Chris on 
There is a big push to shop local, the thought being that money spent with locally-owned businesses keeps this money here locally. There are two sides to this philosophy.
Of course there is the shop local side of things. That if you spend money in a store owned by Mr. Smith who lives here locally, Mr. Smith will then use that money to pay other local bills. However, if the money is instead spent in huge big box store, a good chunk of that money leaves the Wausau area never to be seen again, at least not here locally.
However, the counter to that argument is that often (not always, but often) it is more expensive to shop locally. The big box stores are able to use volume to get their products at a lower cost and can use economies of scale to then offer the same product at a lower cost than a local, small retailer. In this economy, everyone is trying to make their dollar go farther, so if you can get the same product for 5-10% less at a big box, doesn’t that make more sense? And, not all of the big box revenues leave the local area, after all, they do employ local people, they do pay local property taxes, etc.
With the big boxes able to out-price the small, locally-owned retailer, how do the small, locally owned retailers continue to stay in business? Simple, they must learn to not compete on price, but instead compete on service.
Being an owner of a local business, I am faced with the same economic realities that our local retailers are faced with. According to the Wausau Daily Herald, in the last five years, there have been over a thousand rental units added to the local market place – most of these from out-of-town investors. They build in a scale that I cannot come close to. Because of economies of scale, they are able to offer their product for less cost than I am. Because of the size of their portfolio, they are able to undercut prices in certain markets (like mine) and make up for it by increasing prices in other more lucrative markets (like Madison or the Fox Valley). Therefore, I am faced with the same dilemma that local retailers face: do I lower prices and try to survive knowing that many customers only care about the price points – even if that means lowering services; OR, do I maintain current price points and services and sell myself using services.
Being a locally-owned company, I understand what locally-owned retailers go through. That is why even though I could save money and help my bottom line by using big box retailers for almost all of my supplies, I feel that us little guys really need to stick together, so whenever practical, I make an effort to use locally owned companies rather than big boxes. Here are just a few examples of how I make an attempt to keep money local:
Appliances
If you do some shopping on price, you will see that as far as a bottom line price, Best Buy will probably be the winner. However, locally-owned Grebes is really not that far out of line. And, based on volume, we can normally get appliances for a little bit less than retail. However, I don’t know that anyone can touch the service level of Grebes. It starts by being recognized and being addressed by name when you enter the store, continues to their willingness to work with us on the delivery and installation schedules, and is topped by a service department that is simply second to none. If I have a tenant with a refrigerator that won’t keep things cool, I know that one call to Grebe’s service department, and the problem is as good as taken care of.
In 2008, my records indicate that $10,867 was spent on new appliances. Although $923 was spent at big boxes like Menards and Home Depot, $4,964 was spent at Grebes and the rest was spent at other local businesses like Yesse Heating, Ace Hardware and Baumgardt Plumbing. So far in 2009, of the $7,118 spent on new appliances, $4,120 went to Grebes and the rest to the other local businesses already mentioned.
Staying local was also done with money spent when appliances simply needed to be repaired instead of replaced. In 2008, all but $792 (which also stayed local) of the $3,632 spent went to Grebes. So far this year, all but $93 of the $1,696 spent went to them.
Carpet
I could probably save money by going to a big box for carpet, but then the problem of coordinating installation comes up. Sometimes, we have a very tight window to work in of only a few days to get the old carpet out, and the new carpet in. Also, from time to time, we will change carpeting in an occupied rental for a long-time tenant, and this requires a great deal of coordination. In 2008 we spent $17,630 in carpet and installation, so far this year, $11,396 has been spent. All of this has gone to locally owned Showcase Carpets and one of their installers. Keeping the money local, and at the same time getting a level of service that no big box could ever match.
Building Supplies
Although we try to keep things local when it comes to general building and maintenance supplies, sometimes simple convenience does matter. Although over 25% of our maintenance supplies are purchased from Ace Hardware in Weston ($4,675 in 2008 and $5,290 so far in 2009), a good chunk is purchased from big box retailers. However, when choosing a big box, the vast majority comes from Menards. First, because they are a Wisconsin company, and second, because I personally HATE the self-check out lanes that they try to steer you to at Home Depot.
So, do those large, out-of-town apartment owners also shop locally for supplies? Or do they get volume discounts from the big boxes and are more concerned about bottom line than supporting the local economy? To be honest, I don’t know because I am not them.
