STAFF REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of November 14, 2023
TO: Members of the City Council
VIA: Dante Hall, City Manager
SUBMITTED BY: Tim Rood, Community Development Director
SUBJECT: “Small Business Saturday” Extension of Yiftee Digital Gift Card Program
RECOMMENDED ACTION:
Staff recommends that the City Council adopt a resolution approving the third amendment to the Yiftee Digital Gift Card program to add an additional $25,000 for this contract, funded by the General Fund, and authorize the City Manager to execute all related documents that are substantially similar to the approved draft.
BACKGROUND:
On April 26, 2022, the City Council authorized the City Manager to execute an agreement with Yiftee for a Shop Local/Gift Card program for $65,000. At the February 28, 2023 meeting, the City Council authorized the extension of the program and first amendment to the agreement, adding an additional $75,000 due to the successful launch of the pilot program. At the June 13, 2023 meeting, the City Council authorized the Eat Local Hercules catering incentive program and the second amendment to the agreement, adding $50,000.
The Yiftee Community Digital Gift Card program is a cost-effective way to stimulate the local economy and assist small businesses in recovery. It also provides additional savings to residents who shop locally.
Yiftee has no set-up or monthly costs, and the additional City funds will pay for:
The $1+5% eDelivery fee (purchaser fee) plus a $1 bonus gift fee per card.
A bonus gift card to incentivize the use of the program and provide a benefit to all community members.
Branding costs associated with the development of the “shop local Hercules” campaign.
Marketing costs for advertisement and promotion of the program and related point-of-sale signage and posters for participating businesses.
Shop Local Program Bonus Gift Incentive
Many communities are integrating a bonus gift incentive to the community to encourage the success of their programs, amplify the infusion of dollars into the local economy and provide incentives to shop local. Typically, and past practice in Hercules, has been ‘buy one and get one free’ for residents. Hercules has the discretion to set the level of incentive appropriate to our community, in addition to limits on purchases per customer.
ANALYSIS
Staff and the City’s economic development consultant, HdL EconSolutions, recommend the Council authorize a $25,000 Yiftee program tied to Small Business Saturday, which is November 25, 2023. The City and the Bay Front Chamber will both publicize the promotion.
Small Business Saturday
Small Business Saturday is an annual event that encourages consumers to support local, independently-owned businesses in their communities. It falls on the Saturday after Thanksgiving and serves as a counterpoint to Black Friday and Cyber Monday, which often prioritize larger retailers and e-commerce giants.
Historically, reported projected spending among U.S. consumers who shopped at independent retailers and restaurants on Small Business Saturday reached an estimated $17.9 billion, according to the 2022 Small Business Saturday Consumer Insights Survey commissioned by American Express.
Founded by American Express in 2010 and officially cosponsored by U.S. Small Business Administration (SBA) since 2011, Small Business Saturday has become an important part of small businesses’ busiest shopping season. SBA, Women Impacting Public Policy (WIPP), and American Express will be kicking off the 2023 holiday season by encouraging consumers to support the nation’s nearly 32 million independent businesses.
With this initiative, the City and Bay Front Chamber will join in to encourage Herculeans to Shop Local this Small Business Saturday and all holiday season long.
Program Guidelines
Staff is proposing the following incentive system for the Program, which will be available to all purchasers of community gift cards:
Buy a gift card valued at greater than $5 and receive a bonus gift card equal to the value purchased, with a maximum purchase limit of $100 per card with the promotion.
A limit of 2 cards per customer
The Gift Card (original purchase amount) does not expire. Still, the staff recommends that the bonus gift card expire six months (120 days) after purchase (any expired unspent bonus gift funds would be returned to the City for redistribution after a restocking fee).
The City will pay all purchasing and delivery fees during the Pilot Program while funds remain (first come, first serve).
The above guidelines are consistent with the program guideline amendments approved by the City Council on March 28, 2023, except that the number of bonus cards per purchaser has been reduced from 5 to 2. This was a recommendation from Yiftee aimed at maximizing the number of people purchasing cards, given the limited budget for this offering.
Eligible Businesses
Consistent with past program guidelines, staff is recommending the following parameters for business participation in the program:
Is a for-profit business or City of Hercules Recreation Department class taught by a contractor in one of the following categories:
Retail
Restaurant/Cafe
Personal Services limited to the following only:
hair stylists
barbers
estheticians
massage therapists
gyms
nail salons
dry cleaners
tanning salons
pet groomers
fitness/specialty studios including martial arts, yoga, dance, and music Operates from a physical storefront or City facility (home-based businesses are not eligible) Maintains a current City business license
Has no open code enforcement actions
Has 20 or fewer full time equivalent employees as of December 1, 2021 Is either independently owned/operated or a locally-owned chain (i.e., local outlets of chains or franchises headquartered outside of Hercules are not eligible) FISCAL IMPACT:
Funds are available and will be appropriated in the General Fund under expenditure account #100-0000-611.90-00 (Project No. ARP218) for this proposed third amendment to the existing agreement. The proposed third amendment increases the total contract amount under this agreement by $25,000, for a total amount of $215,000.
Contract
Agreement No.
Approval
Contract
Approval Date
Authorized Amount
Original Contract
22-012
Council Resolution #22-032
4/26/2022
$ 65,000
1st Amendment
Council Resolution #23-010
2/28/2023
$ 75,000
2nd Amendment
Council Resolution #23-032
6/13/2023
$ 50,000
3rd Amendment
$ 25,000
Total
$ 215,000
ATTACHMENTS:
Resolution
Draft Third Amendment to the original agreement
Second Amendment to the original agreement
First Amendment to the original agreement
Original Agreement