Banning the Big Box

Brian Gubicza

Can locally owned businesses win on their own, or do they need a law against chains?

By Harold Henderson
July 7, 2006

Independent America
WHEN: Tuesday 7/11, 6:30 PM
WHERE: Chopin Theatre, 1543 W. Division
PRICE: $15, $5 for Local First Chicago members
INFO: 773-732-1701 or 773-338-0466

YOU SHOP, YOU vote. According to the business group Local First Chicago, every time you spend money via computer, phone, catalog, or physical store you’re helping to decide whether locally owned businesses will survive to keep their neighborhoods unique and prosperous.

Local First members would like you to vote local. Even if your sole criterion is price, they hope you won’t automatically assume they can’t beat the chains. Ellen Shepard, who runs the Andersonville Chamber of Commerce and coordinates Local First Chicago, says, “Local businesses are competitive and getting more so.”

One reason is that they’re learning from the chains. In July 2004 Jenny Ackerman, a former English teacher, turned the tables when she and her family opened the Grind Cafe at 4613 N. Lincoln, half a block from an established Starbucks. “We thought it out,” she says. “We had someone sit in Starbucks and count people and what they ordered. We figured that if we could get 10 percent of their customers we could make a go of it. We realized we had to have a very good product, a top espresso machine, fresh baked goods, free Wi-Fi.”

Today the Grind has 12 tables—and 5 more on the sidewalk in good weather—a chalkboard menu, local papers on shelves by the door, and two heavily layered bulletin boards. The rent on the vintage storefront is “a real deal,” says Ackerman. “We’re holding our own and paying our bills.”

She’d also like you to know that most of the Grind’s employees live in the neighborhood and walk to work. She buys her coffee from Intelligentsia on Fulton and her baked goods from Southport Bakery, Labriola Baking in Alsip, Sweet Thang on North Avenue, and other local suppliers. The Grind stickers on the cups? “From a guy on Lincoln,” she says. “My business cards are by a lady on Damen. Gethsemane Garden on Clark Street does our planter for the summer.” Clearly the $1.85 you fork over for a large coffee at the Grind is likely to be respent locally, making at least one more pass through Chicago’s economy before taking off for parts unknown.

Ackerman believes in supporting locally owned shops, but she doesn’t want any pity business. “You can’t just be a small business and expect to be supported because you’re small,” she says. “You have to be a good small business. The chains have forced us to be good. Starbucks raised public awareness of what coffeehouses can be.”

Everybody knows something about Starbucks. How many know about the Grind? Local First Chicago was founded last fall, and shortly before Christmas its 40 members began making their case in Lincoln Square, Andersonville, Lincoln Park, Wicker Park, and Bucktown—putting up window signs and door decals and distributing Local First Chicago literature and thank-you cards to customers, encouraging them to think about how they cast their dollar votes.

Local First Chicago doesn’t dwell on the evils of which chains are regularly accused, at least not directly. And it’s not about being pure—its members shop at chains too. Michael Shuman, one of the gurus of the localist movement and author of the new book The Small-Mart Revolution: How Local Businesses Are Beating the Global Competition, encourages shoppers to “weigh various imperfections against one another.” If you need to buy something, he writes, try to find the “triple crown”— a locally owned store selling goods made locally from local materials. Or at least one of the above or something regional.

Next month Local First Chicago will do another round of publicity in the original five neighborhoods plus Beverly, Garfield Park, Humboldt Park, Logan Square, Park Manor, Rogers Park, South Shore, and West Lawn. From July 4 to 11 the group’s members are observing “Independents Week” with events, sales, and flyers. On the 11th they’re sponsoring a screening (with drinks and hors d’oeuvres) of Independent America, a documentary made by Hanson Hosein and Heather Hughes as they traversed 32 states following two rules: no interstates and no chain stores.

Any city business can pay to join Local First Chicago, provided it passes three tests. It must be privately owned (not publicly traded). More than half the owners must live within 25 miles of the business. And those owners must have the power to decide on the business’s name, look, products, suppliers, service providers, and distribution of profits.

HOWEVER PRINCIPLED AND upbeat Local First Chicago’s message, many local retailers still feel besieged. “We’re being priced out of the neighborhood,” says Diana Epstein, a member of the group who sells gifts, baby items, and vintageinspired furniture at Faded Rose, 1017 W. Armitage. “My rent doubled last year, and the going rent is double that. In the last three years we’ve lost 20-some stores. Most have been rerented, but only two or three to independents.” When the chains aren’t trying to pick her pocket they’re trying to pick her brains—she can identify the trend spotters who work for Target. “I’ve kicked them out three times. I know they have a budget to buy here and then have those items knocked off in China.”

Epstein thinks it will take more than Local First window signs and thank-you cards to level the playing field. She thinks it will take political clout. When she worked as a consultant on the west coast in the 90s one of her clients couldn’t open a store in Carmel, California, because the town had a law against chains, generically known as a formula retail ordinance. “When I saw Armitage being ruined I thought of it,” she says.

