Buy local movement: Why it really does make a difference
A Buy Local sign at Ann Arbor's Heavenly Metal store, located at 207 E. Ann St.
Courtney Sacco | AnnArbor.com
We hear the campaigns and we see the slogans, but do we understand it?
In many ways, supporting local businesses is what drives the local economy. We see trickle effects when people decide to make their purchases at small businesses, rather than online or at non-local big-box chains.
eLocal estimates that when purchases are made at local businesses, about 65 percent of revenue is reinvested into the community, compared to about 34 percent of revenue from national chains.
Of course, you can’t always shop locally. I certainly don’t. But there are choices we can make, such as buying coffee from Sweetwaters rather than Starbucks, or committing to make 15 percent of our purchases at local stores.
So, with the holiday shopping season in full gear — and on a day when shoppers are heading to local retailers to support Small Business Saturday — I’m looking at business owners to see how they’re driving sales in this highly competitive retail market.
To help explain the importance of the Buy Local movement, I had a recent conversation with Hans Masing, the owner of the now-closed Tree Town Toys in Ann Arbor.
He’s been there: he’s a community member and entrepreneur, he operated a small business in Ann Arbor, he struggled to compete against retail giants, and ultimately, he decided to close his store last year.
But Masing, who now works at Ann Arbor's Cole Taylor Mortgage, remains a supporter of local businesses and a staunch believer that every individual can make a difference.
Here are some excerpts from the conversation we had about the local business environment:
You closed your toy store (located in Traver Village on Plymouth Road) last year. Can you talk about your reasoning and how competitors played a role?
Masing: When the recession started in 2008 or 2009, we saw a pretty significant drop in sales. Very quickly, what ended up happening was people had to begin focusing on the bottom line: how can I get this stuff as cheap as possible? We found we had tremendous pressure from online sales and from nationals. There was a lot of pressure as well from far-reaching legislation…(the Consumer Product Safety Improvement Act of 2008) killed a lot of our top quality lines we brought from Europe.
Hans Masing, seen here a few years ago at his now-closed Tree Town Toys store.
File photo | AnnArbor.com
It put us in a position where the business was viable, we could have continued, but it was an awful lot of work for just surviving.
It’s a big question, but why do you think it’s important that people support local businesses?
Masing: Mostly because it keeps money in the local economy. If you’re buying at a big-box store, you’re feeding money outside the economy to wherever their headquarters are…
But look at a local business — a dollar spent there stays in the economy. It goes to local payroll, to the owner, to local taxes, and it really adds up very, very quickly. One of the things about shopping local is consumers may be able to get a better deal online, but immediately the tax revenue is lost. Sure, we all want to save money and I get that, but it’s the tax revenue that gets potholes filled and firefighters and police officers employed.
There’s a term, United States of Generica, where you go into any town and find exactly the same stores and restaurants. That completely kills the local flavor. You don’t see people raving about the local Applebee’s…to maintain that here, you have to shop local and support local businesses.
Tree Town Toys was known for its community involvement, including the memorable shopping spree for Kathleen Edward. How important is that when you’re a small business owner?
Masing: Local business owners are, by default, invested in the local community. They drive on the same streets that you do, their kids go to the same schools as yours, and you run into them all the time but may not even know it.
We liked to support the community as much as we could, by working with Mott Children’s Hospital and local children’s organizations…we would have regular events in the store so parents could bring kids in for crafts, we would do toy drives. We did the local Salvation Army toy drive every year. We also worked with a couple national charities, as well.
(As a small business owner), you can do a lot of intrinsic good for your community.
If local retailers can’t be competitive price-wise, how can they convince people to patronize their stores?
Masing: Price is such a critical factor to consumers these days. But looking beyond price…put your customers first. Remember, they are the reason you’re in business. Do everything you can to be out in front of your customers in a positive way and maintain a positive relationship with the community. Also, be honest with yourself about the viability of your business.
What’s some advice you would give to shoppers?
