'Sombre' mood inside David Jones stores as shoppers redeem gift cards

David Jones customers have rushed to spend gift cards hours after news broke the retailer's future was in serious jeopardy.

The iconic 188-year-old department store chain entered voluntary administration and receivership this morning.

At the David Jones store inside the Highpoint Shopping Centre in Melbourne's west, some shelves were short of stock, while others were due to be cleared by staff.

Shoppers had also come to redeem gift cards.

"The staff were saying that it's really busy today, but it's very sombre," shopper Pauline Ricotta said.

Ms Ricotta said she had come into the store to spend a $300 gift card she had for a year.

Another shopper, Sonya, said she wanted to use $450 worth of gift cards before it was too late.

"I've always found these [suburban] DJs, they don't really have as much stock as the city or Chadstone, but it's the closest one to home, so I quickly came in," she said.

She said she had planned to wait until Black Friday sales, but came to the store after the news broke.

"I bought a couple of things, things that I probably wouldn't have spent that amount of money on if I was paying for it," she said.

"It was better than having to go dollar for dollar with the voucher or lose it completely as an unsecured creditor if that's what the administrators decide to do."

'If you have a gift card, go now'

Consumer Policy Research Centre chief executive Erin Turner encouraged people with outstanding gift cards to go into David Jones stores and spend them as soon as they can.

"If you have a gift card, go now," Ms Turner said.

"You have a small window where you can guarantee you can use it.

"While the company is in administration [and receivership], they're looking closely at the books, but they've confirmed they'll continue trading. This means the doors are still open.

"We don't know what's going to happen after this period of looking closely at the books. The company could remain open, it could wind up, or it might just close local stores near you that make using a gift card less smooth and easy.

She warned if David Jones was wound up, people may lose the money attached to gift cards because they would be treated as unsecured creditors and placed behind others the business was in debt to.

Anyone with David Jones rewards points should also try to spend them quickly, she said.

Applications for new David Jones credit cards have been stopped by the finance company that provides them, Latitude.

In a statement, a Latitude spokesperson said existing cardholders were not impacted and could continue using their card.

Business as usual on David Jones website

There was little sign of the financial problems plaguing David Jones on its website today, where ads for perfume and makeup brands, beauty gift cards and members' sales were prominently advertised along with a large range of Christmas gifts.

Ms Turner recommended shoppers go to a physical store rather than shopping online.

"It's very likely that if you buy something online today, you will still receive it, but there's a chance that you might not or a chance there'll be delays or issues," she said.

Queensland University of Technology retail expert Gary Mortimer said receivers would have to work out how to treat gift cards and rewards points, and they could come with new conditions.

"I recall that Barbeques Galore, for example, when they went into administration, the administrator honoured gift cards, but it required a subsequent purchase on top of the gift card amount," Professor Mortimer said.

"If you had a $100 gift card, you had to spend $200 in store to redeem that $100."

When retailer Dick Smith went into receivership in 2016, customers who put down deposits on items or had gift vouchers did not get their money back or have them honoured.

Consumer advocates, including Ms Turner, have argued funds from gift cards should be stored in trust to ensure people do not lose their money when a business goes belly-up.