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Profit Globally, Pose Locally

Corporate chains try to cash in on the growing consumer movement to support local independent businesses

By Stacy Mitchell

HSBC, one of the biggest banks on the planet, has taken to calling itself “the world’s local bank.” Winn-Dixie, a 500-outlet supermarket chain, recently launched a new ad campaign under the tagline “Local flavor since 1956.” The International Council of Shopping Centers, a global consortium of mall owners and developers, is pouring millions of dollars into television ads urging people to “Shop Local”—at their nearest mall. Even Wal-Mart is getting in on the act, hanging bright green banners over its produce aisles that simply say, “Local.”

Hoping to capitalize on growing public enthusiasm for all things local, some of the world’s biggest corporations are brashly laying claim to the word “local.”

This new variation on corporate greenwashing—“localwashing”—is, like the buy-local movement itself, most advanced in the context of food. Hellmann’s, the mayonnaise brand owned by the processed-food giant Unilever, is test-driving a new “Eat Real, Eat Local” initiative in Canada. The ad campaign seems aimed partly at enhancing the brand by simply associating Hellmann’s with local food. But it also makes the claim that Hellmann’s is local, because most of its ingredients come from North America.

It’s not the only industrial food company muscling in on “local.” Frito-Lay’s new television commercials use farmers as pitchmen to position the company’s potato chips as local food, while Foster Farms, one of the largest producers of poultry products in the country, is labeling packages of chicken and turkey “locally grown.”

Corporate localwashing is now spreading well beyond food. Barnes & Noble, the world’s top seller of books, has launched a video blog site under the banner, “All bookselling is local.” The site, which features “local book news” and recommendations from employees of stores in such evocative-sounding locales as Surprise, Ariz., and Wauwatosa, Wis., seems designed to disguise what Barnes & Noble is—a highly centralized corporation where decisions about what books to stock and feature are made by a handful of buyers—and to present the chain instead as a collection of independent-minded booksellers.

Across the country, scores of shopping malls, chambers of commerce and economic development agencies are also appropriating the phrase “buy local” to urge consumers to patronize nearby malls and big-box stores. In March, leaders of a new Buy Local campaign in Fresno, Calif., assembled in front of the Fashion Fair Mall for a kick-off press conference. Flanked by storefronts bearing brand names like Anthropologie and The Cheesecake Factory, officials from the Economic Development Corporation of Fresno County explained that choosing to “buy local” helps the region’s economy. For anyone confused by this display, the campaign and its media partners, including Comcast and the McClatchy-owned Fresno Bee, followed the press conference with more than $250,000 worth of radio, TV and print ads that spelled it out: “Just so you know, buying local means any store in your community: mom-and-pop stores, national chains, big-box stores—you name it.”

In one way, all of this corporate localwashing is good news for local-economy advocates: It represents the best empirical evidence yet that the grassroots movement for locally produced goods and independently owned businesses now sweeping the country is having a measurable impact on the choices people make.

“Think of the millions of dollars these big companies spend on research and focus groups. They wouldn’t be doing this on a hunch,” observes Dan Cullen of the American Booksellers Association (ABA), a trade group that represents some 1,700 independent bookstores and last year launched IndieBound, an initiative that helps locally owned businesses communicate their independence and community roots.

Signs that consumer preferences are trending local abound. Locally grown food has soared in popularity. The United States is now home to 4,385 active farmers markets, one out of every three of which was started since the year 2000. Food co-ops and neighborhood greengrocers are on the rise. Driving is down, while data from several metropolitan regions show that houses located within walking distance of small neighborhood stores have held value better than those isolated in the suburbs where the nearest gallon of milk is a five-mile drive to Target.

A growing number of independent businesses are trumpeting their local ownership and community roots, and reporting a surge in customer traffic as a result. In April, even as Virgin Megastores prepared to shutter its last U.S. record store, independent music stores across the country were mobbed for the second annual Record Store Day. A celebration of local-music retailers that features in-store concerts and exclusive releases, the event drew hundreds of thousands of music fans into stores, was one of the top search terms on Google, and triggered a 16-point upswing in album sales, according to Neilson SoundScan.

