America’s Independent Businesses Have Reasons for Optimism

By Stacy Mitchell
Published July 2, 2004

On a cold December night, 231 years ago, a band of patriots forced their way onto three ships docked in Boston Harbor and dumped more than 90,000 pounds of tea into the sea. Although we often forget it today, their actions were as much a challenge to global corporate power as they were a rebellion against King George III.

The ships were owned by the East India Company, a vast transnational corporation that exerted enormous power over the American economy. It had a firm grip on the British government too. In 1773 parliament passed the Tea Act, which exempted the East India Company from paying taxes on tea it sold in the colonies. The aim was to enable the company to undercut small competitors, all of whom were subject to the tax, and drive them out of business.

“Hence it was no longer the small vessels of private merchants, who went to vend tea for their own account in the ports of the colonies,,” according to Tea Party participant George Hewes, “but, on the contrary, ships of an enormous burthen . . . “

The British government and the East India Company were betting that the lure of cheap tea would overpower any sense of principle. But they misjudged. The colonists continued to support independent merchants, boycotted East India tea and, that night in the harbor, engaged in a bit of economic disobedience.

It’s impossible to read this history (as in Thom Hartmann’s Unequal Protection) without thinking of subsidies for Wal-Mart, favors for Halliburton, and banking policy designed to augment the power of big banks. Once again we have a government that operates largely in the interests of global corporations.

And once again, there are signs of defiance everywhere. Notably this week, as we celebrate our nation’s independence, thousands of small businesses, led by the new and fast-growing American Independent Business Alliance (AMIBA), are drawing attention to the importance of small-scale, local enterprise in guarding against economic tyranny.

They’ve declared this Independents Week and are urging Americans to reassert their economic independence, much as their Tea Party forerunners did, by avoiding global corporations and seeking out independently owned businesses.

The odds of local businesses gaining ground in an economy where just twenty chains capture one-third of the $2.5 trillion in annual consumer spending seem about as good as, well, the odds that a group of ragtag rebels could beat back the British Redcoats. Independent businesses are outgunned and at the wrong end of a whole host of government policies that favor their big competitors. But like the colonial rebels, they have an ace up their sleeve: the stubbornly independent, self-reliant spirit of America .

“This is about community self-determination,” said AMIBA director Jennifer Rockne. Local ownership diffuses economic power. It ensures that critical decisions — whether to pay a living wage, protect a natural resource, sell produce from local farms, or contribute to a local charity — are made, not by some distant board of directors, but by people who live in the community and who will feel the impacts of their decisions.

AMIBA is publicizing Independents Week nationally, but many of the events will take place in the dozen cities where local business coalitions affiliated with AMIBA have formed.

In Austin, Texas, the 240-member Austin Independent Business Alliance has blanketed the city with posters calling on residents to “Celebrate Your Independents” and persuaded Mayor Will Wynn to issue an official Independents Week proclamation. Members are organizing a variety of events and contests, all of which are designed get people thinking about how their spending decisions affect Austin ‘s future.

Meanwhile, in Hudson, Ohio, fifty-five independent businesses have been running newspaper ads calling on residents to “dare to live a week without malls.” This Saturday, during a big celebration on Main Street, supporters are planning to link arms to form a giant circle around the downtown — a symbolic act organizers hope will spur opposition to a November ballot initiative that would open the way for big box development.

In Tampa, Florida, the Tampa Independent Business Alliance is hosting a public forum that members hope will galvanize a broad public discussion about the merits of pursuing chain store development versus nurturing locally owned enterprises. One vital difference, notes Carla Jimenez, co-owner of Inkwood, is that, unlike chains, independent businesses support a web of local economic activity.

“When we need shelves, we have them crafted here in Tampa,” she said. “We have a local printer, accountant, local bookkeeper that’s proficient with the Clio accounting service we sometimes need, we even have a local, independent pest control company.” The more localized a city’s trade, the less vulnerable it is to the fluctuations of the global economy and the whims of the stock market.