She sent a letter to her alderman, Vi Daley, and got a favorable response. Drafts of a Chicago ordinance then flew back and forth between the city’s planning and legal departments. The current draft would set up a public process by which special chain-free districts could be established in the city. Details are supposed to be announced at a public meeting on the draft ordinance in the north-side wards of aldermen Patrick O’Connor and Mary Ann Smith, a meeting that’s been more or less imminent for several months. It’s now supposed to occur in late July or early August.

“Current business owners might like the idea,” says O’Connor, adding that property owners could take a different view, “since the ordinance might keep rents lower by taking higher payers out of the market.” The idea of an ordinance wasn’t palatable to a panel of developers, financiers, architects, lawyers, planners, and consultants convened last fall by the Urban Land Institute and the Campaign for Sensible Growth to discuss Andersonville’s future. They thought it would be divisive and limit competition.

Mainstream economics is all about letting money flow to whatever businesses can make a profit, whether they’re down the block or down in Argentina. The decision about whether a store “should” be in a given place is normally made by customers— not enough of them and pretty soon there’s no store. A formula retail ordinance—even one that covers only a few square blocks— takes that decision away from individual customers and turns it over to city hall or a neighborhood referendum. Experience has generally shown that in the long run this kind of protectionism leaves everyone a little worse off.

Of course experience has also shown that when money flows without restraint, some neighborhoods get left behind or wind up with strip malls, and all become vulnerable to decisions made far away by people who know nothing about the area and don’t care. Everybody has to live and work in a particular place, and in their role as residents, people might prefer familiar faces, historic storefronts, and community stability over consistently low prices. “I fear the blanching of neighborhoods,” says Local First founding member Libby Bonahoom, who owns Bouffe, a specialty food shop at 2312 W. Leland. “I don’t want to live in a city like that.”

Would a chain-free district be just an upper-middle-class fetish? No, say proponents, who insist goods in locally owned stores are often no more expensive than in chains—and even if they are, some studies make a strictly economic case that buying in them is still a better deal for the community as a whole. In 2004 Civic Economics produced the “Andersonville Study of Retail Economics” (andersonvillestudy.com), which found that locally owned businesses keep $68 in the local economy for every $100 in consumer spending, compared to $43 for chains.

The study wasn’t published in a professional journal, and one of the few mainstream economists to take note of it is Hart Hodges, who directs the Center for Economic and Business Research at Western Washington University. He considers the study inconclusive, because it failed to consider other ways businesses can contribute to the community, such as offering longer hours of operation, lower prices, and better employee benefits. How much is it worth to have the local pharmacistowner know you and your kids? And how do people weigh that against, say, being able to fill a prescription at Walgreens 24-7?

Like the Grind’s Jenny Ackerman, Hodges doesn’t think anyone is well served if poorly run local businesses are favored just because they’re local. He suggests alternative ideas localists might consider: “Why not have ‘best customer service’ or ‘most environmentally conscious’ or ‘best employee compensation’ awards to show which businesses are meeting the goals of a community? A program like that would help consumers know which businesses are performing in ways that they like, and consumers could support those businesses as a result. . . . The point is simply that communities can encourage all businesses to perform in ways that meet the goals of the community—and can do so in a way that makes sense in terms of the economics.”

In any case, Michael Shuman is uncomfortable with formula retail ordinances and in The Small-Mart Revolution warns activists not to depend on them. “If you blow your political capital on erecting controversial zoning and trade barriers against businesses you detest,” he writes, “you’ll be ill-equipped to implement the policy reforms needed to level the playing field that currently tilts against small business,” such as ending city and state subsidies that go mainly to multinational corporations. He spends a third of his book explaining new ways to promote local stock markets, mutual funds that specialize in local independent businesses, producer cooperatives, and more.

FOR MOST OF history, going local was a necessity, not a choice. But Local Firsters don’t cast themselves as die-hard traditionalists. If anything, they see themselves as tiny creatures running circles around momentarily mighty dinosaurs. Shuman agrees that there’s reason to be optimistic, happily invoking Friedrich Hayek’s critique of state socialism when he writes that the giant chains can’t possibly know enough to make the right business moves everywhere at once.

Perhaps ironically, localism is becoming a national movement: Local First Chicago is a branch of BALLE, the Business Alliance for Local Living Economies, of which Shuman and Ellen Shepard are board members. (The other midwestern chapters are in Grand Rapids and Ann Arbor.) In an article featured on BALLE’s Web site, livingeconomies.org, group cofounder Judy Wicks broadens the agenda for localists, emphasizing sustainability and small producers, even those far away. “Living economies produce basic needs— food, clothing, shelter and energy— locally and sustainably,” she writes. “This builds community selfreliance, provides new opportunities for ownership and job creation, and keeps capital within the community. What is not available locally is sourced from community-based businesses and small farms in other regions and countries in an exchange that benefits the communities where products and resources originate.”

Local First Chicago would undoubtedly settle for just getting shoppers to ask themselves what kind of business they want to support when they go shopping. Is it one that’s run by a good neighbor? One that buys locally, using less fossil fuels to get its products? One that saves you money you can put toward junior’s college tuition? “Whether or not you ultimately buy local,” says Shuman, “you should at least ask the right questions.”

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