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Why local?

Reasons to shop with an independent business

A book written by Ray Considine and Ted Cohn several years ago is titled by an acronym; W*A*Y*M*I*S*H. The acronym stands for Why Are You Making It So Hard. The subtitle is ‘for me to spend my money’.

During the past couple of weeks, I have had several conversations with Main Street directors around the country in which we have discussed businesses, both Main Street and mass merchant, within the district and the community as a whole.  The issue at hand was developing ways to get residents to shop at the locally owned businesses. We quickly agreed the inappropriate strategy to entice residents to shop with the local business was to tell them there was an unspoken responsibility to support the locals.

We can, however, enlighten the customer about the positive ways it affects them by their making a choice to do business with the local business. Summarizing some of the studies that have been done on the economics of doing business with ‘the locals’ include:

A dollar spent at a locally owned business is respent six to fifteen times before it leaves the community.

A dollar spent at a national chain store only leaves 20% within the community.

For every $100 spent with a local business, $68 remains in the local economy. If that same money is spent with a chain store only $43 remains.

As a local firm leases or owns a building locally, that business provides an impact of $179 for each square foot occupied; that chain firm produces only $105.

Of each dollar spent with a sole proprietorship, 60 cents continues to circulate in the community. The chain store recirculates only 20 cents of that dollar and the big box retailer only recirculates 6 cents.

If you look closely at the numbers for these research reports, you see the numbers are not consistent with regard to percentages, but the numbers in the reports are consistent with their message. The money spent with a local business has a good chance of having a positive effect on that local individual. Instead of telling people they should want to shop locally, we should be showing them how it benefits them.

Then the conversation with the Main Street director turns to another reality: the local business that makes it difficult to do business with them. As a Main Street program, we can make ourselves as appealing as possible to the local community. When the ‘rubber meets the road’, the business has to make an impression so that the customer wants to do business during this encounter as well as wants to come back.

A community has a box store and a customer decides to drive past them so they can do business with the local business. So far so good, especially when the customer goes into the local store and sees more sales staff then they would have seen at the box store. Unfortunately, none of the staff in the local store speaks to the customer.

Another customer comes home from work one day and decides they want to go shopping. Again our customer decides to make the local business their first choice of a place to shop. However, when they arrive at the local business, they find the business has already closed. With the exception of the diehard customer who refuses to do business with someone other than a local, a trip to the mass merchant is about to happen.

The extreme of our combined experiences is the local business with a poorly handwritten sign on the front door. The message is, “No smoking in my store. No food or drinks in my store. No small children in my store. No packages from other stores in my store. If you don’t like my rules, then you should probably shop somewhere else.”

From a distance, the sign is funny. From being inside the district, it is embarrassing to everyone except the owner of the business. Many of the things that affect one business in the district affect all of the businesses in the district.

Of course, a conversation with a Main Street manager is often going to include a comment, light hearted or serious, about parking in the district. There are two components to this very appropriate concern. One is the community in which the business owners and their staff somehow think it is OK for them to park right in front of their business.

A customer drives up and struggles to find somewhere to park. This writer wonders if the customer would be agitated if they knew they had to walk past the car of the owner or an employee to get to the business.
Add to these scenarios the one in which the local business creates a long and complicated procedure for a customer to exchange or return an item. With any combination of these being experienced by a customer, it would be hard to imagine that customer seeing it as being worthwhile to make an effort with the local business. Even with all of the financial advantages we first outlined, it becomes hard to do business with someone who gives every impression they don’t want to do business with the customer.

Some of these scenarios happen out of ignorance on the part of the business owner; some because the business owner sees their action, or inaction, as being insignificant. There may also be a justification by the business owner in which they compare themselves to the mass merchant and state, ‘They can get by with doing that; Why can’t I do the same thing?”

And therein lays the potential solution. The local business can do the same things with regard to ‘customer rules’, but then they would have to have to offer all the advantages that the mass merchant offers. As the local business cannot have those same advantages, they have to have something different. They have to offer something the mass merchant cannot.

Again, another part of the solution; the customer often holds the local business to a higher standard than they would hold the mass merchant. Because, in the local business a customer can meet and know the owner who may just be their neighbor; the customer can meet and know the employee who may also be their neighbor.

In making a decision, the owner can simply decide; they do not have a company rule book or a corporate office to contact. They do not have a district manager they answer to. This creates for the local business both an opportunity and a responsibility; depending on how the owner sees it.

As Main Street managers, directors, staff and volunteers this is a dilemma and an opportunity; depending on how you see it.

We stated earlier that you cannot ‘shame’ a customer or tell them it is their responsibility to do business with the local business. You can however, show them how it is to their advantage to do business with the local businesses.
We cannot shame these same local businesses into becoming more friendly, customer oriented and open when the customer wants to shop. We can share with them that for them to ‘win’ they have to have advantages; as many advantages as possible.

This is not to suggest you add something else to your list of things to do. We know you already have a ‘full plate’. However, addressing this need seems to have a very high sense of priority if all of the aspects of managing the Main Street District are to have a better chance of succeeding.

This writer’s father, known for his humor, bluntness and strong business logic, would have seen a comparison in the challenges we have outlined and the advertising that a local business does.

He insisted that before our business had an advertising appear on television, radio or in print, that all the staff be gathered for an hour to discuss what was in the advertisement, how to sell the items, and how to sell additional items. His statement was simply, ‘No sense spending a lot of time and money to invite people to come see us and have them see how little we know’.

It does not make sense to spend a lot of time and money to invite people to come to the Main Street District and experience a business that does not know how, or why, to be appreciative.

And yes, you can share this column with these same ‘challenging’ businesses to show them that actions, and insensitivity to the needs of their customers, directly reflect on their business as well as the other businesses within the district. We could resolve the question of WAYMISH.

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This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.
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Profits Plus Solutions, Inc.
PO Box 1577
St. Petersburg, Fl 33731
(727) 464-2182
Fax: (727) 898-3179