by Stacy Mitchell
originally published in Calgary Herald, June 27, 2003
Banff, like many communities in western Canada, is facing a growing influx of multinational chains [“Banff fears ‘corporate branding’ of resort”]. Stores like The Gap and Starbucks are multiplying rapidly, undermining the unique character of this lovely mountain town and displacing locally owned businesses that have long served community needs.
Determined to save their community from becoming “Anyplace, North America,” Banff officials are investigating ways to buck the chain store trend.
Luckily, they are not in uncharted territory. Cities and towns across the continent have devised a variety of effective strategies for limiting chains and nurturing locally owned businesses.
In San Francisco, for example, when chain stores began to invade the Northbeach and Castro neighborhoods, the city implemented commercial size caps. These measures limit stores in the two neighborhoods to no more than 4,000 square feet. The size caps help to maintain smaller shops that serve the everyday needs of residents and keep out chains like The Pottery Barn and Banana Republic, which require larger spaces to accommodate their standard store formats.
Another approach is to require that proposals for new retail stores undergo a community impact review. These reviews, similar to environmental impact assessments, examine how the new development will affect the community and prohibit stores that will have adverse impacts.
The kinds of criteria communities incorporate vary. Greenfield, Massachusetts, for example, considers whether the store will exacerbate traffic, weaken the local economy, or erode the town’s unique character. Santa Cruz, California, considers such factors as whether the store will meet local needs and contribute to a “diverse and balanced mix” of businesses.
Yet another approach is to ban or restrict the number of “formula” businesses allowed. Formula businesses are defined as those that have standardized methods of operation, merchandise, decor, architecture, or other features that render them virtually identical to businesses elsewhere.
Formula business bans do not prohibit chains altogether, but do require that an incoming chain not look or operate, both internally and externally, like any of its other outlets. This creates a signnificant hurdle that few corporate retailers are willing to surmount.
Bainbridge, Washington, for example, prohibits all formula restaurants. Coronado, California, allows no more than ten formula fast-food outlets to operate in the city at any one time. Formula retail stores are likewise allowed only on a limited basis and must undergo a review and obtain a special permit to open.
Still other communities have adopted laws that focus on whether a new retail store will provide goods and services that meet the needs of local residents (rather than primarily serving tourists or leisure shoppers). Palm Beach, Florida, for example, will not grant permits to new stores unless they can reasonably project that at least half of their customers will be local residents.
These are just a few examples of the innovative policies that communities are enacting to protect their character and quality of life, and to support locally owned businesses. (The Institute for Local Self-Reliance maintains an online clearinghouse of these and many other policies at www.newrules.org.)
While opponents often claim that such policies will stifle economic growth, the experiences of many of these communities suggest otherwise. Not only have they protected their sense of place and local identity, but they have also prospered economically.
One reason for this is that locally owned stores generate far more local economic activity than chains do. Hometown retailers keep profits in the community. They also support a variety of other local businesses. They hire local accountants, bank at local banks, and advertise in local newspapers. Chain stores do not require much in the way of local goods and services, and instead tend to siphon dollars out of the local economy.
The value of these secondary economic impacts are substantial, according to a recent study in Austin, Texas. The study found that spending $100 at a locally owned bookstore generated $45 worth of local economic activity. Spending $100 at a national bookstore chain, on the other hand, created only $14 worth of local economic activity.
A second important economic benefit of curbing chain stores is that, in an increasingly homogenized world, cities that have preserved their distinctive character have an economic edge. They are far better able to attract visitors, skilled workers, entrepreneurs, and relocating firms, and thus to prosper over the long-term.
Recognizing what’s at stake, Banff officials have wisely decided proactive steps are necessary to ensure that the community develops in a manner that protects local assets, including the town’s special character and homegrown businesses. There are numerous effective strategies from which to draw and ample evidence that such approaches lead to long-term economic vitality.
STACY MITCHELL is a researcher with the Institute for Local Self-Reliance in Minneapolis (www.newrules.org) and author of “The Home Town Advantage: How to Defend Your Main Street Against Chain Stores and Why It Matters.” This column is excerpted from her speech Tuesday in Duluth.