Masing: I get that people are going to shop on price, but if they can just do some of their shopping locally, it will make a difference. I get the allure of wanting to save a certain percentage on something, but you know what, making 10 to 15 percent of your purchases locally this year would make a huge difference.
Things that are comparable on price, source them locally. Find the local source for it and shop there.
Do you think Ann Arborites are more apt to support local businesses?
Masing: Yes, absolutely. One reason we ended up in Ann Arbor is because it really is a very different community than many other places I’ve lived. I think we have the draw of the (University of Michigan), the major industries in the area, and sort of the uniqueness of all those factors put together. We have a community filled with amazing people and amazing ideas.
Do you have any final words of advice to small business owners?
Masing: Hang in there — you can do it. I know personally how good it can be, and I also know personally how bad it can be. The secret is finding the joy in the middle there. The journey is not the destination; the journey is the day-to-day, so enjoy it. We live in a country where free enterprise is encouraged; it’s difficult, but it’s also possible. The toy store didn’t work out for me, but that doesn’t mean I’m not going to try something in the future. We’re exhaling for a little.
Readers: How do you support local retailers? Weigh in on the comments section below or email me. You can read about Washtenaw County's Think Local First organization here, and pledge to spend some of your holiday budget at local businesses here.
Lizzy Alfs is a business reporter for AnnArbor.com. Reach her at 734-623-2584 or email her at lizzyalfs@annarbor.com. Follow her on Twitter at http://twitter.com/lizzyalfs.
Comments
Roxyjones7
Tue, Jul 30, 2013 : 5:57 p.m.
Supporting local business is so good for local economy and the economy as a whole. Thank you for writing this and bringing it to the attention of everyone. If you live in the Hagerstown MD area check out OSI outlet! They are a family owned business specializing in office furniture!! http://www.osioutlet.com/AboutUs.html
1bit
Sun, Nov 25, 2012 : 11:41 a.m.
There are two main issues here: 1. Big box stores that pay their employees lower wages and leverage their size to get better margins on items. 2. Internet stores which don't charge sales tax to out-of-state customers. The first issue is hard for local businesses / small shops to overcome, but not impossible. The second is more of a regulatory problem; in the other threads on shopping after Thanksgiving, I found it funny when people talked about the great "deal" they found on the Internet. Much of the savings comes from not paying sales / use tax. This issue is now coming to a head and in a year or two this advantage may be lost.
1bit
Sun, Nov 25, 2012 : 6:46 p.m.
Yep - that is exactly my point. People do not report use tax as they should. They are not really getting that "deal" by not paying sales tax as they are supposed to pay use tax anyway. But the company selling doesn't collect sales tax and does not report the sale to the State of Michigan so that it is known that use tax should be collected. So it is the "honor system" but it is clear that either knowingly or unknowingly that the "honor system" has failed.
LAEL
Sun, Nov 25, 2012 : 3:04 p.m.
Michigan has a "use tax" -- a 6 percent tax owed on sales made remotely. In other words, people are supposed to add up their online and catalog purchases and report that on their Michigan tax forms. http://www.michigan.gov/taxes/0,1607,7-238-43529-155531--,00.html
Epengar
Sun, Nov 25, 2012 : 4:02 a.m.
I find that I generally get better service and higher quality when I buy local. I wish more people valued those things more. It seems like many folks are willing to accept a lot less quality in order to save just a little less money.
kittybkahn
Sun, Nov 25, 2012 : 12:29 a.m.
I drive a 2011 Ford Fiesta which, it turns out, was made in Mexico. I hear next year they will be made in the USA. I previously owned a Honda Accord that was made in Ohio. You just never can tell by the brand alone. Plus a lot of the parts on 'foreign' cars are made here in the USA. Don't jump to conclusions.
tdw
Sun, Nov 25, 2012 : 6:53 p.m.
kitty....same thing for my parents Fusion.Kinda wish they got a Toyota assembled in Tennessee
EyeHeartA2
Sun, Nov 25, 2012 : 3:23 a.m.
