Authored by: Mo Chaar, Chief Commercial Officer of Givex
It has been a tough year for businesses in the hospitality industry across Canada, and to add insult to injury, global supply chain disruptions could last longer than expected.
The pandemic, along with ongoing supply chain challenges, have led to food and supply shortages in restaurants across the country. Along with persistent labour shortages and inflation, these issues are taking a financial toll on restaurants, but stored value technology can be a win-win for customers and businesses alike. Consumer demand has remained high, and Canadian businesses are seeing increases in gift card sales from previous years.
According to the Bank of Canada, supply chain issues were fueled by pandemic-era consumption patterns, as consumers bought more goods while many services were unavailable. In 2020, as lockdowns across the country put a stop to in-store shopping, gift cards became a pandemic staple. The more recent and ongoing supply-chain issues of 2021 made finding the perfect physical gift more challenging, and the pandemic may have accelerated the more widespread use of gift cards. This is good news for businesses such as restaurants who can capitalize on this trend to help keep their business afloat and see a steady source of revenue.
How stored value technology can be used to foster scalability
A prime example of how gift cards can be used to achieve success is iFood, a Brazil-based mobile app and online food delivery platform similar to DoorDash or SkipTheDishes. Each month, iFood processes more than 60 million orders, and the company works with more than 270,000 restaurants in 1,500 cities across Brazil. In 2019, iFood partnered with Canadian leader in restaurant technology Givex to migrate its existing iFood gift cards over to the Givex platform. Together, they launched the iFood Card that can be used with the iFood app to order food, groceries, pet and pharmacy products and services from multiple locations in Brazil.
Through its collaboration with Givex, iFood was able to scale the iFood Card program to such an extent that in less than two years, iFood sold more than 10 million cards. This success has enabled iFood to reach new users — for instance, those who acquired a gift card offline and now have access to food delivery services. The pandemic hit Brazil hard, but iFood continues to provide revenue for Brazilian restaurants during new COVID waves and amongst supply chain delays — and Canadian restaurants can emulate this success.
Consumer sentiment is changing
There’s a perception amongst many people that gift cards are for the “lazy gifter,” a thoughtless and impersonal gift — but recent stats found that three quarters of millennials would prefer a gift card over a physical gift.
Despite the risk of launching a gift card program in Brazil, where gift-giving is deeply rooted in culture and symbolism, the program has seen much success. While the idea of giving someone a gift card was once deemed impersonal, the proof is in the pudding. Attitudes have changed and, ultimately, the demand for convenience has shifted the sentiment around gift card giving. This changing perception is for the better, as they can be a powerful tool to provide support to a struggling hospitality industry.
How gift cards can be used to boost Canada’s hospitality industry
So, why should Canadian businesses care? Small businesses and restaurants are now facing new restrictions as the Omicron variant spreads rapidly, threatening their survival. With ongoing supply-chain disruptions lingering, stored value technology is a powerful tool for business owners to drive customer loyalty, put revenue in their pockets, and foster scalability.
Using iFood as an example, it was only through the partnership with Givex that iFood was able to scale the gift card program to such great success. Through an interactive app, users are guided through the steps to purchase an e-certificate. The ease of use and interactive technology made this partnership successful, but this model doesn’t have to be limited to Latin America.
With many items out of stock and backordered, Canadian consumers are more likely to turn to gift cards when gift-giving for any occasion, and restaurateurs can capitalize on their increased popularity. Progressive business owners who want to generate new revenue and provide alternative payment options to consumers should consider partnering with stored value technology providers, who can also help businesses manage the huge volume of transactional and personal data that gets processed. This data can be captured to drive insights into who your customers are, deliver customized offers to them, and build interactive loyalty relationships.
Stored value technology supporting local businesses
Stored value technology can benefit consumers, too. Gift cards can be used to strengthen the sense of community and belonging during tough times by allowing people a means to support their favourite local businesses that have been impacted by the pandemic. Whether it be ordering groceries from a preferred supermarket, or picking up dinner from a beloved local restaurant, gift cards are an easy way for consumers to support the businesses that need it the most. Not only do gift cards provide a means to support businesses, but they’re also easy to come by. If one is gift-giving, a gift card is a great way to ensure that recipients get something they’re happy with.
Video killed the radio star, but will reopened restaurants kill the gift card? The answer is likely no. Gift cards are likely to remain a popular option for the foreseeable future — and retailers are recognizing this increase in gift card popularity. From Oct. 1 to Nov. 30, 2021, Square Canada found that amongst its customer base, merchants selling physical or digital gift cards increased by 21 per cent compared with the same period last year. This represents a huge opportunity for businesses to capitalize on the model that made iFood so successful in Brazil.
With uncertainty surrounding the COVID-19 and a new wave of restrictions across the country, there’s more tough times ahead for Canadian businesses in the hospitality industry.
The importance of stored value technology can’t be understated, as it can be used to not only keep businesses afloat, but allow them to scale and drive customer loyalty — factors that will be key as restaurants weather both new and existing challenges in 2022.
Mo Chaar is the Chief Commercial Officer of Givex, where he oversees commercial strategy and development worldwide as well as managing sales teams within North America. His experience in gift card, loyalty, and POS has played a pivotal role in the success of some of Givex’s largest partners.