mad anthony

Rants, politics, and thoughts on politics, technology, life,
and stuff from a generally politically conservative Baltimoron.

Thursday, November 24, 2011

Support your local giant multinational business...

The defending of small business and the complaints about large multi-international corporations is nothing new, especially in terms of retail. It's gotten even more attention of late, with promotions like Amex's Small Business Saturday, "localvoire" food movements, and people in general claiming that supporting small businesses will help the economy.

So should you feel guilty the next time you shop at Wal-Mart or Target instead of Mom and Pops? I don't think so. I have to admit, the idea of shopping at a small business is appealing - of getting better products, at lower prices, from people passionate about what they sell. And there are a few local business I patronize - the scratch bakery I often hit up for donuts after yard sales, the local gas station near work where I sometimes get my oil changed, the little Asian tailor who hems my pants to fit my nearly midget-sized frame. But most of my shopping is done at Target, or at Weis, a regional multi-state grocery store, or online.

Why? Partly because chain stores often win on price and selection. But even more so, they usually win on convenience - the big box stores are nearby, they are open nearly all the time, and they have plenty of parking.

One of the reasons people often advocate small businesses is that they keep money in the community - but I don't think it's that simple. If a business is a retailer, chances are a huge chunk of it's cost is for inventory, and if they buying from the same manufacturers as the chain stores, the money is going to the same place - probably China. Many chains, especially restaurants, are often franchised, which means the owner often is a local and a small businessperson themselves. And lots of chains are publicly held, which means much of those profits are going to stockholders in the form of dividends and increased stock prices - stockholders who probably live in the community and either own shares or have 401k's or similar investment vehicles that are invested in those chains.

I recently finished an interesting book, The Great A&P and the struggle for small business in America. The book looks at the growth of A&P, which at it's peak sold 10% of the groceries in the US, and at attempts by states and the federal government to restrict them. What makes it interesting is that in many cases, it was middlemen and small business owners who were fighting A&P, while consumers wanted them because they lowered prices. Being pro-small business often meant being anti-consumer, and that meant forcing people to pay more for food at a time during the great depression when money was scarce.

I've always found business, and specifically retailing, interesting, and I've read a number of business histories. It's always fascinating to see how opposed small business owners were to companies that are no longer powerhouses, and in many cases no longer around at all - A&P, Montgomery Ward, Sears, Woolworth. There was a time when these guys were the evil empire, when general store owners would burn Sears catalogs. I always think of this when people grumble about Wal-Mart, because i suspect at some point Wal-Mart too will cease to be a major force in retailing. It's part of the creative destruction of capitalism, and it's especially prevalent in retailing, because it's very easy to switch what store you shop at (especially if you live across the street from a mall like I do).

So if mom-and-pop can deliver a good product, a reasonable price, and convenient parking and hours, you should shop there - but for those reasons, not out of a sense of duty to them for being small businesses. And if a chain store does a better job of those things, you should shop there, and not feel bad about it.


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