Podcast Ep 150: What began as a local initiative to keep business in the town of Letterkenny has spiralled into a success that is the envy of towns across Ireland.
Across the world communities and businesses are bracing themselves for economic uncertainty spurred on by war, inflation and other factors that are leading to a rise in living costs. In the Donegal town of Letterkenny – a town well versed in economic peaks and troughs – the sense is you make your own opportunities in this world.
In recent weeks a shop local scheme launched back in 2004 by Letterkenny Chamber of Commerce smashed the €4m barrier in terms of encouraging local spend with local businesses.
“Our research shows that for every euro that is spent on these cards another €3 or €4 also gets spent. So from that €4m it is possible that maybe between €13m and €16m was spent in the local economy”
The ShopLK scheme gained impetus when it switched to a gift card format and last year it saw a 34% rise in popularity. A contributing factor no doubt is the strong support for the scheme by local businesses to accept payments but also the use of the card by businesses to reward staff by making use of the up to €1,000 tax-free employee rewards provision made in the last Budget.
The advantage of the ShopLK card is that it acts as a promotional platform for Letterkenny as a retail destination but it also helps businesses in the town to increase their own brand awareness.
Paying it forward
We talked to the CEO of Letterkenny Chamber Toni Forrester and board member Jimmy Stafford about how this local spend could potentially be leveraged up to millions more for the town’s traders.
Forrester explained that ShopLK began life as a voucher scheme in 2004. “The board of the Chamber at the time decided ‘let’s do something local for shopping’ and it began as a week-long event and grew into a year-long event. But it grew and it grew, especially during the recession. And as more and more businesses came on board, loads of people started buying them because you could pretty much use them anywhere in the town.
“We were doing in the region of 150,000 vouchers in one year and we decided to switch over to a plastic gift card. There hasn’t been a year where it has slowed, it has always gone up by some percentage.”
Jimmy Stafford, a Cork native, Bank of Ireland employee and local radio personality who has made Donegal his home, said the success of ShopLK has put Letterkenny on the map when it comes to other towns hoping to emulate the success of the scheme and keep local spend local. “It is probably recognised now as one of the most successful card schemes in the country. We surpassed €4m sales in 2022, which is phenomenal.
“That’s €4m in real money that was sitting on those cards and there are many examples of people who may have gone in with a gift card but spent an additional €40 or €50 on top of the €20 they may have had. Our research shows that for every euro that is spent on these cards another €3 or €4 also gets spent. So from that €4m it is possible that maybe between €13m and €16m was spent in the local economy.
“The ShopLK scheme gives confidence to the local community and confidence to local businesses and it drives a positivity that since Covid has been one of the big messages: shop local, stay local. It provides employment and when it comes to online shopping it also encourages people to shop local.”
Why local matters
Commenting on the Budget provision that enabled employers to gift staff up to €1,000 tax-free through voucher schemes such as ShopLK, Forrester said that there was a definite surge in businesses buying them for their staff. “As soon as the law had changed we saw a lot of new businesses sign up. And that’s the beauty of this. They’re giving it directly to their staff and and that is just then coming back into the local economy.
“Looking back to Covid, that did benefit local shopping in a funny kind of way. A lot of people went online and shopped locally, so a lot of our businesses here in Letterkenny were already on the web. These were the local grocers or butchers who delivered to your parents. It really paid dividends for the whole idea of shopping locally because people began to see that behind these businesses there are real people and that’s where ShopLK has really ticked the box. That could be your daughter or your son, perhaps working there casually during the summer. And if we can keep these retailers there through gift cards that promote local shopping, then we have a better economy for it.”
Asked if ShopLK can be or should be replicated by other market towns across Ireland, Stafford said that it requires a lot of hard work and dedication. “We’ve received calls from large towns around Ireland because we’ve shared our success across social media and they ask how we got to €4m. And the answer is that all the way back to 2004 it has been a lot of hard work, discussions, trial and testing and working with retailers to build their confidence in it.
“From an administrative perspective it can be really cumbersome. The current scheme is really slick and will get slicker. But from a journey perspective you have to bring people on the journey because there is a lot of governance and due diligence with this because you are dealing with a lot of money, which means there’s a guarantee side to it and people’s confidence in the company that runs this. But crucially if you have a great board behind you and great support in the town, you can make it work.”
Currently there are more than 250 businesses in Letterkenny that accept the ShopLK card.
Forrester says that technologically, the scheme has evolved from a paper-based voucher system to a card-based system that is enabled through EML, the Meath-based payments platform provider formerly known as Prepaid Financial Services.
Finding a regulated technology partner was crucial, she said, and advised other towns considering similar schemes to do the same, particularly when it comes to security and governance. “When we started out it was a paper-based system and our biggest concern was security. The system wasn’t perfect and we had to do everything manually, which was a nightmare. Then we partnered with EML. One of the things that has worked for us is that we don’t charge a commission to our retailers. Some platforms charge 10% commission, which for a small local coffee shop is significant. But we wouldn’t do that.”
Looking to the future of the scheme, there is the potential to turn the ShopLK into a digital card that will sit in smartphone wallets. “It’s really about what people want,” says Stafford. “There’s is a cohort that love the physical card.”
He added that a core tenet of the Chamber’s philosophy around the card is that if Letterkenny functions well, other towns and villages in its hinterland will develop too.
In conclusion, Forrester said it is about bringing life back into Irish town centres. “A town centre needs to be a destination.”