A Gift Card Good For 100 Competing Retailers?

A group of about 100 competing restaurants in Connecticut is trying an experiment: Each is putting out a joint gift card, one that would theoretically be much more attractive because it would give consumers far more choices. Could this idea possibly have value beyond food?

Restaurants are, by their nature, very different from most other retailers (to the extent that they are considered retailers at all). They tend to attract a strongly local customer base, so if another restaurant is just a few ZIP codes away, it's not likely to be too competitive. That could make the downside of such a program—giving dollars away to rivals—less of a problem.

But the radical idea of such a joint gift card does address the fear of bankruptcy, which is what the Connecticut Attorney General stressed when his office announced the Connecticut card.

“A rash of restaurant and retail closings last season turned expensive gift cards into worthless plastic. Consumers rightly need reassurance that gift cards are as reliable as cash," said Connecticut Attorney General Richard Blumenthal. "This gift certificate program should be a model beyond the holidays, for all retailers.”

In a sense, this program is sort of a cross between a traditional gift card and a Visa gift card. Even a gift card with 100 retailers participating—especially if many are smaller merchants—is a lot more restrictive than a credit card brand's card.

Such a card also raises the issues of "Who carries the administrative burdens?” and “Who holds the cash until it's used?" But in days of economic uncertainty, joint gift cards may not be such a ludicrous concept.