiped once in a quarter.
The biggest problem is that if the card expires and still carries some money,you will not get a refund.Take the gift card offered by the State Bank of India (SBI).If the balance in the card is below 100 and it has not been used for six months or has expired,the entire balance will be forfeited and it will be closed.However,if the balance is above 100 but the card is no longer valid,the bank transfers the remaining balance (minus 100) to the cardholders bank account if you file an application within three months of expiry.

! Renewal and top-ups

To fight fraud related to prepaid cards,the RBI has issued stringent guidelines on prepaid gift instruments.So,the maximum purchase value for both merchant-branded and bank gift cards cannot exceed 50,000,with the minimum value being 500.These cards are non-reloadable and cannot be topped up.However,you can get them reissued,though there may be a fee for this.The SBI charges 50 for reissuing a gift card,while the HDFC Bank charges 100,plus taxes,for its HDFC GiftPLus card.If you are taking a gift card from a bank,you will have to complete the know your customer (KYC) procedure.This isnt required for merchant-branded ones.
The only exception to the non-reloadable clause is HDFC Banks Mudra GiftPlus Card,which can be topped up any time but can only be used to purchase gold or silver coins at HDFC Bank branches.

! Invisible charges

Bank gift cards can be used at multiple establishments,which makes them score high on convenience,but this benefit comes at a cost as several extra charges are levied.For instance,ICICI Bank levies 200,plus taxes,if you want to check the charge slip for any fraudulent transaction.If you swipe the Union Bank of Indias gift card at a restaurant,20% of your food bill will be blocked on the card to cover any possible tip.The same is true at gas stations to cover fuel surcharge.However,if there is no tip or surcharge on the final bill,the amount will be unblocked after a few weeks.So,you need to be careful while using the card towards the fag end,because if the total amount is more than the money loaded in your card,the transaction will be declined.
On the other hand,merchant-branded gift cards do not have any extra charges.The policies of such cards are governed by the retailer.If you are a frequent customer and also have the stores loyalty card,any problems that may arise will be handled smoothly by the store.This is why 70-80 % of the gift card market is merchant-branded, says Kumar Sudarshan,director of QwikCilver,a gift card solution provider to various brands.

! Specific or general

Merchant-branded gift cards can be limiting and binding since you will only be able to use them at a particular store.If you present a gift card of a certain value of a high-end store and the giftee has to pay extra to make a purchase,the thought behind your gift diminishes.Consumers tend to spend 100-400 % more than their gift cards face value while redeeming them, says Sudarshan. This is why bank cards are preferable as gifting options since these can be used across retailers as well as for online shopping.The latter also makes more sense if you aren’t sure of the store that the other person prefers.Another advantage with a bank gift card is that you will get a tele-banking PIN and an Internet banking PIN,which will allow you to check the balance on the card as well as the transaction details.

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Woohoo Newsletter

Issue 12 – For August, 2012 

Greetings!                                                                                                                                                        

This edition of our newsletter is special as we complete one year interacting with you through our monthly newsletters!

This edition of our newsletter is special as we complete one year interacting with you through our monthly newsletters!

We are also happy to share with you that Mr. Gopalkrishnan S D, AVP, Watch Division,Titan Industries agreed to pen down a Guest Feature for this issue. We are glad to have a veteran like him share interesting insights on retail planning with all our readers.

Happy Reading !

NEW LAUNCHES

Hidesign in association with QwikCilver launched its loyalty program to reward its growing and loyal consumer base.

With this program, Hidesign customers will be able to enjoy exclusive rewards and privileges making their shopping experience a memorable one!

Woohoo.in launches its E-Gift Card-the one stop card for all planned (and unplanned) gifting requirements!

Whether its employee R&R programs, Performance Bonuses, Feel Good Gifts, Birthday Gifts, Anniversary Gifts, Festive Season Rewards. In effect, Gifts for any Reason and any Season- the solution is simple!

It eliminates logistic headaches and removes the responsibility of having to choose a suitable gift for the many employees and vendors the Corporate has!

QWIK BYTE: Share of Different Categories

GUEST FEATURE: Mr. Gopalkrishnan S D , AVP:Watch Division, TIL

Retail Set-up: How to make it more viable?

