Toys “R” Us is taking aim at supermarkets and competitors that sell diapers and other core baby supplies with a new rewards program linked to a reloadable gift card for its Babies “R” Us stores.
The Very Important Baby (V.I.B.) program enables customers to earn a 10% bonus, up to $200 annually, on funds loaded into the card accounts at the point of sale with cash or with credit, debit or standard gift cards. For example, for each $100 a customer loads onto the V.I.B. card account, he will receive a $10 bonus in funds stored in the account.
The twist is that customers may use funds accumulated on the card only to purchase items in the product categories of diapers, wipes, formula and baby food, as the company steps up competition with rivals that include Wal-Mart Inc. and online providers such as diapers.com, analysts suggest.
Consumers’ original loaded fund amounts do not expire, but unused rewards expire after 12 months, the company said in a Feb. 23 press release.
So far, customers can only reload funds and redeem merchandise with the cards at Toys “R” Us and Babies “R” Us stores, the company says. And to participate, customers must also enroll in the company’s broad Rewards “R” Us program. But customers can check their V.I.B. card balances on the company’s website.
At least one analyst says the Toys “R” Us move is part of a trend in which retailers are becoming more tactical with reloadable gift cards.
“Reloadable gift cards are not a new concept, but some of these tactics and innovations are new,” Ben Jackson, a senior analyst with Mercator Advisory Group, tells PaymentsSource.
An unusual feature of the V.I.B. card is that funds are dedicated to specific merchandise types, he says.
“Toys ‘R’ Us is rewarding customers for future spending and creating an incentive for them to come back and refill commodities,” Jackson says.
The lack of an online option to reload cards, a la Starbucks Corp.’s prepaid reloadable gift card, is somewhat unusual, Jackson observes.
“Maybe Toys ‘R’ Us is exploring the program to see how it works before adding an online component because clearly going across all of the company’s sales platforms would provide the greatest impact,” he says.
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