Do downtown shopping districts need their own loyalty programs?

Sources: Olympia Downtown Alliance; Downtown San Diego Partnership; City of Boston
Aug 19, 2021

Drawing inspiration from Pokemon Go, a new loyalty program in Olympia, WA, rewards downtown visitors for “checking in” with their mobile phones at local stores, restaurants, bars and entertainment venues.

Reward check-in points can be redeemed for prizes. The technology also encourages multi-store shopping trips by incentivizing users to create “shopping loops” and share favorite routes with friends.

Olympia Downtown Alliance and SnowShoe, the technology provider, are co-funding the pilot program.

“Our staff is asked all the time for recommendations of where to shop or eat,” said Kae Stair of Compass Rose, a gift shop in Olympia, in a statement. “The Go Downtown app gives us a fun way to share our recommendations with people and for customers to become advocates for their favorite places.”

Numerous cities and towns have launched rewards programs over the last year to support local establishments impacted by the pandemic. Most run for a limited time.

Local donors fund some. Many are supported by municipal funds or downtown alliance organizations, which are often funded by special property taxes on downtown businesses or membership dues paid by commercial property owners.

This past April, Boston launched an app, B-Local, that rewards users with Boston Points for purchases at a local business. The discounts are reimbursed through federal CARES Act Funding. A similar program in Akron, OH, generated more than $200,000 in sales and supported 170 businesses over six months.

Some other local efforts from around the country:

  • San Diego’s downtown alliance last July launched a program offering 700 $35 gift cards for $25 with the $10 bonus covered by local donors. The program was repeated in September. 
  • This past June, Raleigh launched an eight-week Support Local, Win Prizes contest. Shoppers submitted receipts over $10 from local businesses to enter sweepstakes for staycations, downtown behind-the-scenes tours and gift cards. 
  • An ongoing old-school program in Lowell, MA, encourages shoppers to pick up a Downtown Lowell Loyalty Card at participating businesses, get the card stamped six times at local businesses and drop the card in boxes around town for a chance to win a $50 gift card.

DISCUSSION QUESTIONS: How should downtown shopping districts design loyalty programs to provide the greatest benefit for the retailers involved? Which of the programs cited in the article or those you know from your own personal experience have you seen to be particularly effective?

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"These downtown loyalty programs are a great way for local municipalities to partner with retailers and restaurants to fuel the local economy."

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9 Comments on "Do downtown shopping districts need their own loyalty programs?"

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Dave Bruno

I love these downtown shopping district loyalty programs, but I think we should think bigger than just loyalty. Associations should think of these programs as portals to the downtown lifestyle, with constantly updated content from participating shops, opportunities for shop owners and associates to generate content, activities planned by the association, and coordinated promotions between shops. Creating an online culture that reflects and enhances the culture in the district will engage visitors and develop a sense of community that is nurtured by all, for the benefit of all, including visitors/shoppers.

Nikki Baird

This is an interesting take on coalition loyalty programs, in part because the benefits to consumers are being partly funded by outside forces like the CARES Act rather than from the retailers themselves. The challenge historically for these programs has long been how to balance funding the loyalty benefits against spreading those benefits across retailers. If you’re a retailer funding loyalty points, great – you’re benefiting from additional sales. If you’re a retailer redeeming loyalty points, not so great, especially if it doesn’t drive additional basket size. When you get this imbalance sustained over time, then the coalition falls apart. By having a commerce group, non-profits, or funneling of economic stimulus funds into funding the points/offers/benefits, it takes a lot of pressure off the retailers themselves. A win-win!

Ken Morris

The challenge with these programs is being too local. Each neighborhood can’t afford to build and maintain these sites. At Cambridge Retail Advisors, we have an entire practice, Economic Development, dedicated to empowering communities through technology and programming. So we definitely take downtown retail seriously.

Gamifying retail makes sense for downtowns, since they are location specific. But once the shoppers get to the local shops, they should expect the same level of technology they get from the mall and big box stores. Democratizing the technology to even the playing field between national chains and local mom and pop stores is essential.

Another challenge for retailers in many downtowns is parking. Retailers and downtown alliances should try to coordinate and offer discount codes that work in ParkMobile and other popular parking meter apps. This could also be by zone to encourage parking near specific retailers.

Richard Hernandez

Earlier this year, I started to see more of push for shopping local and shopping downtown. This involved things from discounts to virtual and in person events, and combined shop promotions to benefit the customers. I think these types of programs need to continue regardless of the pandemic.

Jenn McMillen

If the Maldives can launch a country-specific loyalty program modeled after hotel/airline programs, then downtown shopping districts have carte blanche! The biggest advantage that downtown districts have is the wide variety of business types–restaurants, boutiques, services, etc.–where people can earn. A wide swath of options is good since not everyone wants to shop the pet store or eat at the vegan place. For downtown programs, it’s the old adage: a rising tide lifts all boats.

Ricardo Belmar

These downtown loyalty programs are a great way for local municipalities to partner with retailers and restaurants to fuel the local economy. If the balance is right between how consumers earn points and how they redeem them, it’s a win-win for all parties involved. These should be seen as an opportunity to encourage and grow a downtown lifestyle, not just reward shopping behavior. Why not incorporate activities in downtown parks into the mix? Going beyond store loyalty points and rewards can make the entire city area more enticing to both live in and shop at by consumers and that helps the region grow overall. Finding ways for other local businesses to participate can expand this even further and create a much deeper sense of community when everyone involved is not just earning rewards, but encouraging the spend that creates those rewards.

Carol Spieckerman

The concept of district-as-brand is a great way to help local businesses build bridges between experiences and shopping. The same holds true for lifestyle centers and other retail developments. Companies like SnowShoe take things up a notch by quantifying engagement and building loyalty in a way that a traditional visitors bureau can’t. This kind of next-level loyalty building is emerging as one of the more exciting areas of retail right now.

Georganne Bender

Our offices have been in St. Charles, Illinois for the past 30 years; we have seen it go through all sorts of phases. About six years ago we adopted the slogan “St. Charles – Discover Your City Side.” We have a very strong Downtown Partnership that looks out for businesses. When we couldn’t have annual events last year the Partnership made them work in new and socially distanced ways. Restaurants stayed open because we closed streets so they could have outdoor seating where it previously was non-existent or limited. It’s been good for both businesses and consumers.

Aside from a beautiful and consistent branding campaign, the thing that makes “Discover Your City Side” work is something we don’t often see in other cities: the businesses participate. And they help spread the word with cross-promoted in-house events and promotions. If a citywide loyalty program is to work all of the businesses must participate. If participation is spotty, consumers won’t care about the program.

Chuck Ehredt

Any group of complementary businesses should consider collaborating to co-create more value for customers. Downtown Loyalty Programs may be the epitome of complementary businesses. The key to long-term success is fairness to all stakeholders, a unit of measure (points) that have real economic value and are stable over time, and the technology cost (vendor) is cheap (i.e. about 0.02%-0.04% of sales). We can deliver the technology at this cost, but often local politics and turf battles get in the way of execution. There needs to be strong leadership and then these programs can be remarkably powerful and drive immediate results.

"These downtown loyalty programs are a great way for local municipalities to partner with retailers and restaurants to fuel the local economy."

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