Jimenez was the person who first dreamed up the idea of Independents Week. It’s not surprising that an independent bookseller would connect the dots of political and economic democracy. Local businesses are our best weapons against chain store gatekeepers that increasingly control what books, records, and films end up on store shelves. This week, in my home state of Maine, had it not been for four independently owned theaters, there would have been a complete blackout on Fahrenheit 911.

“This a fun celebration of all of our great independent businesses,” said Michael Levinson, director of Build St. Louis, a fledgling independent business alliance in St. Louis, Missouri, which will kick-off Independents Week with a party at a local brewery emceed by the director of a community-owned radio station. “But it’s also about preserving economic freedom and local self-reliance, values that go back to the very beginning of this country.”

Stacy Mitchell is a senior researcher with the New Rules Project (a program of the Institute for Local Self-Reliance), serves on the board of the American Independent Business Alliance and is a frequent contributor to ReclaimDemocracy.or.

Published October, 2003

Mom and Pops Are Tops. So said Consumer Reports magazine after researching prices at 130 pharmacies and surveying 32,000 readers about their experiences at thousands of drugstores. Independent pharmacies provide the best overall value, including better service and lower prices than the major drug chains, beating them by what Consumer Reports called “an eye-popping margin.”

The survey included independent, chain and online drugstores, as well as pharmacies within supermarkets and mass merchants such as Target and Wal-Mart.

Notable results from the survey include:

• Drug and supermarket chains were far more likely to be out of a particular medication than independents and took longer to get out-of-stock medications. If independent pharmacies were out of stock, they were able to get the product within one day 80% of the time. Other types of pharmacies were able to restock within a day 55-60% of the time.
• The one chain that nearly equaled the ratings of independent stores was the Medicine Shoppe. Notably, this company differs from other chains in that its approximately 1000 outlets are independently-owned, not corporate-run outlets.
• At the top-rated supermarket pharmacy, Publix, most workers are stockholders.
• Drug chains charged the highest prices for prescription drugs, online vendors and mass merchants the lowest. (But CR warns that “online pharmacies not affiliated with stores can be risky.”)
• Supermarket pharmacies beat drug chains in overall satisfaction. Even most mass merchants out-performed drugstore chains other than the Medicine Shoppe. Only Wal-Mart — the worst-rated mass merchant in the survey for overall value — failed to beat the satisfaction scores of most drug chains.

The article also notes the trend of independent drugstores making a comeback after a long downward trend. Apparently more people are seeing through the corporate hype and recognizing the superior value that local, independently-owned businesses of all types usually offer.

In 2002, the Maine Department of Human Services researched the prices of 15 common prescription drugs at 106 independent and chain pharmacies statewide. The 10 lowest-priced pharmacies (based on the combined cost of all drugs) all were locally-owned drugstores. Results from a similar 2003 survey will be published by November of 2003.

Studies by the New York City Department of Consumer Affairs and a statewide study in New York by Senior Action Council also have affirmed lower pricing of drugs at independent pharmacies.

Related features: Local Ownership Pays for Communities, Bigger Banks Mean Bigger Fees

The American Independent Business Alliance (AMIBA) is a new national organization to help establish IBAs in other communities, provide a resource clearinghouse, and coordinate efforts among IBA nationwide.

When the Boulder (Colorado) Independent Business Alliance was was launched in January 1998, it was the first effort of its kind working with independent community-based businesses of all kinds to help them compete successfully against the chains and reverse the trend of losing community-based businesses. By its third year, BIBA had united over 150 member businesses and made a tremendous impact on community consciousness.

AMIBA will help others initiate IBAs and to network and share resources among them. An issue of In Business magazine features a cover story on Independent Business Alliances and related efforts to support independent busineses at the community level nationwide.

Visit AMIBA.net to learn more

By Stacy Mitchell and Jeff Milchen
May 2001. First published by Writers on the Range

It’s no secret that as corporate chains have taken over much of the retail economy, they’ve left a wake of half-empty downtowns, shuttered family businesses and neighborhood residents dependent on driving to strip malls and “big box” stores for staple items.

Now these same chains are dealing communities a second blow– vacating existing stores to build bigger outlets, leaving huge empty shells and acres of asphalt behind.

Dead malls and empty superstores now litter the American landscape. Nationwide, fully half a billion square feet of retail space sits empty–the equivalent of about 4,000 shopping malls.

