New Jersey's largest city has officially introduced a local shopping incentives program, the first big urban area in the U.S. to implement such a concept.
Shop Newark, which has been in the works for about two years, aims to enroll 100 city-based businesses by June. Consumers will be able to use the program to receive cash rebates or property tax credits by shopping at those establishments.
For $10 a month, businesses can enroll in Shop Newark in exchange for a citywide marketing campaign, which is designed to familiarize the city’s more than 280,000 residents, 100,000 commuters and 50,000 students with their respective brands. Consumers can sign up for a free rewards card offering cash-back rebates at participating businesses.
“Usually these kinds of ‘buy small’ programs come out of more affluent communities,” said Karen Brown Stovell, executive director of Forward Ever Sustainable Business Alliance, the organization behind Shop Newark. “This is a game-changer.”
Shop Newark secured the Prudential Foundation as its primary sponsor earlier this year.
“We’re offering something that we hope will be a catalyst for other urban communities to think of these kind of solutions, solutions that would not just support small local business but give reason for these cities as a destination,” Brown Stovell said.
Newark is the third-oldest city in the nation at 353 years, and “we have a big history,” she said.
In August, when Shop Newark cardholders get their rebate, they can choose to receive it as a check or apply it as credit on their property tax if they are a local homeowner.
Fincredit Inc., a merchant-services company based in Marlboro, has helped to launch similar rebate programs in a couple dozen smaller New Jersey communities such as Haddonfield and West Orange.
“This is a big deal [in] an urban community,” Brown Stovell said. “Many urban communities in our nation have gone through so many problems, and I guarantee you if you’re intentional with your spending the average rebate is around $300 or $400. But if you’re really intentional with your spending, it could be $700 or $800. And hopefully, you’ll reinvest that back into the economy.”
According to Forward Ever, for every $100 spent at locally owned businesses, $68 gets reinvested in the local economy. Non-locally owned businesses keep only $43 in the local community.
In collaboration with the nonprofit TapRoot Foundation and sponsored through an initiative with Prudential Financial, Forward Ever determined that if they could shift $1,500 of spending for every 1,000 people toward local businesses, $6 million would go back into Newark’s economy within three years.
Several businesses are enrolled or in queue to be enrolled in Shop Newark. Barber shops, cafes, restaurants, beauty parlors, nail salons, boutiques and others are being encouraged to join by Shop Newark’s marketing initiatives and a calculated 14.5 percent increase in customer retention.
Forward Ever will release a list of participating businesses in June, when consumers can obtain cards of their own to start earning their rebates. Meantime, the initiative is as much about creating a community as it is about economic benefit.
“This connects the businesses to the community,” Brown Stovell said. “It’s not just a case of you walking in my store and I don’t know your name, but one of you walking in often because I do know your name. All those things that create a sense of place and pride … that’s what I want in Newark.”