Although I do believe when keeping dollars local when I can, I also know that I am not going to do business with you just because you are local. I chose to do a majority of my business with local companies like Grebes and Ace Hardware and Showcase Carpets because of the service I receive. If you think I should shop in your store because you are local but you don’t offer me a good value, and you don’t offer that “Northwoods Service” that I am willing to pay a little more for – than don’t expect my business. However, I will pay more to be more than just another customer coming through the door.
John, I really appreciate your thoughts and especially your efforts to buy local. What you are attempting to do as a businessman, and I as a consumer, is truly a dilema. We need to save money, we want the best price. But is that the bottom line?
My recent experiences with Grebe’s has made me a loyal customer. When we bought a lawnmower and a snowblower, they were delivered FREE with a full tank of gas! When we had a problem with our snowblower and couldn’t fit it in the SUV to bring it in, they came out and repaired it IN OUR GARAGE!
I appreciate your efforts to support our local economy. I encourage everyone to try to buy local – my article on supporting local businesses was posted here last holiday season. Buying from big box stores should be our second choice, as they do employ our neighbors and family. Buying ONLINE does NOTHING to support our area; as easy – and cheap – as it is, I encourage everyone to try to not take that road.
I have mixed feelings about this topic. There are many local businesses that I really enjoy and feel deserve my support, but there seems to be this mental divide between local and national economy, as though we are all on opposing teams and therefore shouldn’t be sharing our wealth.
Eastbay has hundreds of local employees, nearly all of whom would be out of a job if online and catalog sales simply stopped because that’s where 99% (if not more) of their business comes from. It’s easy to say that we shouldn’t give other communities our business, but then it’s only fair that we shouldn’t get theirs either.
I think Lisa is totally correct – this is a dilemma. I’m not even sure what it means to buy local – I bought a lawnmower at Menard’s but it was a Honda…is that local? Walmart serves the local economy too – doesn’t it? If I save money by buying the same stuff at Walmart – that just means I have more money to buy other stuff from local merchants. It’s a wicked paradox.
I don’t think it matters. Give me some proof. Sure, I like going to innersleeve rather than Best Buy, mainly because Mike has the music I want and Best Buy doesn’t. But other things like snowblowers, carpet, even groceries are bought wherever I can get the best deal. I’m sure Grebe’s has a great service department, but that’s not a deal breaker for me. Cost is. I hate myself for doing it, but I’ve even started grocery shopping at Wal-Mart because the price difference is very noticeable against shopping elsewhere. And shopping online? Like Andy said, if nobody shopped online, alot of people would lose their jobs, and then where would their local economy be?
I think this is a complicated issue, but I will respond first to what Matt said.
It does matter Matt. Let us use the example of Inner Sleeve. You buy a record there, and a portion goes to the operating expenses of the shop, the cost of inventory, and the like. The rest goes to Mike. Directly. You know Mike, and by shopping at his store directly support the purchase of potatoes or health care for his home.
We get into complications because let us look at Best Buy. If I got buy a Wu Tang CD at Best Buy, the money goes in a cash register, and out of town, and then in some fashion comes back into town through payroll. So, my friend Big Ross gets paid a tiny fraction of what I spent on the WU Tang record, but he gets a portion none the less.
This might be a discussion of degrees. For example, I recently went to Eastbay Retail Store (ugh) to purchase a New York Yankee hat. It was a bad experience, and I did not buy the item. Instead I ordered it online, and will one day have it.
But, every business is local to someplace. The shop online is owned by someone who lives someplace, and the money I spent ultimately will go to purchase potatoes and health care in someone house.
It is a complicated issue, and one that is not easily swayed by jingles and the like. And I am a rabid buy local kind of guy. But, over time Andy and I have talked about it extensively, and he has helped me see the complexity of this.
I think we can say this…there are some things that are local. Beer for example. We have two brewers of beer in Wausau that I know of. They are owned by people that live in this city, and that might be an option. If you drink beer.
But lets go to shoes. I like shoes. No one in town produces a shoe. So, I am stuck purchasing shoes made by out of town people…is that a failure to buy local? Maybe by degree it can be seen that way.
But, what if I buy a shoe from the Cobblery. I think they are owned by local people. So, like Inner Sleeve, that train of money is shorter.
