Quick Cash for Your Town

The case for shopping near home

Shopping locally preserves the unique character of your home town

A few years ago, the city of Austin planned to extend about $2 million in incentives to a developer who wanted to build a new Borders bookstore on a prominent downtown corner. The deal did not go through, but it would have been an unwelcome turn of events for two local, independent bookstores across the street. The owner of one of those stores was so concerned about the possible repercussions that he hired an economic consulting firm to analyze them.

How much difference does buying local  make?

Here’s something to think about before you decide how to spend your next payday loan. The consulting firm found that for every $100 spent at the two local bookstores, $45 remained in Austin in the form of wages to local staff, payments to other local merchants, and so on. The same sum spent at a typical Borders bookstore returned only $13 to local circulation.

Not as much as the Borders study suggests

For several years, the Borders study has fueled the buy-local movement. However, an article in The Economist last week pointed out that newer studies have shown that local businesses recycle only about twice as much money to the local economy as chain stores do. That’s significantly less than the Borders study suggests, but it’s still enough to call serious attention to the buy-local trend.

The movement continues to gain momentum

According to the same article, there are now 130 independent business alliances in the United States with a combined membership of approximately 30,000 businesses. Business and community leaders have long urged shoppers to spend their money close to home. Their reasons have included the preservation of unique independent businesses and support for local employers. Independent grocers point out that it takes much less fuel to get produce from local farms than it does to haul it halfway across the country.

Starbucks has joined the fray

Naturally, big chain stores have noticed that more and more shoppers are rooting for the home team. Starbucks recently set a notorious example of this. Last month, the ubiquitous coffee shop born and raised in Seattle opened a new store on 15th Avenue in its old hometown. It named the new place 15th Ave Coffee & Tea.

15th Ave Coffee & Tea is a thin disguise

The new shop was designed by local talent and built with at least some local materials. The table tops were obtained from a local landscaper’s stone yard and the theater seats came from a local antiques dealer. At a time when foot traffic is slow and profits are low, the willingness of retail chains like Starbucks to spin community pedigrees and appropriate random pieces of local history underscores the fact that shopping locally is on the rise.

Obviously, the name of the new Starbucks store is little more than a disguise. But if all goes well, two other Seattle neighborhoods — Pike Place Market and University Village — are also slated to become eponyms for recently remodeled Starbucks coffee shops.

The issue lives on at Whole Foods

Ironically, the spot designated for the Borders bookstore project in Austin is now occupied by the flagship store for Whole Foods Market. The publicly-traded chain of natural food stores is not local in any meaningful sense of the word, although it was founded in Austin.

Even more ironically, customers shopping in the “local flagship” Whole Foods Market are faced with the dilemma of choosing between the products advertised as local and those advertised as organic, fairly traded, made in-house, vegan, and so on. Is it better to buy the organically-grown peaches shipped all the way from Washington, or the conventional kind grown right around Austin?

And one more thing to think about, before you spend your extra cash in Austin: Is it better to shop at the “local” Whole Foods Market for organic, vegan Amy’s frozen entrées made in Northern California, or at the “local” Wal-Mart for conventional, Italian Michael Angelo’s frozen cuisine made in Austin?

The least you can do

Retail chain businesses and other critics dismiss the buy-local trend as protectionist; and to some degree, it can’t help but be. But before you decide whether to use your payday cash to buy groceries at Costco or the local health food store, remember that buy-local advocates tend not to be zealots.

Buy-local campaigns typically urge shoppers to shift only a percentage – sometimes a mere 10 percent — of their spending to local businesses. The most ethical and economically-sound practice might be to eat only whatever local food organic growers happen to be selling at independent farmer’s markets.  So, maybe somewhere between there and 10 percent?