In city after city, independent businesses are organizing and creating the beginnings of what could become a powerful counterweight to the big-business lobbies that have long dominated public policy. Local business alliances—like Stay Local in New Orleans, the Metro Independent Business Alliance in Minneapolis-St Paul and Arizona Local First in Phoenix—have now formed in more than 130 cities and collectively count some 30,000 businesses as members. Through grassroots “buy local” and “local first” campaigns, these alliances are calling on people to choose independent businesses and local products more often and making the case that doing so is critical to rebuilding middle-class prosperity, averting environmental collapse and ensuring that our daily lives are not smothered by corporate uniformity.

Surveys and anecdotal reports from business owners suggest that these initiatives are in fact changing spending patterns. A survey of 1,100 independent retailers conducted in January by the Institute for Local Self-Reliance (where I work) found that, amid the worst economic downturn since the Depression, buy-local sentiment is giving local businesses an edge over their chain competitors. While the Commerce Department reported that overall retail sales plunged almost 10 percent over the holidays, the survey found that independent retailers in cities with buy-local campaigns saw sales drop an average of just 3 percent from the previous year. Many respondents attributed this relative good fortune to the fact that more people are deliberately seeking out locally owned businesses.

None of this has slipped the notice of corporate executives and the consumer-research firms that advise them. Several of these firms have begun to track the localization trend. In its annual consumer survey, the New York-based branding firm BBMG found that the number of people reporting that it was “very important” to them whether a product was grown or produced locally jumped from 26 to 32 percent in the last year alone. “It’s not just a small cadre of consumers anymore,” says founding partner Mitch Baranowski.

“Food is one of the biggest gateways, but we’re seeing this idea of ‘local’ spread across other categories and sectors,” says Michelle Barry, senior vice president of the Hartman Group. A report published by Hartman last year noted, “There is a belief that you can only be local if you are a small and authentic brand. This isn’t necessarily true; big brands can use the notion of local to their advantage as well.” Barry explains: “Big companies have to be much more creative in how they articulate local. . . . It’s a different way of thinking about local that is not quite as literal.”

One way corporations can be “local” is to stock a token amount of locally grown produce, as Wal-Mart has done in some of its supercenters. The chain’s local food offerings are usually limited to a few of the main commodity crops of that particular state—peaches in Georgia or potatoes in Maine—and sit amid a sea of industrial food and other goods shipped from the far side of the planet. Yet, this modest gesture has won Wal-Mart glowing coverage in numerous daily newspapers, few of which have asked the salient question: Does Wal-Mart, which now captures more than one of every five dollars Americans spend on groceries, create more and better opportunities for local farmers than the grocers it replaces?

Wal-Mart, like other chains, has learned that, with consumers increasingly motivated to support companies they perceive to be acting responsibility, tossing around the word “local” is a far less expensive way to convey civic virtue than the alternatives. “Local is one of the lower-hanging fruits in terms of sustainability,” explains Barry. “It’s easier for companies to do than to improve how their employees are treated or adopt a specific sustainability practice around their carbon footprint, for example.”

Rather than making direct claims using the word “local,” some companies are pushing marketing messages that work by association. One example that caught Dan Cullen’s eye was a CVS television commercial that begins in a Main Street bookshop, following the owner around as she tends to her customers. The bookshop then transforms into a CVS. The bookshop owner is now the customer. The feel is still very much Main Street. “Suddenly the kind of unique, enjoyable, grassroots bookstore experience morphs into a CVS experience,” says Cullen. “There’s a Potemkin façade that a lot of chains are trying to put up because consumers now want something other than a cookie- cutter experience.”

Still another corporate strategy is to redefine the term “local” to mean not locally owned or locally produced, but just nearby. “With the term ‘local’ being so nebulous, it seems ripe for manipulation,” notes Mintel, another consumer-research firm that counsels companies on how to “craft marketing messages that appeal to locally conscious consumers” and how to avoid “charges of ‘local-washing.’ ” The key, Mintel says, is for companies to decide what they mean by local and to disclose that clearly so as not to be accused of trying to misappropriate the term.

Corporate-oriented buy-local campaigns that define “local” as the nearest Lowe’s or Gap are now being rolled out in cities nationwide. Some represent desperate bids by shopping malls to survive the recession and fend off online competition. Others are the work of chambers of commerce trying to remain relevant. Still others are the half-baked plans of municipal officials casting about for some way to stop the steep drop in sales tax revenue.

Many of these AstroTurf campaigns are modeled directly on grassroots initiatives. “They copy our language and tactics,” says Michelle Long, executive director of Sustainable Connections, a seven-year-old coalition of 600 independent businesses in northwest Washington state that runs a very visible, and according to market research, very successful “local first” program. “I get calls from chambers and other groups who say, ‘We want to do what you are doing.’ It took me a while to realize that what they had in mind was not what we do. Once I realized, I started asking them, what do you mean by ‘local’?”

