Sunday, July 26, 2009

Local Has Cache

Retail vacancies are on the rise in our town and others like it across the country. City Councils and Chambers of Commerce debate mostly useless tactics that will take months or years to have an impact and don't have the funds to do much about the problem. In a recent story in the Wall Street Journal, Joseph Epstein made the case for judging a city "by the number of blocks of interesting shops it contains."

I tend to agree with Epstein's friend, sociologist Edward Shils, who made the observation. I am not against chain stores - they have hard-working employees, just like the independent stores, and face similar challenges finding and retaining customers and talent. But to a great extent, their takeover of malls and street locations across the country has led to a homogenization of the urban and suburban landscape and of the customer experience. We've gained consistency and predictability at the expense of being surprised and delighted - it's the triumph of brand management over brand, which it a topic for another story.

Though lots of people are concerned about these changes, there has been little organized response, or at least little coverage of any organized response. The WSJ ran a story in June about campaigns in multiple cities across the country to save neighborhood stores. It profiled the 3/50 Project, which encourages shoppers to pick three independently owned businesses and spend $50/month at each one.

According to the organization for every $100 spent at a store, $25 more stays local if spent at an independent store vs. a chain store through payroll, taxes and other expenditures ($68 vs $43). Compared to buying online, all of that $100 comes back to the community. We buy a lot online, and shop at chain stores as well as independents, but I worry that the amount spent locally is not enough to make our town one Shils would judge favorably.

The whole idea of supporting local products and merchants appeals to consumers. Farmers markets are booming, and chain stores saw bigger declines than independents this past holiday. While sales at independent stores declined an average of 5.0% vs. 2007, retail sales overall were down a record 9.8% meaning that chains saw bigger declines: Barnes & Noble (- 7.7%), Best Buy (-6.5%), Borders (-14.0%), JC Penney (-8.1%), Macy's (-7.5%), The Gap (-14.0%), and Williams-Sonoma (-24.2%).

The Institute for Local Self-Reliance, a Minneapolis nonprofit research group, has found that community efforts to support local merchants can help to insulate them from the worst of the recession. Their research shows that independent retailers in cities with buy-local campaigns saw holiday sales decline less in 2008 than those in cities without them (3.2% vs. 5.6%). According to ILSR, there are about 100 buy-local campaigns active across the country. Could be worth bringing up at the next city council meeting instead of the next lame brand or beautification campaign.

Have you visited an independent retailer in your town lately?

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