Is Local the New Black?

In the wake of Enron and Worldcomm, I wrote an article on “Moving From Words to Deeds to Restore Public Trust“ that got picked up by Marketing Profs. It is as relevant to today’s outrages – just replace those guys with Madoff, the mess on Wall Street, and abuses of “rescue” funds by our biggest financial institutions. So, what have we learned since the last massive breach of public trust in Corporate America?

We expect greater accountability of the companies that enjoy our tax breaks, consume our resources, raise capital through our markets, and benefit in other ways by doing business in our neighborhoods. Most major companies launched social responsibility initiatives (or at least PR campaigns) before the September 2007 meltdown to demonstrate they understood this. But the bar is higher now that so many bedrock institutions have become beggars at the public trough. So, what are the implications for big companies? This time around, Corporate America may have died along with the idea that markets can be self-regulating.

If pendulum were to swing back toward decentralization, it would provide a way to for companies to get closer, and more accountable, to the customer and other constituents. Networking and technology provide the tools to enable many of the benefits and avoid at least some of the costs of taking a decentralized, locally focused approach to business. This is why I think local may be the new black.

There are real advantages to supporting local businesses – decisions are made locally and the people who work there are personally invested in the community since it’s where they live. In return, they support the schools, the local kids’ sports leagues, and more.

But what does local mean these days? Does it mean not-chain-store? Does it have to do with the type of real estate – not a mall? Is it about local ownership? Is it physical? I think it’s more a mindset… a commitment to serving the community, regardless of ownership, type of real estate, or number of locations. The challenge is to deliver that local, home-town feeling (regardless of where you’re doing business) consistently across locations.

Who’s doing this today?

• Real estate offices (including the regional chains) get it, and always have – they are all about the local economy they serve and are well-aware of the differences between neighborhoods.

• Local grocery stores – unlike Safeway and Whole Foods, Mill Valley Market and Molly Stones support most community events with cash and in-kind donations and they stock unique merchandise at customer request.

• Community banks & credit unions – their point of differentiation often is their support of the local economy or workers. Given their greater insight into the local market, they are more likely to make loans in today’s anti-lending environment than the big banks. And they’re getting no bail out money!

• Privately run enrichment programs for kids – preschools, arts & crafts programs and others like them cater to local families. There are good reasons why Steve & Kate’s Camp, West America Tae Kwon Do, and others like them are long-lived institutions in our town. They fill a need and make our lives richer.

With retail vacancies hitting small towns like ours hard, City Councils should be thinking about what types of retail they want to see move in. I’d suggest they consider the benefits of businesses with a local mindset, and go after these four types of good corporate citizens.

The New Face of Do-Good Consumerism

It used to be that the same names always came up when anyone talked about socially responsible companies: Patagonia, The Body Shop, Ben & Jerry’s, maybe Benetton, and that was about it. What made them socially responsible differed from company to company – but having a conscience was an essential part of their relationship with employees, owners, and customers.

Today, we expect big companies to be good citizens of the world – Chevron, Nike, Gap, Starbucks, Pepsico and others produce annual reports on their acts of corporate or social responsibility. The reports are posted proudly on company websites, and the companies are truly making progress in cleaning up their act. But being a good citizen is generally a response to external pressures - it's not part of most companies' DNA.

Then, there’s 2006 startup, TOM’s Shoes. TOM’s is a business that's also a social movement. The name – TOM’s stands for TOMorrow’s Shoes – and their “One-for-One” commitment to give a child in need a pair of shoes for every pair sold, make customers feel great for buying a pair of TOM’s shoes. There are blogs, block parties, and foreign country shoe drops in addition to TOM’s own stores and retail accounts where customers can share the feel-good TOM’s experience.

Retailers like TOM’s have made it a central part of their business proposition to creatively and tangibly take on big social, economic or environmental issues while also providing products that U.S. consumers want to buy. These companies have figured out that taking action on a human scale and letting the customer in on the act is cool, and creates a reason to be brand loyal.

And as Carol Phillips points out in her Millennial Marketing blog, this type of do-good positioning really resonates with millennials. As Phillips points out "One of the most cherished Millennial values is 'making a difference'. This makes cause marketing a natural choice for many Millennial marketers."

What is your favorite do-good brand?