Magazine Article | January 1, 2001

Online Gift Certificates Drive Sales To Stores

Source: Innovative Retail Technologies

Cadillac-Fairview malls service Canadians with 6,000 merchants and a $20 million gift certificate program. By adding online purchasing to the program, the company expects to double its profits and eliminate paper certificates.

Integrated Solutions For Retailers, January 2001

Giving gift certificates is the easy way out of shopping for friends and relatives. If those hard-to-buy-for people live in Canada, purchasing these monetary gifts just got simpler. Cadillac-Fairview (Toronto), owner of over 50 shopping centers across Canada, recently enabled its mall-wide gift certificates to be sold online. Since there is a Cadillac-Fairview shopping mall within a 30-minute drive of over 20 million Canadians – 70% of the country's population – Cadillac-Fairview hopes moving the program online eases gift giving on both ends. In fact, the company hopes revamping its paper-based program on the Internet will double its sales from $20 million to $40 million over the next 18 months.

Broaden The Buying Options
Cadillac-Fairview provides its gift certificate program not as a profit center, but as a service to its 6,000 merchants nationwide. "If a retailer is in a Cadillac-Fairview mall, the global gift certificate program drives sales to its store," said Ron Peddicord, executive VP of e-business at Cadillac-Fairview. But the service was costing Cadillac-Fairview almost 9% of gross sales, and its customers still had to go to a mall to purchase the certificates.

"We were going to have to put in new technology to do our paper-based gift certificates anyway, because the system was MS-DOS based," Peddicord said. "We didn't want a paper-based program over the long term, so we needed to open up to the Internet."

Cadillac-Fairview looked to Givex Corp. (Toronto) to provide it with the Internet platform it wanted to allow its 6,000 merchants to transition easily from a paper to a virtual world of certificates. Givex is a North American ASP (application service provider) specializing in gift certificate management services. "Givex was the only company that offered an across-the-board solution with respect to redemption," Peddicord said. "Others offered us an Internet solution, but didn't want anything to do with our paper-based gift certificates." In the previous system, a customer would be issued a paper document which merchants accepted just as they would a check.

Selling From The Web To The Stores
Since Cadillac-Fairview merchants operate on different systems, the Givex solution gives them the opportunity to accept e-certificates within their stores in various ways. Merchants can verify certificate numbers over the phone or incorporate a Givex feature into their POS systems. Another way is to install a stand-alone handheld POS device that can accept the e-certificates as well as credit, debit, or Givex gift cards.

Customers still can purchase physical mall-wide certificates, but they are in the form of gift cards instead of paper. The cards cut the cost to produce the certificates and ensure that all the money remains among the mall merchants, since a customer cannot receive change for a gift card. A balance must be carried on the card until the total amount is spent. Peddicord said the money Cadillac-Fairview saves by phasing out the paper system will be put toward marketing efforts for the malls.

Givex now manages and administers the gift certificate program for Cadillac-Fairview, allowing shoppers to purchase the certificates online through the Cadillac-Fairview site, individual mall sites, or the Givex site. Givex handles all the cost in respect to the program, and Cadillac-Fairview pays the company a percentage of the gift certificates to run everything. The services include real-time management, tracking, reporting, fraud protection, and a 24/7 customer help-line.

Peddicord cannot see why the Cadillac-Fairview merchants wouldn't want to join a program that serves the mall-wide certificates and provides another way for customers to shop at individual stores. In Cadillac-Fairview's malls, gift certificates make everyone's role in the gift giving process easier.

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