NASE in the News

Community Spirit

Buy-Local Campaigns Boost Sales For Some Small Businesses
By Mindy Charski

Last spring, with the recession taking a toll on the business community in the Reno, Nev., area, Clint Jolly and some colleagues decided to hold an event to raise the visibility of locally-owned independents like his meat market, Butcher Boy. The May fair drew 60 of Butcher Boy’s local vendors—many of them micro-businesses like Buckbean Brewing Company and the marketing agency Media Directions. It also drew about 1,200 consumers.

Since then the momentum for the initiative known as Buy Local Reno has continued to build with other small businesses eager to get involved.

“For the most part everybody is on the same page, as far as believing people spending their money locally is going to be better for the community,” Jolly says.

It’s a conviction increasingly driving local independent businesses to team up to promote not only themselves, but also the intangible and economic benefits they offer their communities.

“A lot of small-business owners are feeling quite up against the ropes, even more than they had been in the past, and these campaigns really offer a lot of hope to small businesses and a lot of effective strategies,” says Ann Bartz, program manager of the Business Alliance for Local Living Economies (BALLE), a San Francisco-based nonprofit that assists local independent business networks.

What Is Buy Local?
There are all types of buy-local campaigns that aim to drive dollars toward—or at least get consumers thinking about—independent businesses. Many efforts use education campaigns to communicate the importance of shopping at local independents. They also draw attention to members through events like shop-local weeks and through directory listings where businesses may choose to offer discounts.

Some initiatives support various local independents in a particular area—perhaps a city, county or larger geographic region. Others focus only on local produce. Some include locally-owned franchises, some bar them. Some ask consumers to shift 10 percent of their annual spending from chains to local independents. Nationwide, many business owners are promoting The 3/50 Project, a movement that encourages consumers to spend a total of $50 monthly at three independent businesses.

Groups in some areas have taken a more elaborate route by creating currencies that can only be used locally. In the Berkshire region of Massachusetts, for instance, consumers exchange $95 for 100 BerkShares. That translates into a 5-percent discount for consumers on purchases they make using BerkShares at the more than 360 participating businesses, which include farms, jewelers and law firms. Though all businesses are eligible to join the program, co-founder Susan Witt says managers of chain stores often aren’t able to secure permission from parent companies to participate.

“The structure of the program positively favors the locally-owned, independent businesses that set their own policies and can make their own decisions about participating,” she says.

Buy Local Gets Popular
Buy-local campaigns are on the rise, and many are produced by groups affiliated with either BALLE or the American Independent Business Alliance (AMIBA), a nonprofit in Bozeman, Mont., that also helps local coalitions.

AMIBA estimates its 75 affiliates have a total membership of 15,000 to 20,000 businesses. BALLE estimates its 70 networks represent roughly 20,000 businesses.

This might be an optimal time for micro-businesses to join buy-local initiatives. One benefit, after all, is having others help with your marketing, which is important to maintain even in tough economic times. The majority of businesses getting involved with Buy Local Reno, for example, have fewer than 10 employees.

“These are the businesses that are hurting the most because they have a hard time coming up with money for marketing to combat the slowing business,” Jolly says.

Also, with so many people already thinking green, it’s easier to push the idea of “buy fresh, buy local” for produce that doesn’t need to travel far on carbon-emitting trucks. In addition, advocates of the movement say many consumers are fed up with big chains crowding their cities.

“We hear a lot of people lamenting the fact their community is losing its sense of character and looks like any other place with the same strip malls and same big-box development,” AMIBA co-founder Jeff Milchen says. “People are really wanting to either try to sustain or recreate the sense of community that tends to disappear when you see these changes taking place.”

Indeed, one reason Cassie Green, owner of Green Grocer Chicago, joined the Local First Chicago network was to help preserve the character of her West Town neighborhood. She describes it as being “an up-and-coming gem in the city that houses some of the best restaurants and little shops around.”

Green says, “Anything to remind people how important it is to support small independents is a good thing, unless you just want a world full of chain stores that don’t really care about your neighborhood.”

But the strongest message communicated through buy-local campaigns is that patronizing local stores helps the community, and many initiatives refer to a September 2008 study conducted by the research firm Civic Economics.

The survey found that if residents of Kent County, Mich.,—which includes Grand Rapids—were to shift 10 percent of their total spending from national chains to locally-owned businesses, the county would see nearly $140 million in new economic activity, 1,600 new jobs and $53 million in additional wages.

