Businesses have been closing down with angry business owners taking to the streets in protest over light rail construction work which has been preventing customers from accessing 230 stores on Jerusalem Boulevard in Tel Aviv’s Jaffa district.
But the launch of a new app supported by the Tel Aviv Foundation, which works to develop innovative financial tools to promote community goals, has successfully reversed the fortunes of the affected businesses by incentivising residents to keep buying. Shoppers in the affected area receive a 30 percent rebate on all purchases through the Colu app.
“When a resident goes to a local shop and spends 100 shekels [US$29], the shopkeeper gets 100 shekels, and then the resident is rewarded with 30 coins [in the app], which are equivalent to 30 shekels, which can then go back either to the businesses on the Jerusalem Boulevard or any other businesses in Tel Aviv on the Colu platform,” explained Elad Goldman, Public-Private Partnerships, Tel Aviv Foundation.“The coins cannot leave Tel Aviv, so the currency stays in the city and the local economy.”
The Rockefeller Foundation initially connected the Tel Aviv Foundation with the developers of Colu to see if the app could be used to assist the city with its resilience strategy.
When the construction of a light rail network began, it was a sudden shock for the businesses in Jerusalem Boulevard. The Tel Aviv Foundation saw an opportunity to use Colu to drive business back to the area.
“The municipality allocated a budget to the project,” explained Goldman. “But there’s no risk because if the app doesn’t work to incentivise shoppers, then the municipality doesn’t pay. So, the municipality has nothing to lose.”
The city granted a US$150,000 subsidy and the programme was a success–in less than two months Colu drove more than US$550,000 into local businesses and boosted revenue by 30 percent to pre-construction levels. More than 4,000 shoppers used the app and made over 23,000 transactions–70 percent of shoppers hadn’t purchased anything in the Jerusalem Boulevard area in the previous three months.
“This partnership goes to the heart of the work of the Tel Aviv Foundation: promoting values such as urban resilience, social responsibility, equal opportunity and lowering the cost of living,” said Dr Hila Oren, CEO of the Tel Aviv Foundation. “By partnering the private sector with the municipality, we can do even more to improve the quality of life for all the city’s residents.”
Colu’s purpose is to help local economies thrive. “In Tel Aviv, we recognised an opportunity to implement our technology to help area businesses,” said Amos Meiri, Co-Founder, and CEO at Colu. “Through the power of our app, the resilience of the Tel Aviv business community, and the willingness of residents to venture into challenging retail areas, we helped prop up an area that was experiencing very difficult issues.”
Several other uses for the Colu app are now in the development phase, including incentivising residents to recycle, leave their cars at home and use public transport, and use the app to report hazards in the city.