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Hearth & Home May 2015

Independent shops form the backbone of the U.S. economy.

Shop Mom & Pop

By Lisa Readie Mayer

The Shop-Small, or Shop-Local movement is gaining traction as a way of helping specialty-store owners increase their business.

A baby clothing and furnishings shop in a small New Jersey town recently displayed a banner that read, “Proud to be your Mom & Pop Shop!” Rather than cowering from the Babies-R-Us megastore a few miles down the road, this retailer chose to promote its independence and “smallness.” The owner hopes that by doing so, customers will recognize that her store can deliver on what the mass merchant cannot: unique items, quality merchandise, custom monogramming and personalization, beautiful displays, a unique shopping experience, and top-notch service.

This store is just one example of a growing number of retailers participating in the “shop-small” movement that’s gaining momentum across the U.S. and Canada. The movement – also called “shop local” or “shop independent” – encourages consumers to shop at local, independent retailers, and reinforces the message that small businesses are the backbone of the local economy.

How much so? According to the U.S. Small Business Administration, there are 23 million small businesses in the U.S., accounting for 54 percent of all U.S. sales. Small businesses employ 55 percent of the workforce and are responsible for 66 percent of all net new jobs since the 1970s.

While big business has eliminated four million jobs since 1990, small business has added eight million jobs. Small businesses donate 250 times more to local charitable causes and nonprofit groups than big businesses do.

It’s estimated that, for every $100 spent in a small business, $68 stays in the local economy, versus $43 for $100 spent at a mass merchant. If that $100 is spent online, in most cases none of the money stays in the local economy.

The shop-local movement is one way to counter what Forbes magazine calls a “retail crisis” brought on in part by consumers’ growing reliance on online shopping, something 69 percent of independent retailers consider their number-one challenge, according to a survey by the Institute for Local Self-Reliance.

However, the organization reports that independent businesses in communities with long-term “buy local and independent” campaigns had revenue growth of 9.3 percent in 2014, compared with 4.9 percent for independent businesses in areas without such programs. Half of participating business owners said shop-local programs helped them generate new customers, and nearly half said the campaigns garnered greater awareness and support among their municipal officials.

Shop-Small Programs

One of the most recognizable programs is Small Business Saturday. Launched in 2010 by American Express, the annual program is held the Saturday after Thanksgiving and is designed to drive customers into local, small businesses “that create jobs, boost the economy and preserve neighborhoods.”

In addition to an extensive consumer television and radio advertising campaign, and free point-of-sale marketing materials for participating small businesses, American Express offers up to $30 in statement credits to consumer cardholders who register with the program prior to shopping on Small Business Saturday. It also awards “Main Street Makeovers,” “Street Art” mural projects, and other improvements to selected participating communities.

By the second year of the program, American Express reported a 23 percent increase in transactions at small businesses on Small Business Saturday. In 2013, according to the National Federation of Independent Business (NFIB) and American Express, consumers spent $5.7 billion with independent merchants on Small Business Saturday (the latest figures available), a nearly four-percent increase over the $5.5 billion spent in 2012. Close to 3,000 communities from all 50 states now participate in the program, which boasts 3.4 million Facebook “likes.”

Small Business Saturday is no longer just an American Express promotion. In 2011, with the support of governors, mayors, local and federal officials, the U.S. Senate officially recognized Small Business Saturday as the Saturday after Thanksgiving.

According to the 2014 Small Business Saturday Consumer Insights Survey, in just five years since its inception, half of all consumers now say they are aware of Small Business Saturday, and 82 percent said they would patronize a local small business on Small Business Saturday. Thanks in part to the program, shoppers estimated they would do nearly one-third of their holiday shopping locally. Even better news: 77 percent said the program motivates them to shop small all year long.

While Small Business Saturday may be the best known of the shop-local campaigns, there are a number of others. With a goal of “saving the brick and mortars our nation was built on,” The 3/50 Project encourages consumers to commit to spending at least $50 of their monthly shopping budget in three locally-owned businesses. Launched in 2009, the free program has registered thousands of businesses in the U.S. and Canada. It offers templates for print ads, flyers, buttons, countertop signs, yard signs, movie theater screen ads, press releases, radio public service announcements and more, as well as a listing on the “LookLocal” iPhone app.

The American Independent Business Alliance (AMIBA) promotes the year-round “Come in, We’re Local” campaign in support of independent businesses. AMIBA’s “Independents Week” promotion, held the first week in July to tie in with Independence Day, celebrates “the entrepreneurial spirit and contributions of our country’s independent businesses.”

The organization also encourages consumers to “Shift Your Shopping” during the entire holiday season (not just on Small Business Saturday). The goal is to create “a shopping tradition that strengthens local economies, expands employment, nurtures a sense of community, and provides a more relaxed, fun and rewarding gift-buying experience.” The group offers window clings, posters, pins, advertising graphics and other tools that retailers can use to tie in with these efforts.

Perhaps the most innovative shop-local program is taking place in several towns at the New Jersey shore. The program rewards property tax credits to residents who shop at local businesses. Participating independent merchants offer rebates of five percent, 10 percent, or whatever they choose, to residents of the town who are registered for the program and present a “reward card” with their lot and block number when they shop.

Money stamps spread the pro-local message with every cash or check transaction.

