Wednesday, October 11, 2006

Going local...

One of my favorite stores is Vargo's Jazz City & Books in Bozeman, Montana. It's an independent book/music shop on Main Street and is one of those places that always has a few surprises in store for visitors. It is also the place where my sister found an illustrated, hardcover copy of the book wherefrom my alias came. It is, in short, my perfect embodiment of a small, locally-owned business, something we generally lack here in Howard County.

Now, the issue of small versus chain businesses -- mainly retail and restaurants -- is usually centered on the evil Wal-Mart empire and all the damage it's wrought in communities around the country. I'm agnostic on Wal-Mart -- as long as their business practices are legal, the Walton family is fine with me. I tend to avoid their stories, but when I need something cheap and inexpensive and I'm sufficiently prepared for the inevitable dizziness and claustrophobia, I'll give them some money.

When it comes to discount retailers, I, being sufficiently snobby, prefer Target. But when it comes to shopping in general – and eating for that matter – I'd much prefer to spend my money at a locally-owned business, and I'm even willing to go out of my way and pay a premium for the experience.

The problem is that in Howard County, there's only so much local shopping you can do. Main Street Ellicott City and Savage Mill are pretty much the two main areas with high concentrations of non-chain retailers and restaurants. But these places tend to offer more eclectic things. As for Columbia, well, there is a smattering of local business – many of them, however, are tucked away in office parks or other out of the way spots. Certainly, the main retail and restaurant centers in Howard County – The Mall, Snobbin (Dobbin/Snowden River Parkway), and Long Gate, where over 60 percent of all county retail space is located – are banal big box belts. And there's more of the same on the way.

As for restaurants, well, let's just say our selection is both paltry and lacking in variety.

Aside from being places where snobby people like me prefer to shop, however, small businesses are generally better for their communities. They offer all sorts of qualitative benefits -- informal gathering places (see: Lakeside Coffee Shop), their owners are advocates for the community, they are usually better at tailoring their business to the wants and needs of the community, they usually pay better, and they contribute to the overall character and sense of place. Here's a list of even more benefits of local businesses.

But, more pragmatically, their contributions to our local economy are significantly greater than those of chain stores, something several studies has conclusively shown. For instance, this one, which found that over 53 percent of the revenue generated by local businesses in Maine was spent within the state, while only 14 percent of chain stores' revenue was spent locally.

Also, there's this study showing that locally-owned businesses in a neighborhood of Chicago "circulate 70% more dollars back into local economy than chain store competitors."

Finally, here's a link to a summary of several studies on this and related topics.

Although these studies are nice to point to as examples of why local businesses are good for communities, this is something I think most of us already know intuitively. What's less intuitive, however, is how we foster a business environment where the benefits of small businesses aren't lost by the economies of large ones.

Several areas have enacted what are known as Formula Retail Ordinances, which are described thusly by the Institute for Local Self-Reliance.

Formula businesses include retail stores, restaurants, hotels and other establishments that are required by contract to adopt standardized services, methods of operation, decor, uniforms, architecture or other features virtually identical to businesses located in other communities.

Several communities have banned certain types of formula businesses. These laws do not prevent a chain store from coming in, but they do require that the incoming chain not look or operate like any other branch in the country. This has proved a significant deterrent to chains, which generally refuse to veer from their standardized, cookie-cutter approach.
Communities with such ordinances have adopted rules to address their unique situations. Some ban only chain restaurants, some limit the number of chain establishments, and some apply a neighborhood-by-neighborhood approach.

Other communities use Tax Increment Financing (special taxing districts where a portion of property tax revenue goes to certain dedicated uses) to create a fund for local business start ups, which, interestingly, is something I advocated for in a project I did on Town Center for a class at graduate school. My proposal called for using TIF and grant money to set aside a certain percentage of retail space in downtown as affordable, incubator sites. These locations would be permanently affordable and once businesses reached a certain level of solvency, they would be expected to move elsewhere.

Still other communities create property tax systems that favor local businesses over national ones, with the justification being that this preference helps "capture" some of the negative externalities imposed by chain stores and the positive ones offered by local shops.

I don't know enough to say which, if any, of these solutions are effective -- the Formula Business Ordinance seems a little heavy handed, while TIF and property tax adjustments are of questionable fairness. But at this point, we don't need a solution, just a dialogue.

So, what are your thoughts? Should we be doing more to make our economy more hospitable to local businesses? Do you, like me, try to shop locally whenever feasible? If so, what are your favorite local shops?

Me, I'm partial to David's, Produce Galore and Princeton Sports (even if it is overpriced) on the retail side, and Frisco Grill and Vennari's on the food side.


Hayduke said...

Comment Test.

Anonymous said...

test 2

Hayduke said...


Hayduke said...

Another test.

Anonymous said...

Sleeping on the keyboard? It looks like you got Mary's suggestion working.

Hayduke said...

After numerous failed attempts (hence the frustrated keyboard pounding), I finally got it working right.

Now, let's see how long it takes for new comments to load on the sidebar.