Per the article: "you're feeding money outside the economy to wherever their headquarters are…" Ford = Dearborn, Michigan, USA Honda = Minato, Tokyo, Japan
Tom Drake
Sat, Nov 24, 2012 : 10:33 p.m.
i tried to shop locally this sat. morning, after the farmer's mkt. i walked into downtown and nothing was open before 10am. if stores want shoppers they need to be open when we are there..
David
Sat, Nov 24, 2012 : 10:12 p.m.
This a great article. This is also why every chance we get we buy local. Could I get nails, screws, and rivets cheaper at Lowe's? Yea, I could but I go to Stadium Hardware anyhow. Insurance cheaper at some national chain? maybe, but Kleinschmidt Insurance does a great job, and I can walk in the door instead of sit on hold for hours. Eat at Holiday's instead of McDonalds. We do our best to support the businesses that support us and help Ann Arbor. I don't know the owner of Lowe's or McDonalds and i'm sure they don't tell other people about Eco Signs; however, I know the names of local business owners and they know me. I recommend companies that do excellent work, and companies I know first. Buying local is not only beneficial in the long run, but also just plain and simply good business.
Linda Peck
Sat, Nov 24, 2012 : 9:50 p.m.
I was shopping locally today and I found great deals at Learning Express at Westgate on Stadium and Jackson. I make it a habit to shop locally and I usually find many great deals. I found things at Learning Express that were less than the same product on-line, and I did not have to pay for shipping. It is a great place to shop, Westgate, and lots of people are there every day.
dotdash
Sat, Nov 24, 2012 : 9:13 p.m.
Getting the lowest possible price is held up as this great virtue, but it is often the reverse. Look at the flap over Walmart: yes, you can get a shirt for $5, but the person who folds it and rings it up needs food stamps to get along. What is the real price of that shirt? Much higher. I'd rather pay the real price for the shirt, instead of some twisted hidden-price government subsidy price. A small local store is more likely to have a reasonable pricing structure. Even though the price tag may be higher, the *real* price is probably lower.
tdw
Sat, Nov 24, 2012 : 3:45 p.m.
I'm just gonna quip in here.I always kinda chuckelled when in Ann Arbor and saw the bumper stickers " Gore,Kerry jobs for America "...........on a Subaru
Richelle
Sun, Nov 25, 2012 : 2:40 p.m.
Bob, I like how you forgot to mention the Subaru (and Mitsubishi) Research and Development facilities right here in Ann Arbor.
Basic Bob
Sat, Nov 24, 2012 : 8:34 p.m.
Who cares where it is screwed together, unless your goal is to provide more world-beating low-skill jobs. Where did the mass production equipment come from? Where do the engineers work? Where are the engines and transmissions designed and built? Where do the profits go? Hint - not Indiana. I'm not a UAW guy but we have a common interest in supporting the livelihood of US workers and long term success of US manufacturing. Japanese companies fundamentally care about Japan.
Brad
Sat, Nov 24, 2012 : 5:09 p.m.
Was it one of the many Subarus built in Indiana (part of America)?
jcj
Sat, Nov 24, 2012 : 3:33 p.m.
eLocal estimates that when purchases are made at local businesses, about 65 percent of revenue is reinvested into the community, compared to about 34 percent of revenue from national chains. This is a somewhat misleading statement. Lets say you have a local business with $100,000 of gross revenue. $65,000 reinvested. Now you have a non local business with $1,000,000 of gross revenue. $340,000 reinvested. Having said that I fully support buying local when possible.
JBK
Sat, Nov 24, 2012 : 3 p.m.
Not sure why this blog turned into a discussion about automobiles, BUT here is a thought. As I was out and about this week getting ready for Thanksgiving, I was picking up the usual assortment of chips, beer, wine, cheese, etc... I could not help but notice that the "local" products have a markup of 20 to 25% above the name brand products. So I did what anyone with a brain would have done, I bought the more reasonably priced items and went on my way......... UNTIL the local producers get their prices inline with the "out of state" producers, I will not buy their over priced garbage. It is a free world and I have elected to spend my money elsewhere.......
Epengar
Sun, Nov 25, 2012 : 3:56 a.m.