Part of the problem is that chains are building new outlets at a staggering pace and creating a glut of retail space. In the last 12 years alone, per capita retail space has increased 34 percent, from 15 to 20 square feet. Many communities have more retail space than residents can support, so vacancies inevitably follow.

The other part of the problem is that corporate chains feel compelled to reinvent themselves every ten years or so, abandoning existing outlets for new formats. First there were small strip malls, which gave way to enclosed malls. Then came successive waves of ever-larger regional malls. Hundreds of malls then closed following the first wave of big box stores in the 1980s.

In the 1990s the big boxes themselves began to shed their skins, vacating existing stores to build still larger outlets. As a result, Wal-Mart alone has left almost 400 abandoned stores—more than 30 million square feet of vacant retail space surrounded by thousands of acres of asphalt.

The experience of Macon, Georgia is not typical, but instructive. This small city is home to three Wal-Mart carcasses, two of which exceed 100,000 square feet—more than double the size of a football field and triple the size of typical supermarket, and that’s not counting their vast parking lots. Like most of the 34 abandoned Wal-Mart stores in Georgia, the three Macon outlets were shuttered after the company built two larger “supercenters,” swallowing up still more undeveloped land.

Rather than becoming victims of the corporate cannibalization game, many communities are taking a different approach. Dozens have banned new big box outlets by amending zoning rules to prevent construction of stores over a certain size. Others have prohibited retail expansion into undeveloped areas, requiring instead that new stores locate in established downtown and neighborhood commercial districts. Many have also shifted tax dollars that have long subsidized new roads and other infrastructure for sprawling development into projects that support downtown commerce.

Some are beginning as well to see the advantages of working with nearby communities to implement a shared vision for development. Instead of engaging in the lose-lose competition for tax base, residents of the Cape Cod region of Massachusetts voted to create the Cape Cod Commission. This regional planning agency reviews all development proposals that could have impacts beyond their host communities, including all retail stores larger than 10,000 square feet. The benefits and costs of new development projects are carefully evaluated and reviewed for conformity to the region’s land use plan, which encourages the growth of small businesses that employ local residents and meet community needs.

New ideas are also emerging from independent businesses themselves. In 1998, business owners in Boulder, Colorado formed the Boulder Independent Business Alliance, a cooperative effort to help one another survive and build stronger bonds with the community. BIBA grew quickly to encompass more than 150 member businesses. Through group purchasing and a joint marketing campaign that promotes the benefits of patronizing locally owned stores, BIBA has dramatically improved its members’ prospects and made residents aware of just how important the choice “Local or chain?” really is.

Similar alliances have since sprung up in many other communities, including  Louisville, KY; Portland, ME and Minnesota’s Twin Cities. These alliances work not only to enhance competitiveness and marketing, but also to give independent businesses a much-needed voice in local government decision-making. The Salt Lake alliance, for example, played a pivotal role in blocking taxpayer subsidies for a new mega-mall. Without the subsidies, the project was ultimately scrapped.

A new organization, the American Independent Business Alliance, aims to knit these efforts together into a national coalition that will not only seed, nurture and network further local business alliances, but create a political counterforce to the corporate lobbying groups that promote many of the harmful subsidies driving sprawl and chain store proliferation.

Such efforts will pay big dividends in the long run. Unlike footloose superstores, traditional business districts have been around for hundreds of years and can last for hundreds more. Individual businesses may come and go—yesterday’s donut shop becomes today’s bagelry and espresso bar—but the independent business base itself retains its essential role in the economic and social fabric of the community.

Unlike global corporations, local businesses are owned by people who live in the community and are committed to its well being. These businesses are vital to our quality of life and sense of place, but they face powerful threats, and it requires conscious action to ensure their endurance. Thankfully, many communities are responding to the challenge, realizing that the best community qualities don’t come in big boxes.

Stacy Mitchell is a researcher with the Institute for Local Self-Reliance (ILSR.org) and author of The Home Town Advantage. Jeff Milchen is the co-founder of the American Independent Business Alliance (AMIBA.net).

Data source: Wal-Mart Realty