Product quality and functionality are essential prerequisites for any retail set-up. Advertisements announce these, create brand desirability and kindle the purchase instinct. The last mile conversion into real purchase is at the final touch point, the retail store. Hence it is important that the art of retail is carefully thought and planned through. Here are a few critical areas to be considered.

Selection of the store: A good research and understanding is required before deciding on the location where the store is to be put up. The profile of the residents in the catchment area of the store should be relevant to the product category being sold. One does not put up a value mart where the nearby population is highly upmarket!

Product display and Visual merchandising: A good and attractive display of the product is very essential to elicit customer interest. Products should be arranged for the ease and convenience of the customers. One might want to highlight new introductions within the store to catch customer attention. Products could be arranged based on price points or product categories or any such classification that makes it easy for the customer to browse through. The products should not be stored in a clutter nor should the counters look empty. Very often the customers may shy away from a product on the presumption of a high price or may not be at ease to enquire the price. It would be a good idea to display the prices and display the ‘value buys’ separately. The store also should not look intimidating, particularly if the products are of widely differing price points catering to different customer profiles. The visual merchandising such as in store posters, danglers etc should also be very relevant, inviting and pleasing. Store in general and product counters in particular should be well lit.

Selection of the franchisee: All stores are not always run by the company themselves. When the stores where the products are sold are franchised, it is very important that the process for selection of franchisees gets equal attention as the products being sold. The reputation, the local standing, the investment capabilities and the retail experience of the franchisee are few factors that deserve attention. These are very essential to ensure that the reputation for the brands that have been built over years and at a considerable cost are not being whittled away by an inadequate franchisee.

Store staff: The staff being polite, well-groomed, well-informed about the product go a long way in converting the walk-in into a sale. A good and presentable uniform, the kind of make-up or perfumes that they can wear, a good training on how to receive or greet a customer, when to assist a customer or when to leave him alone are traits well worth being trained for. Customers today do look for a good retail shopping experience and these are essential to get the customers again back into the store for repeat purchases.

Loyalty Programs: It has now become common practice to grant to customers reward points on purchases made, that can be redeemed during subsequent purchases, to gain customer loyalty and ensure repeat purchases. Collecting customer’s details such as their name, address, birthday or wedding day etc and wishing them is one other way of winning customer loyalty. They should be specially informed when products relevant to them are introduced or provide them a special preview of new products or allow the special privilege of availing discounts when there are schemes run by the company. These would make them feel privileged and stay closer.

Gift Card Programs: Gifting presents a great opportunity to the retailers today. There are any number of occasions- Father’s day, Mother’s day, Children’s day, Valentine’s day, Marriages, Birthdays, marriage anniversaries- just to name a few. Festivals and celebrations of successes and achievements add to the opportunity. Loyalty programmes, as already mentioned, helps in acquiring details of some of these and to use them effectively with customers. Unless one is gifting something to someone intimate, it may be difficult to judge what the giftee would need or appreciate. Very often what size to buy (as in case of apparels) could be an issue. In this fast moving world, one may not have the time to decide and choose an appropriate gift. Gift cards have starting playing a great role in this space. A Gift card which can be redeemed say in a large format store, gives wide options to the giftee. Being electronically managed, Gift Cards are also safe and convenient. Most of them in the form of plastic cards are also elegant and easy to carry around like a credit card. Paper Gift Vouchers with a face value force the customers to buy to the extent of such value or forego balance since refunds are never permitted. Gift Cards permit multiple usage and does away with this limitation. Retailers can create additional sales opportunities in collaborating with such Gift card programs by either offering their products on sales through such gift cards or selling Gift cards themselves as a product category in the stores.

Financial performance: It is needless to mention that any retail operation needs to be profitable. In a single store, profit achieved at the store is an easy measure. It has been proven that establishing many neighbourhood stores increases sales as it makes it easy for the customer to shop and to prompt the customers for considering the products in these stores, particularly when it comes to gifting. While this could lead to a desire for opening up of many stores, it is also equally necessary to keep an eye on each such store. Financial parameters or thresholds should be defined clearly and one should not hesitate to close down stores when they turn out to be not profitable. These could be based on turnover, return from square foot of space (especially when the rent is high) or return on investment made.

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