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Sharing business can foster local shopping

Gift cards, local currencies and “disloyalty” cards can all be used to build businesses and jobs where you live

There’s a wave of business building going on around the developed world, and it doesn’t require a government program to make it happen.

It just requires the businesses in a community to get together and agree on one thing: to jointly sponsor a community gift card, a local currency, or both.

The community gift card is the easiest to institute. Any financial institution can run it for the community.

Why not use it, and put the money to develop a local system into something else?

Unlike a stored value card or gift card for a single store, the community gift cards are good with all participating merchants. Making them reloadable — with some benefit associated with their use (perhaps a program like, “we’ll add five cents for every $1 you put on the card,”) gets people shopping locally with the participants.

For the merchants, these look like cash-type transactions — certainly no worse than accepting debit cards.

A local gift card program strengthens every business that takes part, because it makes shopping in the neighbourhood worthwhile. It also makes new business ventures in the neighbourhood pick up an immediate audience, simply by being part of the program from the day they open their doors.

Chattanooga, Tennessee, has used this to revitalize its downtown, which had seen most businesses close due to competition from the highway strips on the outskirts of that city. Dane County, Wisconsin (whose main centre is the state capital, Madison) has a county-wide program open to local businesses — those that are owned and operated by locals — and a “Buy Dane” card system.

Both have the same idea: money that flows into the till of a locally owned business stays in the community and is used to build other businesses (through purchases) locally rather than flowing into the till of a major retail chain that ends up leaving the community.

But it’s not just gift cards or pre-loaded debit card technology, or smartphone applications, that are delivering results – which can be dramatic.

Brixton has been a poverty-stricken, down-at-the-heels borough of London, England for years. Few Londoners chose to go to Brixton if they could avoid it. Many of Brixton’s more successful citizens — who included former British prime minister Sir John Major (1990-97) — made their fortunes elsewhere, as opposed to within the community.

Brixton decided a few years ago to fight back, and created a local currency, called the Brixton pound.

Today, people who work in Brixton often get their choice of being paid in Brixton pounds or Bank of England pounds. (A majority now choose Brixton pounds.) The two can be exchanged at banks in Brixton. Most businesses in Brixton accept both kinds of currency.

Savings in Brixton pounds are being used to make loans to build and expand enterprises located in Brixton. This has formed a vital pool of capital for startups in a poor area. As with gift cards, businesses accepting Brixton pounds tend to find suppliers for their needs which are also in Brixton — and are unabashed about letting the Brixton council know their needs.

Today, Londoners flock to Brixton, spending money in its interesting shops on cleaned-up streets. Yet many of the businesses that were formed are aimed at serving local residents.

Bristol, also in the U.K., has recently copied the Brixton pound with its Bristol pound — and the city government has made it clear that the Bristol pound is welcomed for paying local civic fees and taxes.

Communities looking to develop local businesses might couple one other proven idea to the idea of local payment systems: the “disloyalty” card.

This idea came from seven independent coffee shops in Toronto, trying to compete with the big chains. The disloyalty card required a patron to have one cup of coffee at each of the seven, deliberately giving each of them business. At the end, the shop that they got their card from originally gave them a free cup — and they could then start again.

All seven coffee shops have added either additional outlets or major expansions and renovations since starting the program. It has built everyone’s business — by sharing.

If stores are going dark on a neighbourhood shopping street, try local spending power with one of these ideas to revitalize it — and create jobs in the community as well.

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