As for the impact of buy-local campaigns, there aren’t many studies.

But one study did find that independent retailers in cities with active buy-local campaigns reported an average drop in 2008 holiday sales of 3.2 percent. Comparatively, independent retailers in cities without active efforts saw an average drop of 5.6 percent. The January 2009 survey was conducted by the Institute for Local Self-Reliance, a nonprofit research group with offices in Washington and Minneapolis, in partnership with AMIBA, BALLE, and other independent business organizations.

Buy-Local Skeptics
Not surprisingly, buy-local initiatives have their skeptics, including Joseph Turek, dean of the School of Business and Economics at Lynchburg College in Lynchburg, Va.

“Asking consumers to buy locally probably won’t have much effect on the local economy because so much of their spending leaks out of the area,” he explains.

That’s because consumers are purchasing from businesses that are most likely buying raw materials and finished goods from nonlocal sources; when they do that, money leaves the area. One way to reduce such leakage would be for local businesses to work with each other as long as it doesn’t put them at a competitive disadvantage, he says.

But ultimately, Turek says, “The simple fact is that, given that we live in a global economy and that very few communities are economically self-sufficient, there really isn’t much that can be done to insulate an individual community from the economic turmoil that is ravaging the nation.”

And, just as the bad economy may be fueling the growth of buy-local campaigns, it can also make their proposition thorny when there are mass merchandisers regularly barking about their low prices.

Indeed, a February 2009 survey from the market research company Mintel found that while nearly 20 percent of respondents buy local as often as possible and aren’t influenced by price, price is a consideration for the 30 percent of respondents Mintel calls “Aspirational Locals.” For these folks “there’s certainly a desire to buy local, but financially it may just not be possible today,” senior analyst Krista Faron says.

Of course, not all eligible business owners choose to join buy-local campaigns. Among them: Jim Beachler, whose company, Hollow Woodworks in Ferguson, Mo., crafts personalized wooden puzzles.

Though customers can make purchases at his workshop, he also sells his products wholesale, at art shows, over the phone, and via his Web site. He’s involved with an area Chamber of Commerce but considers his market to be nationwide and into Canada.

“I’d rather spend my money and time where I can make more of an impact,” Beachler says, “and I can make a broader impact going nationwide.”

There are other reasons businesses decline to join.

Tamara Johnston McMahon, who co-founded Buy Local Pasadena in California, has found many shop owners are too busy to listen when members call, think the group is trying to make money off them, or just don’t understand the benefits.

“It takes bodies and takes time to approach people over and over again until they understand,” says McMahon, a partner at Anti-Body LLC, which manufactures fair-trade skin care products in Sierra Madre, Calif.

Starting A Buy-Local Initiative
If you’re thinking of starting a grassroots buy-local effort, here are some tips:

Be inclusive
Don’t limit your campaign to retailers, says AMIBA’s Milchen, since you’ll have more of an impact if you include others, like local farmers, manufacturers and service providers.

“Building a broad and diverse base of business supporters—as well as community supporters—is definitely a key factor in the success of these campaigns,” he says.

Seek help from nonprofits
Consider affiliating with AMIBA (www.amiba.net) or BALLE (www.livingeconomies.org).

“There’s definitely no value to re-creating the wheel when we have learned from a decade of experience what works well and what doesn’t,” Milchen says.

In addition, the New Rules Project, a program of the Institute for Local Self-Reliance, shares advice in the retail section of its Web site, www.newrules.org. Likewise, BALLE sells a manual with ideas for buy-local campaigns that is available even to businesses that aren’t affiliated.

Find multiple funding sources
Some networks charge businesses to be listed in a directory, says BALLE’s Bartz, and some seek support from chambers, individual funders, local governments and local community foundations.

Strong organizers are key
These efforts require lots of work, so it’s important to be passionate, like Clint Jolly of Buy Local Reno.

“We have multiple customers on a daily basis that come in and say, ‘We want to come support the local guys, we’re glad you’re here,’” says Jolly. “When you see that reaction from customers, the people who keep your business open, then it’s pretty powerful.”

Within five miles of freelancer Mindy Charski’s Dallas home are seven stores owned by Wal-Mart Stores Inc. and zero farmers markets.