Monday, November 7, 2011

The Impact of the Independent Retailer: Do We Need to Shop Locally?

While reading a back issue of an independent Louisville, KY circular (Leo Weekly), I became affixed on a full-page spread devoted to independent retailer advertising. Captioned at the top, a statement read, “Invest in your community, in your neighbors, and in yourselves.” Feeling a bit on the philosophical side, I began to think about the meaning of this statement and how it correlated to independent retailers and the community. My academic urge kicked in and I started doing some research on the social and economic impact of the independent retailer.

Leopard heels from The Perfect Pair

In the past few years I’ve kept abreast of documentary-worthy plights where communities fight against the development of big-box retailers, like Wal-Mart, citing the affects and impacts these types of stores can have on the independent entrepreneur. With prices often below cost, a big-box retailer like Wal-Mart can easily close the doors of an independent retailer within months. Yes, maybe we’ve all heard this, and these types of instances could attribute to our love and affection for the local merchant- we like to see the underdog succeed.  And this succession can only be attributable to its community of shoppers. But really, why do we shop locally? What are the social impacts? Are there any? What is contributed to the culture? What are the economic impacts? How are they measured?

It is widely believed that local, independently owned businesses are the heart and soul of a community, providing alternative outlets for shoppers, and adding to a city’s culture and sense of self. And when you think about it, who is it that owns these businesses? Our friends. Our neighbors. Our family. Imagine walking into J. Crew and asking for the CEO because you want shopping advice. However, venture into a store like Local Honey, and chances are owner Shea Steele will style you right. It must be noted here that often the knowledgeable service and attention to your needs add in the value and respect for a local business. Local First Utah, a non-profit independent business alliance, states, “[A local businesses] products and services support and sustain the needs of our residents, and they play a vital role in our social networks. In fact, local businesses mirror who we are and what we value as a community. They help to create a sense of place.” Ditto.

An assortment of Judith Bright jewelry.

The independent business also allows unique art and culture to develop in a community that could otherwise be ignored by national retailers. The local retailer creates value through its contributions to the climate and an area’s cultural vitality. Locally owned businesses also contribute to the economic vitality of a community in a multitude of ways.

First, shopping at locally owned businesses puts three times the dollars into the Nashville community. Several research studies have shown that for every $100 spent at a local business, $45 remains in the community, while only $13 remains when spent at a nationally owned business. The difference in funds typically is allocated towards other locally owned businesses. For example, local merchants generally utilize local professional services, such as law, accounting, advertising, banking, printing, internet services, etc. By contrast, national retailers generally procure these services in corporate headquarter communities or in nationally-based markets. Additionally, local retailers generally hire local employees, providing job opportunities for its communities. A 2008 study of Kent County, Michigan found that a 10% shift in community spending from chains to local businesses would create an additional 1600 jobs and $53 million in wages.

Second, local businesses are more likely to invest in their communities. A case study conducted by the Institute for Local Self-Reliance found that for every $1,000 a national retailer donated to local charities, local retailers donated $4,000. If we think about our community, national businesses have held events aimed to provide funds to Nashville charities, like the recent Belk charity sale and Dillard’s fashion show to benefit the Children’s Hospital at Vanderbilt. There’s two, but I can count dozens of recent and upcoming events in which local businesses supported or will support its community with charitable donations (Blush fashion show to benefit Bridges Women’s Shelter; nD Fashion Festival to benefit the Belcourt Theatre; Nashville Fashion Week Forward Fund; the upcoming Project Red fashion show held by students at the Art Institute of Tennessee-Nashville). It is our local retailers that make significant contributions to the city that it supports and is supported by.

Third, environmental impacts are often reduced with the growth of local businesses. Local businesses as previously stated, are more likely to make local purchases. This requires less transportation for products. Also, these types of businesses generally locate themselves in urban town centers, rather than on the fringe or off-the-beaten-path. Local businesses can revitalize buildings and even entire areas. All of this means that local businesses contribute less sprawl, congestion, habitat loss, and pollution.

A look from Local Honey.

Yes, many of us have been shopping locally for a while now, but sometimes I think its necessary to examine our behaviors and analyze our decisions their ultimate affects. And for me, all this does is reinforce the importance of our continued support for the independent retail store.


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