But, if I buy at Rogans, the train is longer, but the train ultimately gets back around to payroll, and local people work at Rogans.
Sadly, what used to be a cliche in my head…Buy Local…has been opened up to the sort of complexity that we have in our world. Interconnected economies, economies of scale, and other factors.
Maybe we should instead focus our efforts on being mindful consumers, with an eye toward the future and how our consumption can affect our situations.
I don’t know if the question should really be “local” at all. As Andy noted there really shouldn’t be a divide between local and national. I’d go even further to suggest there shouldn’t be a divide between local, national, and global economies.
At this point, I imagine a certain percentage of people would say “Stop! I don’t want my money going to a sweatshop in El Salvador” (or where ever is not in fashion). That is informative. The invocation of “locality” may actually be a decision to only do business with those who share the same self-interests. The question isn’t “Is Menards local if the sell Hondas?”, rather the question is “Does Menards share my values if they sell Hondas?”
Of course, I’d be remiss if I didn’t note that locality doesn’t matter at all if you’re supporting the an evil empire. :)
A central question to ask about money is will the person who spends it enhance his or her creative humaneness. I, at the age of 42 (next week) happen to a member of a res nullis – a rather empty and uncreative generation. By and large, to give members of my generation the ability to wield the power of money has been for the most part a vacuous exercise, resulting in little that enhances the world. This is not to say that people cannot change or that there are not a few highly creative people of my generation. But I find it prudent to call attention to this fact – whether exchanged locally or with distance – money in the hands of my generation has not resulted in an improved quality of existence.
Dino, I wasn’t saying shopping at Inner Sleeve doesn’t matter, because I know the money train is shorter in that instance. What I was saying was in the overall economic picture, give me some proof that shopping at locally owned businesses improves the local economy.
If everyone shopped locally, the big box retailers wouldn’t have reason to be here, and thus the employees of the bigger stores wouldn’t have jobs. Those same business that are local would need more employees, yes, but not to the degree that the big box retailers can employ. What happens then?
My post was intended more to be on the cost of items at local stores vs. bigger retail giants. Friendly service doesn’t make up for the dollars that are saved shopping elsewhere. I would like to shop locally, sure. But it doesn’t make financial sense right now.
Some people clearly use their purchasing dollars to further their social agendas. I know people who won’t spend money at wal-mart because of how they “bully” their suppliers, or won’t by this brand or that brand because of sweatshot labor or other non PC agenda’s the companies might have.
That is fine.. that is our perrogative as consumers.
Although I have made an effort to reward locally-owned businesses, that is not my social agenda. Although I purchased $5000 in main supplies from Ace Hardware in Weston, about $15,000 went to Menards or Home Depot or other more national supply companies.
Personally, I look for the best value – and great customer service has a value to it. I will pay more for great customer service.
Where I have a problem is when a local retailer takes a position that I really really should buy from them simply because they are local and by not doing so I am a bad person.
Yet, they are not open when I am available to shop. Yet, they do not have what I need to buy. Yet, their prices are much higher than I can find elsewhere. Yet, I get that same “give me your money and get out” attitude that I can find at a much lower price.
Don’t tell me I have to shop local or I am a bad person… I may just in fact be a bad person, but it is not because I don’t think you are deserving of my funds.
The companies I mentioned in my article… Grebes, Ace Hardware, Showcase Carpets, Yessee Heating, Baumgart Plumbing – they have shown me why I should buy from them, because no matter how their prices compare, it is a better value.
The closest I can get to “proof” are stats I see repeated over and over again:
For every $100 spent in locally owned independent stores, $68 returns to the community through taxes, payroll and other expenditures. Spent at a national chain, $43 stays in the community; online – nothing comes home.
Thanks Lisa. Those are good stats.
Lisa- where did you get the stats? What size city are the stats from? What types of businesses are represented in these stats? Dino, I’m surprised you didn’t ask these questions.
There are well documented studies that do support the general findings, if not the exact numbers:
http://www.buylocalberkeley.com/node/36
As I’m sure you’re all aware this site is a bit biased, but the studies themselves generally look decent.
I have seen these same stats repeated in several places. I’ll look into it and see where they originated, but I see no reason to not believe they are true. The local owner buys local advertising, purchases local insurance, pays local printing companies to print fliers and brochures, etc.
