Keeping it local

Jul 30th 2009 | AUSTIN
From The Economist print edition

A rising vogue for shopping near home

IN 2002 the city of Austin planned to extend about $2m in incentives to a developer who wanted to build a new Borders bookstore on a prominent downtown corner. This was an unpleasant prospect for the owners of two local independent businesses, BookPeople and Waterloo Records. If the deal had gone through they would have faced a big competitor located directly across the street. Steve Bercu, the owner of BookPeople, says that he always assumed that local businesses were better for Austin for sound economic reasons. But in the circumstances, he wanted to test the proposition.

So BookPeople and Waterloo called in Civic Economics, a consultancy. They went through the books and found that for every $100 spent at the two locals, $45 stayed in Austin in wages to local staff, payments to other local merchants, and so on. When that sum went to a typical Borders store, only $13 went back into circulation locally.


Although the study was part-funded by BookPeople and Waterloo it gave a boost to the growing “buy local” movement in America. For years business and community leaders have been full of reasons for people to do their shopping close to home. They say that local and independent businesses have more individual character, and that they are owned by your friends and neighbours. Some stores, particularly grocers, point out that it takes much less carbon to haul a truck from a few towns over than from halfway across the country.

At the moment, the economic argument has special traction. Dan Houston, a partner at Civic Economics, says that in recent studies he has found that locally-owned businesses put about twice as much money back into the community as the chains do, not three times, as the Austin study found. But that is still enough of a “local multiplier” to catch people’s attention. Stacy Mitchell of the Institute for Local Self-Reliance in Portland, Maine, reckons that some 30,000 local independents have joined about 130 independent business alliances around the nation.

Big companies are taking note that customers are rooting for the home team. Ms Mitchell points to a telling development in Seattle, Washington, where Starbucks got its start. On July 24th the company opened a new coffee shop there. The newcomer is not called a Starbucks; it is called “15th Ave. Coffee & Tea”. It promises “a deep connection to the local community,” and its seats are recycled from a local theatre.

There is an insular element to the trend. “Is it pure local protectionism? Sure, to some extent it is,” says Mr Houston. But the advocates are not zealots. One national campaign is asking people to shift a mere 10% of their spending to local outfits.

The Borders project in Austin eventually fell through, and the proposed site is now occupied by the flagship of Whole Foods Market. The chain was founded in Austin and is local in a sense, although it is now publicly traded. Throughout the shop, produce advertises its credentials: local, organic, fairly traded, made in-house, vegan, and so on. This week its customers faced an ethical dilemma: is it better to buy the organic watermelon from California, or the conventionally-grown kind from Lexington, Texas?