Keeping our dollars weird
When visitors come to town, they search out uniquely Austin places to nosh, hear live music, and spend. Vacationers want the fun-and-funky experience of shopping at Room Service Vintage or Hatbox, not the same Old Navy; Tesoros Trading Co. or Planet K, not Wal-Mart; South Congress, not the mall. On Saturday, Nov. 22 – Austin Unchained Day – the Austin Independent Business Alliance is calling upon natives to do the same: Patronize locally owned retailers instead of chain stores for one day. Better yet, AIBA asks all Austinites to consciously shift $100 of their holiday season spending to locally owned businesses.
This year, the local economic shadows cast by the darkening national economy provide a fresh reason to heed the Austin Unchained message. A key rationale for shopping at locally owned retailers is that dollars spent here stay here, to a far greater extent, and boomerang around Austin. A landmark study done in 2002 compared the local economic impact of shopping at two beloved Austin indie stores – Waterloo Records and BookPeople – to that of shopping at Borders. (At the time, the chain planned a new store across Lamar.) The Liveable City study found that $100 spent at Borders had just $13 in local economic impact; the same expenditure at Waterloo and BookPeople yielded a $45 impact.
A more recent 2008 study by Civic Economics (the same local firm that did the Austin study and several others) confirms that trend. The research for Local First of Grand Rapids, Mich., examined the economic impact of a 10% shift in market share, from chains to locals, across an $8.4 billion countywide retail market. It found that shifting $840 million – of the same spending – to locally owned businesses from chain stores would create $137.3 million more in local economic activity. That included creation of 1,600 more local jobs, paying $53 million in all, and a multiplier effect spreading the wealth across many sectors, not just retail.
"In today's national economic climate, it is more important than ever to keep profits here in Austin, rather than sending them to Wall Street," said Frank Lynn, executive director of AIBA. The group estimates that if each Travis Co. household redirected $100 of holiday spending from chain stores to locally owned merchants, the local economy would get a $14 million boost.
Unless you love the mall, it's generally more fun to browse small, one-of-a-kind neighborhood shops anyway – such as those in AIBA's five Independent Business Investment Zones, areas rich in indie biz storefronts. The atmosphere and merchandise are more eclectic and personal, the service hometown-friendly, the drive shorter, the quality often better. There's also something to be said for the grassroots satisfaction of helping neighbors realize their entrepreneurial dreams. But as much as average Austinites brag on – but don't patronize – our live music scene, many locals forget about shopping at the "only in Austin" places that attracted us here in the first place.
Conventioneers know better! "Visitors don't want malls; they want unique destinations where shopping is the main attraction but where they can also grab lunch, maybe see some live music, too," reports Cheri Winterrowd of the Austin Visitor Center. The AVC storefront on Sixth Street helps more than 150,000 visitors a year, she reported: "Some two-thirds of the visitors ask about shopping, and we distribute around 500 IBIZ brochures a month." She added, "We're getting increasing interest in 'off the beaten path' places like South Lamar and the East End – which is why it's nice to have the IBIZ brochures." The city of Austin is providing about $35,000 annually to AIBA to market the IBIZ districts with banners, brochures, and advertising.
Of course, townies spend far more than tourists shopping for everyday staples – like booze. Twin Liquors is a textbook example of a locally owned indie biz that gives back more to the Austin economy and community. The family-owned business, with roots extending back to the 1800s, has grown from one store to 55 in Central Texas – with the economy-stoking administrative functions retained in Austin. (Twin Liquors' new Hancock Center mega Marketplace will open Nov. 22, 3-6pm, and hold special Austin Unchained tastings.) Owner David Jabour noted that because they're from here, they make a special effort to carry, promote, and sell locally produced wines and spirits: Tito's Handmade Vodka, Treaty Oak Platinum Rum, Dripping Springs Texas Vodka, Paula's Texas Orange, Savvy Handcrafted Vodka.
Twin Liquors has lent its 70 years of retail experience and industry connections to help Central Texas wineries and spirits entrepreneurs conceive, incubate, start up, market, and distribute their wares. "We just really get excited about being able to develop a locally produced product," said Jabour. "We're going out of our way to make sure we're doing everything we can to promote them, through our own reputation as one of the most progressive spirits retailers in the county." The trade publication Market Watch named Twin Liquors Retailers of the Year in 2004 and gave the company a community-service award for its support of more than 500 charitable events annually. That's typical, says AIBA, of indies' stronger "I live here, I give here" passion – yet another reason to spend with them.
Doing the Math
Why do locally owned businesses have three times the economic impact? According to the Civic Economics studies, while both indies and chains hire local sales staff, indies create more local employment because they hire administrative, marketing, advertising, legal, accounting, and other help in town, not in Bentonville. They purchase goods, business-to-business services, and available wholesale merchandise in Central Texas. Plus, the income enjoyed by local entrepreneurs gets spent on their Austin-centric lives – not sent away to corporate or distributed to shareholders. (Anecdotal evidence provided to AIBA also suggests that its members pay higher hourly wages than comparable chain stores.) To account for the economic bounce on the dollar, a multiplier is used to calculate "total economic impact." For example, in the Borders vs. BookPeople/Waterloo study on $100 spent, a multiplier of about 50% yielded the $13 vs. $45 impact figures.
The 2008 Civic Economics study for Grand Rapids states: "The magnitude of these impacts is such that, under ordinary circumstances, economic development organizations and public agencies would rally to the cause, actively recruiting and incentivizing any firm promising such an impact. As it happens, consumers can themselves create these impacts with only a modest shift in their habits and behavior."
Citizen outcry against city incentives that effectively favor chain stores over homegrowns has risen to a fever pitch of late; it also fueled the 2002 Borders vs. BookPeople study. Based on Civic Economics' research, incentives to help locally owned retailers thrive might be more effective economic development policy now – not to mention a powerful way to rebuild citizen trust. What magnitude of new economic activity and sales-tax revival might be enjoyed if the city and the Chamber of Commerce threw their resources behind a "rally to the cause"? That question begs for a City Council work session.
Meanwhile, there's holiday shopping to be done. For those fretting about the local economy, AIBA has a cheering suggestion: Make a list, then check it twice for ways to patronize the shop around the corner.
For more information, including a listing of AIBA members hosting community events and offering special discounts on Nov. 22, visit www.ibuyaustin.com.