You assumed the local products are lesser or equal in quality to the "name brands." At least in the case of beer, that is likely to have been a mistake. Also, "markup" is an poor choice of words. "Markup" means "the amount charged over the cost to the seller." Locally made stuff may well cost more to make that stuff made elsewhere. It's not reasonable to assume that because local goods cost more, that the sellers are making a higher profit on them.
Great Lakes Lady
Sat, Nov 24, 2012 : 1:49 p.m.
Re-read the article and then think about how NOT buying a Ford, GM, Chrysler negatively impacts your local and state economy. Your vehicle is one of the largest purchases you'll make next to your house. Why do you think Michigan went from the number 1 state economically to number 49 or 50? Many auto workers are either unemployed, or have moved out of state. Infrastructure in this state is crumbling due to diminished tax base from the downsized auto industry and all of the peripheral businesses it supports. I'm willing to bet that most small business owners in this area drive foreign vehicles because in their mind it's "cool"....not thinking that maybe if they support Michigan's major industry, those employees just might support them?
Great Lakes Lady
Sun, Nov 25, 2012 : 1:23 p.m.
Per the article: "you're feeding money outside the economy to wherever their headquarters are…" "eLocal estimates that when purchases are made at local businesses, about 65 percent of revenue is reinvested into the community, compared to about 34 percent of revenue from national chains." The largest industry in Michigan is automotive...not only Ford, GM, Chrysler...but all of the small businesses around the headquarters, suppliers, etc. These large corporations support the arts, pay taxes for infrastructure, etc...as they decline, so does this state. Justify however you want the purchase of your vehicle that profits the HQ of another country; just know that it is leading to the decline of this state. We pay taxes to support our Mich universities that train our children, who then need to leave this state to find a decent job.
bluetonguedlizard
Sat, Nov 24, 2012 : 8:08 p.m.
What is the impact if those foreign cars were purchased second hand from a local dealer....?
laura wolf
Sat, Nov 24, 2012 : 3:08 p.m.
yeah, i would love to buy a fuel efficient small truck from an american company when i need a new one. chevy quit making the s-10, ford dropped the ranger. they never improved the fuel use over the years anyway just added features i didn't need. for now i am stuck with my old s-10 waiting to see if someone comes out with what i need by the time i have to buy a new one.
LA
Sat, Nov 24, 2012 : 2:42 p.m.
maybe it's because the brains running the auto companies were fat-cat idiots who refused to deal with the fuel issues starting back in the 70's. They lost momentum and fell behind.....they are still trying to catch up. I tried to buy a new hybrid Ford 2 years ago. The price was insane, and they didn't even have any in stock and were very reluctant to pursue the issue. The standard Fords were not impressive but I really wanted to support the Ford and was willing to deal with it if I could get the hybrid. I couldn't afford the Prius or any hybrid car either. So I ended up with another dependable, reliable, affordable Toyota.
Ingrid Ault
Sat, Nov 24, 2012 : 1:47 p.m.
At Think Local First (our poster in the picture) we encourage the public to "think local" when making some of their holiday shopping choices. Local independently owned businesses give great service, are experts in their field, make returns a breeze, and best of all you are investing in our community! Here is the link to find a listing of local independent businesses in Washtenaw County. (www.thinklcoalfirst.net.) We hope you'll shop local and keep your dollars local!
ViSHa
Sat, Nov 24, 2012 : 4:25 p.m.
"make returns a breeze". I have not found that to be always true in local businesses here. In fact, I have found it the opposite.
Ingrid Ault
Sat, Nov 24, 2012 : 1:48 p.m.
Oops! Typed too fast, here is the link: http://www.thinklocalfirst.net/.
EyeHeartA2
Sat, Nov 24, 2012 : 1:36 p.m.
@smokeblwr: "Buy local" only refers to eggs, hot pads, jelly and trendy sweaters - you know things that really add to the local economy. "If you're buying at a big-box store, you're feeding money outside the economy to wherever their headquarters are…" Obviously does not apply to autos. Everybody in the smartest city in the country knows that.