Local Merchants Alliances Gain Traction

by QuickBooks

2 min read

Small businesses competing with big-box retailers and other chains in the San Francisco Bay Area have devised strategy for wooing customers into their stores: Join forces to promote one another.

Now 200 members strong, the San Francisco Locally Owned Merchants Alliance (including Michell’s Ice Cream, pictured) is working to boost the regional economy and its businesses’ bottom lines by collectively encouraging consumers to “buy local.” Members are listed in an online directory, which they advertise through word of mouth and by posting window decals at their places of business.

The nonprofit group is the brainchild of Hut Landon, its volunteer executive director. Landon also works full-time as executive director of the Northern California Independent Booksellers Association.

“We tell [our members], if you want to put a poster up in your store and you want to talk to your customers about it, we have tools for that, but [the businesses also] need to understand why that’s beneficial,” Landon says.

He says SFLOMA lacks the financial resources to advertise the benefits membership, so it depends on existing members to spread the word: Buying locally benefits the community. For example, for every $100 spent, locally owned independent businesses generate $68 in economic activity, compared with $43 by national chains. Meanwhile, out-of-state sellers who don’t collect sales tax are virtually a total drain on the economy, SFLOMA notes on its website.

To join the alliance, a company must be located in Northern California; the majority of its owners must live in the area; it cannot have any corporate presence outside the state; it must have independent control of its operations; and it may receive no external assistance in paying business expenses.

The “buy local” movement in California recently received a shot in the arm after a decade-long effort (spearheaded by booksellers in Sacramento) to force Amazon.com to collect sales tax from customers statewide finally succeeded. “They’re collecting sales tax in California, which they didn’t do for 12 years,” Landon says. “Booksellers had something to do with that.”

Desperate to keep independent bookstores afloat during Amazon’s meteoric rise, Landon saw the “buy local” movement as a way for small shopkeepers to reclaim dollars being directed into the coffers of big corporations, as well as a means to increase the community’s tax base.

Other communities are also seeing the benefits of small-business alliances as the concept spreads to other cities. More than 80 U.S. communities have even experimented with printing their own “currency” to encourage local purchasing. (As long as merchant-printed currency is treated as taxable, it’s perfectly legal, says Laura Ullrich, an assistant professor of economics at Winthrop University, in Rock Hill, S.C.)

Janda Keenan, a spokeswoman for the Business Alliance for Local Living Economies in Bellingham, Wash., says the national alliance was the first of its kind, when it started in 2001. She credits co-founder Judy Wicks, then-owner of the White Dog Café in Philadelphia, with the idea of bringing small businesses together within a local community to enlarge their collective strength. (Wicks sold the café in 2009.)

According to Keenan, Wicks saw the need to level the playing field for small businesses. Large corporations “can cookie-cutter out a program or a model or a best practice,” in contrast to many small businesses, which cannot afford to invest in best-case studies and trend analysis. “That was the vision,” Keenan says. “How can we emboldened these businesses? How can we strengthen them?”

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