Examples abound. In northern California, the Arcata Chamber of Commerce is producing “Shop Local” ads that look similar to the Humboldt County Independent Business Alliance’s “Go Local” ads, except they feature both independents and chains. Spokane’s Buy Local program, started by the local chamber, is open to any business in town, including big-box stores. Log on to the Buy Local Web site created by the chamber in Chapel Hill, N.C., and you will find Wal-Mart among the listings.

When billboards proclaiming “Buy Local Orlando” first appeared in Orlando, Fla., Julie Norris, a café owner who last year co-founded Ourlando, an initiative to support indie businesses, was excited to see the concept getting such visibility. But she soon realized that the city-funded program, which provides businesses who join with a “Buy Local” decal, seminars at the Disney Entrepreneur Center, and a listing on the Web site, was open to any business in Orlando. “We sat down with the city and said, ‘What you guys are doing is a real disservice to the local business movement,’ ” she says. When Norris complained publicly, city officials accused Ourlando of being “exclusive” by not allowing chains.

The city did agree to remove from its press materials and Web site a reference to a study that found that, for every $100 spent locally, $45 stays in the community. The problem was that the study, conducted by the firm Civic Economics, found that to be true only if the money was spent at a locally owned business. Shop at a chain store, the analysis found, and only $13 of that $100 spent stays in the community.

The Economic Development Corporation (EDC) of Fresno County also appropriated the $45-stays-local statistic when it kicked off its Buy Local campaign at the Fashion Fair Mall. The figure was repeated on a TV news story without any clarification that it did not apply to the types of chains visible in the background. Like the Orlando initiative, the Fresno campaign aims to boost sales tax revenue by deterring online and out-of-town shopping. It goes out of its way in every radio and TV spot to make sure people know that “local” means national chains and big-box stores. “Buy Local” stickers and posters are now visible on malls and chains throughout the Central Valley. “For someone to say you are not local if you are a big box, I say baloney. They invested here,” explains Steve Geil, CEO of the EDC.

“I would prefer that the county’s resources were not being spent promoting Wal-Mart and Home Depot,” says Scott Miller, owner of Gazebo Gardens, a plant nursery founded in 1922. “We have a great history of being involved in community events and donating to local causes. Our plants are grown locally. We believe that our kind of business is more valuable to a community than any big chain.”

When the city of Santa Fe decided to launch a campaign to encourage people to shop locally, the Santa Fe Alliance, a coalition of more than 500 locally owned businesses that has been running a buy-local initiative for several years, signed on. At the kick-off in March, the Alliance’s director, Vicki Pozzebon, emphasized the economic impact of shopping at a locally owned business versus a chain. “After that, the city asked me not to push the $45 vs. $13, but just say ‘local,’ ” says Pozzebon. The city’s message, according to Kate Noble, a city staffer who runs the program, is that shopping at Wal-Mart is fine, as long as it’s not walmart.com. Pozzebon says, “It has only diluted our message and confused people.”

These sales-tax-driven campaigns may well be doing more harm to local economies than good, according to Jeff Milchen, co-founder of the American Independent Business Alliance, a national organization that helps communities start and grow local business alliances (and on whose board I serve). “If you encourage people to shop at a big-box store that takes sales away from an independent business, you’re just funneling more dollars out of town, because, unlike chains, local businesses buy lots of goods and services, like accounting and printing, from other local businesses.”

The irony of trying to solve declining city revenue by trying to get people to shop at the local mall is that the mall itself may be the problem. While many California cities are facing budget cuts and even bankruptcy, Berkeley has managed to post a small increase in revenue. Part of the reason, according to city officials, is that Berkeley has more or less said no to shopping malls and big chain stores and is instead a city of locally owned businesses that primarily serve local residents. That creates a much more stable revenue base. Berkeley hasn’t benefited from the temporary boom that a new regional mall might create, but neither has it gone bust.

Can corporations succeed in co-opting “local”—or at least so muddling the term that it no longer has meaning? The Hartman Group’s Barry thinks that’s possible. “For many consumers, these things are not being called into question much. They say, ‘Hey, it’s my local Wal-Mart or my local Frito-Lay truck.’ It depends where you are on the continuum and how you define local, which is a term that is really up for grabs.”

