Amidst the doom and gloom of recent economic news and forecasts, consumer behavior this holiday season may be muted. With national government efforts to revive both Wall Street and Main Street invariably uncertain, grassroots efforts may be just as likely to hold the key to the economic mess. Local First Lexington, a new Lexington initiative with an emphasis on keeping the consumer-driven revenue to stay within the community, could very well impact our local Main Street economy in a big way.
Local First Lexington president and co-founder Steve Baron said the initiative, a membership-based 501c6 with at least 20 local businesses on board so far, is modeled after similar city and statewide organizations and campaigns across the country.
Membership is open to any privately-held business that is at least 50 percent locally-owned, with owners residing in Fayette County or the immediate surrounding area. All business decisions must be made locally, without reporting to a national office or franchise headquarters.
The thrust of the national movement to "focus on local," which started making headway in the early part of this decade, is to promote the economic, environmental, and social contributions made by locally-owned, independent businesses. The concept parallels the coinciding trend to "go green," with many Local First enthusiasts touting the environmental advantages of shopping locally; locally-owned businesses are less likely than chains to contribute to suburban sprawl, for example. Baron pointed out that the ecological benefits are more difficult to pinpoint, however, than the economic and cultural advantages, which are widespread.
Many of these benefits are common sense, Baron added, but because they are not highly publicized they tend to fall below the radar of most peoples' daily consideration. A number of studies nationwide have supported the economic benefits of shopping locally, and while the numbers vary from study to study, the findings have been consistent in showing that locally-owned businesses contribute significantly more to the local economy than do non-local businesses.
Benefits to the local economy
One such study demonstrated that even a modest shift in consumer behavior toward buying locally can have a potentially tremendous economic impact on a community. A Civic Economics study in Kent County, Michigan - county seat Grand Rapids, population of about 200,000 - found that a 10 percent market shift in consumers from chains to locally-owned businesses could potentially create over 1600 local jobs, with wages of $53 million added to the local payroll. The benefit would spread across several industries, not just retail.
Much of the economic impact of shopping locally can be traced to what economists refer to as the "multiplier effect": locally owned businesses are more likely to utilize local services, from accountants and architects to advertising and sign makers. Thus, money spent at locally-owned businesses is likely to be re-invested into the local economy, while chains and corporate-owned businesses typically utilize non-local companies for these same services.
"If I have to buy something to fix the ceiling fan, I'm going to go to a local store and buy it rather than calling up corporate headquarters and have them bring down something from Minnesota," said Baron, owner of South Limestone record store CD Central. "If we need to have something designed for us ... we hire a local person to do it."
Hap Houlihan, Local First Lexington Secretary and co-owner of Southland Drive's Morris Book Shop, believes this utilization of local services prevails among local merchants, even if they don't deliberately subscribe to the "Local First" mentality of wanting their money to remain in the local economy.
"Even without that mentality, practicality enters in pretty strong, too," he said, noting that he nearly always has lunch on Southland Drive, a district he touts as "practically the only vestige left of the old-timey shopping experience."
Locally-owned businesses contribute to a town's distinctive character
The advantages of that "Mom & Pop" retail experience to which Houlihan alludes go beyond economics, according to Local First advocates - locally-owned businesses contribute to a town's uniqueness and sense of place in a way that chains aren't designed to do. For Lexington, a city that has seen a recent focus on quality of life in attracting and retaining the creative class, this angle is of particular importance.
"If you go to the cities that are kind of famous for being really cool places, places tourists like to go to visit - places like Boulder, and Austin, and Asheville, North Carolina - they have a tremendous amount of [locally-owned] businesses, and people really support them and the concept of shopping locally," said Baron.
In addition to providing storefronts that give a community its distinctive look and personality, locally-owned record stores and bookstores also tend to offer a greater variety of unique and locally-themed titles than national chains do. Houlihan, who previously worked for University Press, maintains that the effects of the safe, "please everyone" inventory approach taken by corporate bookstores are in fact "denigrating" to the publishing industry.
"Basically, the New York Times bestseller list is becoming a bigger and bigger section of the entire pie," he said. "And that makes it more of a risk to publish something that definitely won't be a bestseller." In other words, without the risks taken by locally-owned retailers to keep their inventory interesting and relevant to their particular client-base, book and record titles that aren't necessarily "safe" and mainstream might not only have a hard time finding shelf space - - their very production could be endangered.
Chains don't always have the lowest prices
While independent businesses can't always offer the lowest-possible price point on which chains rely to stay competitive - "Bigger corporations are always going to have more buying power than smaller companies," acknowledges Houlihan - the price difference is often not as extreme as consumers might expect. Sometimes the price point even leans in the favor of the Mom & Pop.
"Oftentimes chains are the lowest, but they aren't always," said Kimber Lanning, founder of Local First Arizona, an initiative that has garnered over 1,500 members since its 2003 inception. "Through advertising, they've convinced America that they're always cheaper ... and they just simply are not."
"At J&H, two of our more popular brands, Merrell and North Face, dictate the lowest regular price that a retailer can set," added George Lathram, owner of the longtime Lexington outdoors supply store. "This price is set across the board for everyone, no matter what size business you have. With most of our brands, we have the same price as everyone else. Most people don't realize that."
Looking into why corporate stores are able to offer such low prices has historically exposed unethical labor practices and suppliers whose own production suffers at the cost of these flagrantly advertised low prices (see www.fastcompany.com/
magazine/77/walmart.html for some examples). It's one of the growing reasons some consumers shy away from the Big Box stores.
That's not to say that the "Shop Local" stance doesn't have its own complexities. In New York, Time Magazine reporter John Cloud struggled with the decision to buy an organic apple grown in California, or a locally grown, non-organic apple in the March 12, 2007 article "Eating better than organic." In the end, the article posed that buying a local, non-organic product is better than purchasing organic from, say, Wal-Mart - but the road to that decision was not simple, or short.
On a similar note, even though the products and services offered at a locally-owned level tend to be more unique and customer-oriented - and locally-made goods are carried almost exclusively by locally-owned, independent businesses - just because a store is locally-owned doesn't mean the products are purchased at a local, non-corporate level. Lexington storeowner Teresa Hendricks addresses the ethical concerns of purchasing from corporate suppliers at her Woodland Triangle boutique Lucia's, which offers clothing, accessories and gifts from around the world: Guatemala, Kenya, India, Nepal, among other countries that have long had problems with labor exploitation. Almost every company she purchases from is a member of the Fair Trade Federation, and Hendricks speaks regularly about fair trade practices with the owners of those few companies that aren't. Hendricks, who graduated from UK's Patterson School of Diplomacy, appreciates the "accountability process" that is key to the Fair Trade Federation, which works to "insure a living wage in the local context to the artisans." The fact that the federation gives "technical assistance, marketing assistance, financial assistance" to the artisans and craftspeople is another important consideration in Hendricks' purchasing.
Local First Lexington does not hope to complicate, or monopolize, the purchasing decisions of local consumers - they mainly want consumers to think about the deeper effects of these decisions, and to let the advantages of "shopping local" inform them at least part of the time.
Baron believes in the power of Lexington consumers to make a big difference in our own economy. "If [consumers] could just shift part of their consumer activity to local businesses they might not have considered before, I think it's going to make a tremendous impact on our community," said Baron. "I sincerely believe that."