THE “BUY LOCAL” movement is popular among small-business owners, but does it really work?
Over the last year, many concerned shoppers and business owners banded together to form support groups and shopping coalitions aimed bolstering local businesses and educating shoppers about the plight of small-business owners.
The Slow Money Alliance, the brainchild of longtime venture capitalist Woody Tasch, aims to persuade at least a million Americans to support the creation of grassroots, nonprofit seed funds to shore up local economies and businesses. Separately, the 3/50 Project — an initiative launched last March by Cinda Baxter, a retail consultant and professional speaker — encourages shoppers to spend $50 in each of their three favorite local bricks-and-mortar stores over the holidays.
“Business owners regularly pour money back into the community via commercial property taxes, payroll taxes, sales tax, and salaries,” says Baxter. Similarly, “the 3/50 Project is about funneling revenue back into local business,” she says.
These initiatives are no doubt helping some owners build sales, but the question is whether those sales will stick. Since the downturn began, many small shops have seen their revenues and profits tumble, as penny-pinching consumers flock to big-box discounters. Personal appeals from business owners have managed to recapture some of those shoppers, but many consumers remain unconvinced.
In fact, just one in six adults regularly buys locally available products and services, according a 2009 consumer survey on local shopping from market research firm Mintel. Although these so-called true locals are willing to pay a higher price — and even buy local if competitive products are better — most American shoppers don’t feel as strongly, Mintel said.
What’s more, the buy-local label can be confusing, says Steve King, a partner at Emergent Research, a research and consulting firm in Lafayette, Calif. Stores use a variety of labels, including buy local, fair-trade, made in the U.S.A, handmade and sustainable. “Consumers tend to mix up handmade and something that came from a local shop,” he says.
But even if additional shoppers could be convinced to buy local specifically, a sales increase would likely be transitory, says Paul Kurnit, a business consultant and clinical marketing professor at Pace University in New York. Most campaigns don’t translate into sustained business growth, he says.
Then there’s the case of Jennifer Kaplan, the owner of Rockridge Home, a furniture accessories and gift store in a tony section of Oakland, Calif. When Kaplan placed an ad in the San Francisco Chronicle urging shoppers to buy locally, she didn’t get the response she expected. “We’ve been very direct in our approach,” says Kaplan. “We’re asking people to buy local, and we’re saying thanks for supporting us and keeping us here.” But many shoppers just didn’t have money to spend this year, she says. Instead of making purchases, a number of customers offered to help in other ways. For instance, many came in to browse, says Kaplan. Although that wasn’t the ideal reaction, it did end up paying off. “Just having people in our store makes a big difference,” says Kaplan. “The more people that come, the more people are drawn to come.”