Milchen is less concerned about what he calls faux-local campaigns in cities where there is already a strong local business organization. “It’s more of an educational opportunity than a problem, so long as they respond to it,” he says. But in places where local enterprises are not organized, he says he fears these corporate campaigns may succeed in permanently defining “local” for their own benefit. Michelle Long shares that concern: “That’s my fear. People are going to do diluted versions and hold the space so that real campaigns don’t get started.”

Localwashing has prompted local-business advocates to reconsider their language. Many are now using the word independent more than the term local. Controlling language is critical, says Ronnie Cummins, director of the Organic Consumers Association, who is pushing for tighter regulation of the word organic, as well as rules governing terms like natural, sustainable, and local. “We’ve been fighting so long without the help of federal regulators that some people have forgotten that tool.”

But perhaps localwashing will ultimately make corporations even more suspect and further the case for shifting our economy more in the direction of small-scale, local, and independent. “I think the fact that the chains are trying to play the local card, in a way makes it easier for us,” says the ABA’s Cullen. “I think people are going to recognize that these aren’t authentic, and that’s going to make the real thing all the more powerful.”

Stacy Mitchell is a senior researcher with the New Rules Project (newrules.org) and author of Big-Box Swindle: The True Cost of Mega-Retailers and the Fight for America’s Independent Businesses (Beacon, 2006). Send your examples of localwashing to her at smitchell@ilsr.org.

Bull Market

What I learned from blogging against the movement to lure Trader Joe’s to the Capital Region

By Stephen Leon

From what I have seen, the world is divided into three sets of people.

1. Those who have never been to a Trader Joe’s, and perhaps have never heard of it.

2. Those who love Trader Joe’s more than they love their own families.

3. Those who love Trader Joe’s more than they love their own families and are incensed that there isn’t one nearby.

—Stephen J. Dubner, Freakonomics

 

One day about a month ago, my e-mail began to fill up with messages lobbying me to lend support on the Metroland food blog to the local movement to bring a Trader Joe’s store to the Capital Region.

I have been to Trader Joe’s food stores in the suburbs of New York and Boston. Having bought food there myself (and given my sister shopping orders when she was planning to visit from Connecticut), I understand completely why people are in love with this chain. As I explained on a recent blog post on metrofoodie.com, Trader Joe’s “is a food store chain that sells natural and somewhat upscale products at very reasonable prices in a comfy, neighborhood-store setting. “For many people who stumble into a TJ’s for the first time (the closest one, in Hadley, Mass., is about an hour and 45 minutes from Albany), it’s love at first sight. People come home gushing about all the high-quality groceries they bought and how little they spent.

As founder Joe Coulombe puts it, “Trader Joe’s was designed by me in the 1960s and ’70s to serve people who are overeducated and underpaid.”

Coulombe sold TJ’s in 1979 to German billionaire Theo Albrecht, whose family also owns the discount food-store chain Aldi, a decidedly less upscale, no-frills operation aimed at lower-income and less food-snobby populations.

Curious about the sudden flurry of e-mails encouraging me to lend editorial support to the effort to lure TJ’s to the Capital Region, I tracked down the coordinator of We Want Trader Joe’s in the Capital District (wwtj.org), Bruce Roter. Roter acknowledged that the e-mail barrage was a centralized effort (complete with canned messages for people who didn’t have time to craft their own), and that the group had initiated a discussion with the company abut locating a store here.

Five or 10 years ago, I would have joined this effort, but I have become gradually more skeptical of the sentiment that the Capital Region would be a great place to live, if only it had . . . an IKEA! A Nordstrom! A Starbucks every five miles! A Dinosaur Barbecue! A Trader Joe’s!

I am even more skeptical now that I’ve become acquainted and involved with the growing movement to encourage strong local economies through increased support of local independent businesses, farmers, artists, etc. While groups such as Capital District Local First (and its national umbrella organization, Business Alliance for Local Living Economies) recognize that not all of consumers’ needs can be met by local businesses, they encourage people to shift some of their consumption to independents where possible. And the economic benefit to the community is fairly obvious: A significantly higher percentage of money recirculates within the local economy if spent at a local independent retailer as opposed to national chains, which are less likely to use local suppliers, and much more likely to send the profits out of state.

So I asked myself—and my blog readers—is it really worth fighting for another chain to come in, compete with local co-ops, natural-food stores and farmers markets, and send the profits back to Germany?

And they answered, in force.

