By Megan Harman

A new app launching in Toronto this summer is set to shake up the customer rewards business by bringing the benefits of a large-scale rewards program to small businesses in the health, fitness and beauty industry.

Royaltie, a unique new rewards program that enables customers to earn and spend rewards at hundreds of different businesses, has selected Toronto as the first city in which the program will be available.

The company has launched a beta version of its mobile app on an invitation-only basis, and plans to launch to the public in August 2016.

The most unique aspect of the program is the ability for users to accumulate reward points through health, fitness and beauty transactions of all kinds – not only those made at businesses enrolled in the Royaltie program.

“We have built it around the consumer, in that as a consumer, there is no restriction around where I can earn my rewards,” says Justin Belobaba, founder and CEO of Royaltie. “Any purchase, anywhere, health, fitness and beauty related, is eligible.”

Users can simply snap a photo of an eligible receipt and submit it through the Royaltie app in order to earn rewards, called ‘Royalties’, which are credited at a rate of 10% of the value of eligible purchases. Royalties can then be used as a form of store credit at participating businesses, up to certain caps set by each individual business.

The idea, Belobaba says, is that regardless of which specific businesses consumers are frequenting, individuals who earn rewards are the types of consumers who are inclined to spend money on health, fitness and beauty. As a result, they’re considered attractive customers from the perspective of businesses in these industries.

“What we can guarantee is that every single customer has a proven spending history on health, fitness and beauty – that’s how they accumulated these rewards,” Belobaba says.

The health, fitness and beauty sector is an untapped segment of the loyalty market, according to Belobaba. Aside from major retailers such as Shoppers Drug Mart, Rexall Pharma Plus and Sephora, he notes that the industry is largely dominated by small businesses such as salons, spas and yoga studios, and fewer than 2% of those types of businesses offer rewards programs. Small service providers such as those represent Royaltie’s primary market.

“It’s a huge sector,” Belobaba says, “yet the interesting thing about this sector from a retail standpoint is it’s one of the least penetrated sectors by rewards programs.”

As of mid-July, more than 700 Toronto businesses had signed up to participate in the program. The app provides them with a platform for potentially attracting new customers, according to Belobaba, and there is no upfront cost to participate. Instead, businesses pay a flat fee of $4 for each new customer they earn through Royaltie, and they can choose the level of store credit they wish to extend to users redeeming their Royalties. For example, a salon offering haircuts at a cost of $70 might offer users the ability to allocate up to $30 worth of Royalties towards the cost of that service.

Following the Toronto launch, Royaltie plans to expand the program to New York, Miami, Los Angeles, and San Francisco in the fall of 2016.

Interested readers can download the Royaltie app, currently available for the iPhone, using the code: FWS2T2LR.

Megan Harman is a business reporter based in Toronto. She writes about topics including retail, financial services and technology. Megan covers Toronto’s retail industry through her blog Retail Realm (torontoretail.wordpress.com). Follow her on Twitter at @meganmharman.

Canadian Retail News From Around The Web: July 22, 2016