Somethings you just take on faith. Lisa knows of what she talks about.
Well, I’m off to Wal-Mart!
Never take statistics on faith, Dino. You should know better than that.
I actually read the studies cited by Charles U. Farley. One them in particluar deals with this question of how much remains in the community (the $68 v. $43 ratio). It was the study done about Anderson, Illinois. It does mention a ratio that is exactly or very close to the number Lisa identified. But, at least as interestingly, it identifies the methodology used to arrive at that finding. The methodology was reading the annual reports of the large chain stores and getting the $43 number. But the $68 figure was based on interviews with the local merchants. There is no other verification. The statistic is derived from what the merchants say happens. Maybe it’s accurate and maybe it isn’t. There’s no way for me or you to tell. So everyone, including the authors of the study, are taking on faith the information provided by the merchants. Since the study was funded by the local Chamber of Commerce it is at least conceivable that there was a motive to arrive at the eventual outcome.
Ultimately, John Fisher is right. Everyone makes buying decisions based on a variety of reasons. People buy at the Inner Sleeve because Mike provides a product and a service that no one else does. And no one mentions that he often does it at a lower price than the big box stores, and sometimes less than the internet. Maybe some buy because they like Mike. Who knows and it doesn’t matter.
The same with buying at Grebe’s or anywhere else. And where does ‘buying locally’ end? Should people east of th eriver try to buy on that side of town? And people on the west side the same? Should shoppers always try to buy as close to the’r own domicile as they can? I recently bought a product from a ‘local’ merchant. It cost me about four times what it would have at the local big box store. But it was actually manufactured in southern Wisconsin, not in China. Is that buying locally? What if the big box sold the Wisconsin made product and the local merchant sold the product made in China? And the price was the same? Which purchase would be buying locally? Or there was a local craftsman who could individually manufacture the same thing for me, but at ten times the cost? Is that what I should do?
Thank you, matthew. It was refreshing to read the same questions I often think of when people say “buy local”
http://www.bookweb.org/advocacy/economic.html
This is the first website I came across, and I found it very interesting. Didn’t have time to read every study, but this article included studies in Michigan, Arizona, San Francisco, Maine, Texas, Illinois, all done by different organizations. Seemed to all come to the same conclusion.
Two items of particular interest: the direct comparison in Arizona between Office Max and a local office supply store; the finding that locally owned businesses contribute several times more to local charities and community groups than box chains.
I’m not going to dispute the validity of the studies you mentioned, but it’s not really a surprise that the locally-owned store would be more supportive of the local community than OfficeMax.
At the same time, OfficeMax is also contributing at a corporate level, which will surely trickle down to that community, among many others. What would be more interesting would be to see how the contributions of the two companies compare when adjusted for size.
Thanks Lisa for that link. I think that is a start.
I admit that my perspective has changed with some pretty great conversations with some pretty bright people. I think that this is not nearly as easy an issue as I once thought it was.
I was also a little bit quick to accept the stats presented by Lisa, mainly because Lisa is my friend and I tend to trust her on things.
Like I said in my previous response, every business is local to someplace. This common claim that buying things online is part of this, and I think false. For example, Eastbay. I bought shoes there a week ago, I ordered them online. Never went to the store, they were shipped to my house. In this chain, Eastbay got money, footlocker got money, a shipping company got money, and DC Shoes got money.
We can track that back even further, and say that all the pieces that go into those pieces got money from my money.
And all of those pieces are local. Someplace.
I wonder if the Buy Local movement is sort of an unintended (here you are John Fischer) consequence of the Buy Local movement in food production and eating. Maybe that is the case, and maybe not.
But now in all levels of production, we have a global society, and that society makes Kohler toilets for homes in Virginia, and Briggs and Stratton motors for lawn boy lawn mowers.
I think I am not sure what local even means. But, I think it is fair to say that purchasing online brings no money into a local community, well that seems false to me. Some examples…
1. I bought tickets to Brian Setzer online.
2. I bought shoes online.
3. I am considering buying a washer and dryer online.
All of these are online purchases. All of these put dollars in my community.
Like I said, I think I have moved more into the arena of mindful spending, being aware of what my dollars are doing.
We have had some stats put up here, and I was hoping we could get some links to the places that you mention. So that we can all get a look at that information.