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5 Jun 2012

Andrew Simms on the impacts of chain stores on local economies

I was at the Hay Literary Festival over the weekend, and while I was there I caught up with Andrew Simms of New Economics Foundation, and in the light of the campaign afoot in Totnes to try and stop the opening of a Costa Coffee outlet in the town, I asked him “why should Totnes (or anywhere else for that matter) say no to Costa?”  Here’s the audio file, followed by the transcript:

“Chain stores, of whatever variety, whether they are selling mobile phones, or whether they are selling coffee, or whether they are selling doughy torpedo-shaped sandwiches, are a way of doing business that carries with them a particular DNA for the society and the local economy which grows up around them. Because of the way they are linked in to remote supply structures, institutional investors who are also remote and will have no knowledge of your local economy, all the demands and the pattern of business that are focused into those kinds of franchise models are fundamentally disinterested in the overall health and wellbeing and vibrancy of the local economy.

They are interested in one thing, and that is sucking in consumer spending to be extracted from the local economy, shuffled off to head office to pay for centralised logistics, and the expectations of remote, disinterested investors in the City. It is an extractive industry. Whatever the fascia’s like, whatever it appears to be selling, it is fundamentally a financial extractive industry. So the difference between a chain coffee store and one which is independent, and local, and whether it’s to do with who does their accounts each year, or who cleans their windows, they’re much more likely to be recirculating the spending that goes on in that local outlet in the local economy, bringing much broader social and economic benefits.

Because businesses whose DNA is emeshed with the local community bring more benefits. They provide not just the goods that they sell, but the social glue that holds communities together. They provide the financial resources from which vibrant, diverse, and therefore more resilient communities can grow. And thirdly, and equally importantly I think they give a sense of place, of distinctiveness, of uniqueness, they are the cure-all for Clone Towns, because nobody wants to live in a place where when they walk down the High Street they could be walking down any High Street in Britain.

Our identity is drawn as much from the place we are as it is from our family history and the things that we’ve done. So true independents bring economic health, they bring social glue, and they bring a strong sense of place and identity, and that’s why I think you shouldn’t go down the chain store route”.

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Erik Curren
5 Jun 4:19pm

Great interview. Such important ideas.

I’ve got a quandary. Not sure if anyone can help? I was just elected to city council here in my town of 24,000 in the Eastern U.S. My own philosophy aligns 100% with local business over chains. There’s also some support in town for going local, especially among local merchants and progressive folks.

But there are also lots of people who love chains and think the city should be recruiting MORE chains (we have an Economic Development Dept with largely this purpose) rather than keeping chains out.

Cities like mine see chains offering many benefits:

1) Residents “want better shopping” and resent having to drive to other cities to get their favorite brands. In a small town or small city, it’s a sign of civic pride to say “We now have our own [insert famous brand here].”

2) With local budgets for schools and other services cut every year, local govt enjoys the tax revenue from local shops and chains alike. They just want tax money and aren’t too picky about the source! So the city wants to maximize the number of businesses in the city, rather than keeping some businesses out.

3) Many citizens view chains as not just inevitable but also preferable to mom and pop businesses. Many shoppers think that local shops have higher prices, inconsistent hours, quirky customer service and sometimes uneven quality. The perception is that chains are better value, more reliable and that if the staff are grumpy, they’ll keep it to themselves.

The deeper arguments against chains are very compelling if you’re a long-term systems thinker.

But how do you convince everybody else who’s just looking at the immediate impact and saying “Boy, the economy sure is tough. We need more jobs and tax revenues in this town. Thank goodness such a famous and successful chain has chosen our little town. What idiot would want to scare them away?”

Brad K.
5 Jun 4:46pm

Nice rhetoric. We have a “local” Ace Hardware franchise store, considered to be a “locally owned business”. Ekco makes a modest, durable manual can opener here in the US, and ACE is their primary distributor.

When I wanted a backup can opener (mine is 20 years old), I had to special order three (the store’s minmum order), because they have gone to Made in China brands on the shelf. So much for “local”.

I also have to worry about folk that tout a “vibrant local economy”, when what they mean is the global, cash-flow definition of economy. Because lower prices for acceptable products help a *lot* of people, just not certain isolated cash flow streams. Like “local” merchants. A merchant, local or otherwise, that provides lower cost goods also provides employment, which actually *does* bring money into the local economic cash flows.

When you talk about the “local economy” in sustainable terms — people being fed, sheltered, employed, and secure in their lives, and the measure is *not* currency or cash flow, then I want to hear the story.

Charles Alban
5 Jun 11:45pm

The only solution to this is a sort of artificial Disneyland with a closed economy using its own currency. This is what created the wealth in the Middle Ages that enable relatively small towns to build gigantic cathedrals. All communities in the Middle Ages were closed economically to the outside world. They all had their own currencies in the form of credit notes. See Douglass Rushkoff on this. The wealth was based on agriculture, and since it was retained within the community and did not bleed off to the Crown or the bankers, or to Wal-mart and Wall Street in modern terms, they had plenty of wealth to build gigantic edifices, which would be inconceivable in this day and age. These independent self-sufficient communities became an economic threat to the crown, so they were forced to adopt the national currency bearing the royal image. So to reverse this trend it is necessary to reintroduce local currencies with closed economies.

9 Jun 12:48pm

The American Independent Business Alliance provides thorough help for folks seeking to do the kind of public education you’re seeking.

11 Jun 2:10pm

Read more about this topic in my article, “Commercial Disobedience.”

Erik Curren
11 Jun 9:54pm

Luis and Mark, Thanks much. I’ll check out the links.

phil cowan
17 Nov 3:42am

Very ineresting reading, thankyou. I live and work in one of Londons very last high streets free of predatory chainstores. This is, i fear about to come to an end. Our petition is proving that our community is overwhelmingly against the destruction of the wonderful “GLUE” that is the independent shops where people connect here. Try that in Burger King etc! Say no to chains in primrose hill (our petition) Google and make a difference! Thankyou everyone.

Brad K.
19 Nov 3:00pm

@ Phil Cowan,

Chainstores make the news. What about local merchants that buy from international distributors, that choose to place “name brand” products on the shelf, instead of giving preference to locally made products?

What about local enterprises that depend on transcontinental supplies, like nails, and finishes. And coatings and chemicals that meet regulatory requirements. And services such as cash registers, accounting software, nylon bushings for moving parts and webbing for straps. Etc.

“For want of a nail . .”, after all.