Local business

Mom-and-pops strategize vs. big boxes

“Local businesses—unite!”

That could have been the battle cry of the Chico Independent Business Forum held at the City Council chambers Friday (July 27).

About 25 local business owners were there—instead of at the Friday night concert going on across Main Street—to listen to Jeff Milchen, co-founder of the American Independent Business Alliance, outline a strategy for helping local businesses thrive against “big box” stores such as Wal-Mart, Home Depot and Best Buy. The California Healthy Communities Network and Lyon Books sponsored the gathering.

Nearly 40 cities across the country and one in Canada have implemented the innovative model to strengthen hometown businesses and prevent their displacement by chains.

While groups such as the Downtown Chico Business Association are great at what they do, “not all businesses are located downtown,” Milchen said. “But almost all businesses are affected when a giant retailer like Wal-Mart comes to town.”

His idea for IBAs started when he lived in Boulder, Colo. He and David Boluc, owner of Boulder Book Store, realized that locally owned business needed to organize in order to combat the growing power of global chains, which Milchen says are “unsustainable and drain communities of their culture and uniqueness.”

Started in 1998, the Boulder Independent Business Alliance grew from 10 members to more than 160 within two years. Its success led Milchen, along with BIBA’s assistant director, Jennifer Rockne, to start the nonprofit AMIBA in 2001.

Using what they had learned in Boulder, Rockne and Milchen developed a three-pronged approach: public education, group promotion and advertising, and building effective and lasting relationships with local government.

BIBA runs a continuing ad campaign that both creates a brand name and informs the public of the benefits of shopping locally. Along with the ads, BIBA uses marketing tools such as storefront decals, BIBA bookmarks for local bookstores, bumper stickers that instruct people to “Put Your Money Where Your House Is!” and BIBA paper cups for independent coffee shops.

In Chico, where the expansion of the southside Wal-Mart and the addition of a Wal-Mart supercenter on the north side are in the planning stages, Milchen’s presentation found a receptive audience.

“This is a critical time in Chico’s development,” said Heather Lyon, owner of Lyon Books. “Sustaining local ownership and local self-reliance is vital to Chico’s long-term economic vitality.”

Heather Schlaff, of the Wal-Mart watchdog group Chico Advocates for a Responsible Economy, said Chico’s long-term economic vitality would be best served if the addition of another Wal-Mart were rejected. Phil Tucker, of the California Healthy Communities Network, agreed with Schlaff: “With two of these in a town the size of Chico, they’ll be competing with each other, lowering prices, until Chico’s independent stores are gone.”

Tucker, a resident of Napa, said he became interested in the big-box debate after coming across Big-Box Swindle, a book by Stacy Mitchell (available at Lyon Books).

Mitchell is a senior researcher for the Institute for Local Self Reliance. Her home state of Maine in June became the first state to require cities to evaluate the impact of proposed big-box stores (larger than 75,000 square feet) on jobs, local businesses and municipal finances. Only stores that won’t adversely affect the local economy can be approved. The Informed Growth Act goes into effect in September 2007.

“Retail is not like other industries like manufacturing because you can’t increase how much people spend,” Mitchell said from her home in Portland. “So even though stores like Wal-Mart generate a lot of sales tax, all they’re doing is taking revenue away from locally owned businesses.”

In California, a bill similar to Maine’s was passed in 2006 but vetoed by Governor Schwarzenegger. The Permit Streamlining Act, SB 1523, would have required that economic-impact reports similar to Maine’s be prepared for any retail center larger than 100,000 square feet.

“I am unable to support this bill that effectively sends a message to retailers and others that California is ‘closed for business,'” Schwarzenegger wrote in his veto message.

But Mitchell thinks just the opposite. The bill would have told California cities that they care about local business and their communities. A study in Maine showed that for every dollar spent at big-box stores, only 15 cents stays in the community, while for every dollar spent at a locally owned store, 50 cents stays in the community.

Local state Sen. Sam Aanestad (R-Grass Valley) voted no on SB 1523. Low prices benefit low-income people, he said, and big-box stores deliver low prices, driving down prices elsewhere. “That’s what the free market system is based upon—competition,” he said.

Yet no one has been hurt more by Wal-Mart than the low-income family, Mitchell said. “Wal-Mart lowers wages in a community faster than they lower prices.”