‘We are in desperate need of Trader Joe’s in the Capital Region.” “Oh my gosh.. I would LOVE a trader joes in Capital Region.” “Trader Joe’s is not a ‘Big Box’ operation. It has a small, friendly feel and the workers are more than helpful and anxious to please.”

“They must be a good company to work for because the people that work there always seem happy and they are so friendly. We need a Trader Joe’s in the Capital District PLEASE!!!!”

My two blog posts on the subject yielded 114 comments, and most of them were along the lines of the above. Some of the respondents made the point that they were regular shoppers at co-ops and farmers markets, but argued that Trader Joe’s would be complementary and would fill a niche for people whose needs are simply not met by local food stores.

Many respondents claimed to drive two hours fairly regularly just to shop at a Trader Joe’s. Others claimed that a Trader Joe’s in the Capital Region would lure more grocery shoppers here.

While most of the comments made sense to me (even if I didn’t exactly agree with them), a couple of them baffled me. One respondent labeled any opposition to luring Trader Joe’s to the Capital Region “Smallbany thinking.” I responded on the blog that while you may or may not agree with pro-local, anti-sprawl and urbanist movements, they are progressive in nature, backed by considerable thought and scholarship, and united in the belief that sustainable local economies lead to “a greater sense of civic pride; more participatory democracy; and a stronger community identity.”

The following comment summed up what I believe is a thread of denial that runs through much of the passion for Trader Joe’s:

“I lived in an area where within 15 miles there were two Trader Joe’s. Lucky me! But I never thought of them as a chain!”

‘It is [a chain],” emphasizes Jody Colley, publisher of the East Bay Express in Oakland, Calif., and a pioneer of Bay Area buy-local initiatives. “They have a not-too-slick farmer’s market atmosphere that tends to draw a more earthy-yet-urban shopper, but . . . it’s still formula retail. In the U.S. we are not accustomed to our food being presented in this way by chains, but we are getting used to other industries honing in on the green movement, changing their branding and packaging, and targeting a more coconscious consumer. This is no different.”

Bruce Roter, of We Want Trader Joe’s in the Capital District, counters: “It is true that Trader Joe’s stores are smaller and customer friendly, with many employees available to help, so they don’t feel like a chain. Still I can’t imagine many who favor Trader Joe’s using ‘I don’t think of it as a chain’ as justification for their desire for a Trader Joe’s in our area. . . . The sole rationale is that Trader Joe’s offers quality products at prices that are not available in our community.”

“There needs to be a large amount of credit given to the original owner of TJ’s for this,” says Cindee Lolik, operations and administrative coordinator at Albany’s Honest Weight Food Co-op. “He was able to create a fun, light atmosphere for customers and, at the time, find exotic new products for them. But the reality is that TJ’s is a chain that ultimately seeks to make a monetary profit with only superficial ties to the communities that it is supposed to serve.”

When it comes to the price question, says Lolik, “it is important to consider what those ‘downscale’ prices really cost all of us in the long run. Trader Joe’s used to carry bulk foods, such as coffee—but they have eliminated this and now all their privately-labeled coffee is sold packaged—they buy at a volume that reduces the price to the customer at the cash register, but increases the cost to the environment by using nonsustainable packaging. Their produce, while being organic and natural, is all packaged, which is not only a burden on the planet but it also makes it difficult to buy what you need, resulting in more waste in the long term. There is certainly no commitment at TJ’s to fresh food. Their strengths lie in the “center store”: jarred, canned, boxed, frozen and pre-prepared foods.”

Ultimately, at the core of this debate is the question of whether a “small footprint” chain like Trader Joe’s can complement the local economy—or whether it is just as detrimental, albeit on a smaller scale, as Wal-Mart is in the eyes of those who favor a locally based economy.

To Colley, Trader Joe’s is just another chain: “It sucks dollars out of your local community, does little to support local farmers, and may make it harder for your local food co-ops, farmers markets and natural grocers to compete, since they are probably going after a similar consumer demographic.”

Not so, counters Roter. “Trader Joe’s’ business model is to consistently sell the best products possible at the lowest prices possible, to offer excellent, friendly service in an environment where grocery shopping is not a chore, but a pleasurable experience. . . . Trader Joe’s and local co-ops will complement rather than compete with one other. Trader Joe’s fills in a niche between what co-ops offer and what our traditional supermarkets provide. Trader Joe’s can no more replace our co-ops than our co-ops can replace Trader Joe’s.”


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