When my wife and I drive to our local hangouts on my days off, we often survey the landscape and comment on what has become of our local businesses. Because we are both food people, we often get right to the point when it comes to food establishments, especially chain restaurants. We wonder whether the full parking lots in front of these establishments is an example of what is wrong with our society. Do the consumers who frequent Costco and Outback realize that they are contributing to the industrial food system? Do they think along those lines? What is the real price of cheap food and where does the money come from to make up for the discrepancy?
Each year brings more national chains, displacing locally owned businesses throughout the country. We see clones replace unique establishments. We see and hear the omnipresent ads of corporate chains every day, but are collectively under-informed about the many important values independent businesses provide us individually and as a community.
The disappearance of local businesses leaves a social and economic void that is palpable and real – even when it is unmeasured. The quality of life of a community changes in ways that macroeconomics is slow to measure, or ignores completely. Looking at some of the issues of local, let’s consider the importance of:
Building A Strong Local Economy
The giant chains often win a town’s consent to build new stores with promises of growth and tax revenues. Their scrutiny inevitably shows that most income of new chains comes directly from established businesses. For example, an extensive study of new Wal-Mart stores at Iowa State University found 84% of sales simply shifted dollars away from existing local merchants.
It’s time to consider the real costs to a community that loses its local business base. Independent local businesses employ a wide array of supporting services. They hire architects, designers, cabinet shops, sign makers and contractors for construction. Opportunities grow for local accountants, insurance brokers, computer consultants, attorneys, advertising agencies and others to help run it. Local retailers and distributors also carry a higher percentage of locally-made goods than the chains, creating more jobs for local producers.
In contrast, a new chain store typically puts in place a clone of other units, eliminates the need for local planning, and uses a minimum of local goods and services. Small manufacturers are also affected since they rely on local retailers to give their new products a chance. Local retailers are free to take chances with the goods of a new manufacturer or product that is not part of a national sales plan. Therefore, small manufacturers and a wide variety of service industries have a clear stake in the nationwide health of local retailers.
Ensuring Choice and Diversity
Retailers sift through competing goods and services to find those that appeal to their customers. Even though a single local shop may have a smaller selection than a big chain outlet, a multiplicity of independent retailers creates great diversity.
For example, when 3,000 or so national independent booksellers or music shops buy for their local customers’ tastes, the cumulative effect is demand for a wide variety of ideas and music. This allows access to controversial books or music from new artists with the expectation that there will be a market somewhere within a variety of stores. As fewer giant corporations dominate both production and sales, our options – determined by a powerful few – will be drastically reduced.
Our freedom of choice is imperiled when a few buyers from national chains choose what reaches consumers. This may be only mildly disturbing for most consumer goods, but truly frightening when you consider the impact on our choice of news sources, books, music and other modes of expression.
Maintaining Community Character
When asked to name our favorite restaurant, cafe, or shop, we almost always cite a unique local business – look at the results in any “Best of” polls as proof. We embrace the idea of distinctive businesses with local character, but often forget their survival depends on our patronage. It is easy for us to get so consumed by efficiency that we forget how much of our lives we spend eating out, shopping, and doing other business. We owe it to ourselves to consider the quality of our experience, and ask if we benefit when we choose a community-based business.
Let’s make future decisions based on full-cost accounting, and create a level (or better) playing field for local businesses with our policies; the chains already have enough laws rigged in their favor nationally.
This post was written Marc BrownGold, General Manager.