Three-quarters of the rebate amount is applied to the shopper’s property tax bill, and one-quarter of the amount goes to the third-party administrator of the program, Fincredit. The program is a win-win for towns, which collect the full amount of property taxes and incur no costs, while benefitting from a vibrant business community. Renters can also partake; they receive a check for the rebate value.

Marlboro, New Jersey was the first town in the country to offer the program. Since it began in 2012, about 50 merchants and more than one-third of all households in the town participate. According to a report in the Asbury Park Press, in its second fiscal year ending in April 2014, “participating merchants realized more than $1 million in sales directly attributable to the program, and residents saved more than $64,000 on their property taxes.” In the last year, three other nearby towns have adopted the program. Said the mayor of Ocean Township, New Jersey, “It’s good for our merchants, and who doesn’t want to reduce their property taxes?”

Are These Programs Effective?

Many independent retailers participating in shop-local programs report of gaining new customers and significant sales increases. Some hearth, patio and barbecue retailers, however, have experienced mixed results, with directly attributable sales hard to quantify.

Anna Papp, owner of Outdoor Living Center in Covington, Louisiana, has tied in with the Small Business Saturday program since its inception, promoting it in-store, through advertising and on Facebook. While she praises American Express for “really spreading the word” through radio and television advertising and point-of-sale materials, she faults the company for not sufficiently instructing customers about pre-registering their cards to take advantage of the $30 statement credits.

“If more customers knew they would personally benefit economically, maybe it would have helped more,” Papp says.

Anna Papp, owner of Outdoor Living Center in Covington, Louisiana.

She believes the campaign brought in a few customers, “But it’s hard to estimate how much business it actually generated,” she says.

Jonathan Kelly, vice president of Fireplace & Bar-B-Q Center in Overland Park, Kansas, agrees with Papp’s assessment. He, too, praises American Express’s “phenomenal and inspiring” TV ads, and free marketing kit for retailers, but says, “I don’t know that Small Business Saturday had a real impact on our business.”

Kelly believes the problem may lie in the use of the word “small.” He says, “I think the idea of ‘shop small’ is negative. It connotes a small selection and less professionalism. In this case, it’s not a good label.”

He believes another reason for lack of results might be that none of the other stores in his strip mall location participated in the program. “Hindsight is 20-20; maybe if we can get the other stores to participate and the landlord to help support it, we might do better. To grow will require working with other businesses to promote it jointly.”

Regardless, Kelly plans to tap into the free program again next year, hoping it will bring in new customers and increase sales.

Jonathan Kelly, vice president, Fireplace & Bar-B-Q Center, Overland Park, Kansas.

Unlike Papp and Kelly, Kimberley Quirk says tapping into shop-local campaigns has unquestionably had a positive impact on her business. The owner of The Energy Emporium in Enfield, New Hampshire, a renewable and sustainable energy products resource center and retail store, participates in The 3/50 Project, the Local First Alliance, and the Vital Communities campaigns.

Quirk says that simply putting the logos of these grass-roots initiatives on her storefront window and on her website has helped start a conversation with customers who ask about them.

“It’s a chance to talk about the importance of shopping local,” she says.

She has also found that banding together with other retailers in her district magnifies the results of shop-local programs. Last year, Quirk and fellow merchants tested the waters on a Small Business Saturday promotion. “We did okay, but we know it could be better and more effective with greater business participation,” she says.

To that end she has already begun planning a bigger effort for this upcoming holiday season and is helping to recruit more local businesses to get involved. The town’s new-and-improved 2015 Small Business Saturday program will include a “scavenger-hunt” that requires shoppers to visit multiple stores, in-store freebies such as hot chocolate or gift-wrapping, and advertising of unique merchandise that can’t be found at mass merchants.

Kimberley Quirk, owner of The Energy Emporium in Enfield, New Hampshire.

“Before, I didn’t even want to open on the Friday and Saturday after Thanksgiving, but now I see the benefits,” says Quirk. “Sometimes, unless you actively promote shopping local, people don’t realize they have better and more unique alternatives to shopping at Wal-Mart. The shop-local movement helps to raise awareness of the independent businesses in a community and why it’s important to support them. It’s bigger than any one store. If you improve the entire town, every merchant benefits.”

The experts say shop-small and shop-local promotions gradually change the mindset and behavior of consumers. Even if they are not shopping on Small Business Saturday or Independents Week, exposure to the messages creates a heightened awareness of the benefits of shopping at local, independent retailers that will likely result in increased consumer spending at these businesses throughout the year and over time.

Forbes magazine notes that retailers have to get creative and step up their game to survive and thrive today.

“Many retailers believe that if they stock the shelves, keep the lights on and staff enough sales people … they have done their jobs,” according to an article by Brian K. Walker. “Retailers who understand their customers … evolve the customer experience, and focus on their differentiators and assets, have the opportunity to thrive.”

That means putting the “special” in specialty retailing. Emphasize what the Big Box stores can’t: great customer service; knowledge and expertise; assembly, delivery, maintenance and repair services; warranty support; cooking advice and classes; the latest-and-greatest new products in the category; community engagement and all the other benefits that independent retailers offer. Promote your “smallness,” raise your “mom and pop” banner, and band with neighboring independent merchants on shop-local campaigns.

It could make a big difference in your business.

Retailer Resources

American Express Small Business Saturday

American Independent Business Alliance

Institute for Local Self-Reliance

The 3/50 Project

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