Gift Certificate Restrictions Imposed

Following Kyobo Book Center, CGV and Megabox that took measures to restrict gift certificate payments, other large franchises such as Lotte Cinema and Sinnara Record have made similar limitations or suspensions, intensifying the impact of the consequential blows.

In particular, the culture industry is expected to be impacted enormously as the franchises dealing in film, concerts, records and other cultural fields are, one by one, breaking off partnerships with the issuers of gift certificates.

According to a coverage this newspaper carried out on August 25 against 60 large franchises nationwide that signed partnerships with premium gift certificate companies (excluding Kyobo Book Center and three others), 12 enterprises limited the use of gift certificates, and four did not accept the gift certificate at all. Accordingly, the number of enterprises that limited the use of gift certificates rose to 19 in total.

Enterprises that put a ceiling on the amount payable in gift certificates are Lotte Cinema, Seoul Cinema, Sinnara Record and nine others. They are also revising plans to drop gift certificate trade in the future. The gift certificates that will be limited or refused in the stores of those enterprises cover all certificates issued by 19 companies.

Four enterprises including Tous Les Jours, Libro Books, and GS Bookstore do not accept gift certificates at all. In the stores of these brands, general gift certificates are accepted but premium gift certificates are not.

Nine other enterprises revealed their plans to decide whether they should continue accepting gift certificates, and 35 enterprises said they will continue to accept gift certificates for the moment regardless of the gift certificate uproar.

Why are Franchises in the Culture Business Hurrying to Take Measures?-

Theaters, record shops and book stores are where gift certificates are exchanged most frequently. Approximately 100 million won of what CGV and Kyobo Book Center, which are now limiting the amount of payment in gift certificates as of August 24, sell is in gift certificates each month, and the value of gift certificates other cultural enterprises accept amounts to 30 to 50 million won per month on average.

These enterprises fear the notion that they could suffer big losses in the event of bankruptcy of the gift certificate issuers, since they request that certificate companies make redemption payments in a lump sum at the end of the month rather than doing so on a daily basis.

Lotte Cinema, one of the “Big Three” of the domestic theater businesses, decided on August 25 to limit the amount payable in gift certificates to 10,000 won per person, similar to CGV and Megabox. Seoul Cinema, Land Cinema, Primus and other theaters also made limitations at the same level.

Sinnara Record, a large record store business, also decided on this day not to receive more than 25,000 won in gift certificates for each payment. “We decided to limit the payment in gift certificates since bankruptcy risks of the issuers increased with the ‘Sea Story’ scandal, and we can refuse to accept any gift certificates issued by premium gift certificate companies when the situation worsens,” Sinnara Record explained.

Culture and Art Sectors are Worried about the Blow-

Business bodies involved with plays and musicals are greatly concerned as they worry that the “gift certificate scandal” might repel their customers. The blow could be enormous if and when the use of certificates is totally suspended as a result of bankruptcy of the gift certificate issuers. Ten to 20 percent of revenues from tickets for plays sold at the ticket boxes are sales through gift certificates.

Even though the entrepreneurs in the culture business are not actively limiting the payment in gift certificates out of concern that doing so could repel audiences, they are asking the payers to use other methods of payment at the ticket boxes. Director C of a cultural performance agency stated, “Normally we sum up the gift certificates once a month, but these days we are requesting the redemption to the issuer everyday.”

“A large number of customers visit theaters in order to spend their gift certificates,” says an official of a play performance team. “It’s a pity that the gift certificates initially created to stimulate the culture are failing to perform their functions due to the failed policies of the government.”

In the Meantime, Stores with Small Amounts of Gift Certificates Trade will Watch the Development-

On the other hand, franchises with only a small amount of trade in gift certificates such as amusement parks and hotels are planning to watch the development for now. Lotte World earns mere millions of won among entry fees through gift certificate payments each year.

Internet malls such as Daum and Interpark are publicizing that there is no problem with gift certificate payments.