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Trends: Localization

OPEN Book: Trends American Express OPEN

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October 26, 2009

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It’s breathing new life into neighborhoods and offering a better way of life in the process. Local businesses are perfectly positioned to participate.

In today’s marketplace, consumers may think globally, but they’re increasingly acting locally. Small businesses are becoming integral parts of local communities as consumers embrace a burgeoning localization movement by shopping closer to home. Existing businesses can adapt by using locally made products, aligning with other businesses, and sponsoring local events.

A number of factors explain localization: the rise of the organic-food movement, greater awareness of our carbon footprints and the drive toward sustainability all play a part. Perhaps resonating most significantly are the appreciation of the value of local communities, the desirability of goods produced by neighborhood artisans using materials found within the area, and the quality of locally sourced, seasonal produce. Plus the simple fact that consumers often prefer to do business with people they know. There is growing evidence that buying locally supports the community. A study commissioned by the Andersonville Development Corporation indicates that $100 spent at an independent neighborhood business creates an additional $68 of local economic activity, compared to a benefit of only $43 if the $100 were spent at a chain or franchise. In addition to benefiting neighborhood residents, buying locally helps an area preserve and enhance its unique identity, which consumers appreciate. And because business success attracts further business, the process fuels itself – revitalizing local commercial operations and leading to further growth.

Community Networking

BALLE, theBusiness Alliance for Local Living Economies, is a group of community business networks across the U.S. and Canada whose 20,000 members believe that local communities should produce and exchange as many goods as is reasonably possible. If that’s not feasible, BALLE members compensate by trading with other community networks. Additional goals include decentralized ownership, fair wages and investors taking a “living return” rather than the maximum return, freeing profits to fund sustainable growth. Consider how your business can contribute to a similar setup.

Community organizations such as BALLE form part of the LOHAS (Lifestyles of Health and Sustainability) movement. Estimated to be worth $300 billion in the U.S., LOHAS companies try to practice “responsible capitalism,” committing to sustainability, fair trade, environmental awareness and socially responsible investing. There are online forums where business owners can discuss ideas, and the movement’s events, website and journal serve as hubs for education, business resources and information sharing. LOHAS membership should be considered by business owners as the concept of localization becomes a part of
the mainstream consciousness.

Local Produce

The Pearl District in Portland, Oregon, until the late 1990s, was home to dilapidated rail yards and aging warehouses. It has since been regenerated with art galleries, upscale stores and fashionable residences. Mandates encourage independent enterprises to ensure the area enjoys a distinct, individual appeal. The mix of arts and retail offers partnership and sponsorship opportunities for local businesses to demonstrate their commitment to the neighborhood. A core principle of the “local” concept is to apply it throughout your business, from materials to supplier to customer.

Homeboy, a design store in Chicago, sells only local products “so that our community retains its character and uniqueness,” the owners explain on their website. This way the store can vouch for the origin of everything it sells. Those lacking the funds to start or realign their own business can pool resources with others. B-Native is a New Orleans-based website that gathers together local craftspeople who produce jewelry and glassware. Everything is produced in the immediate area.

Back to the Basics

The most popular example of localization is the growing number of farmers’ markets driven by consumer demand for local produce. Today, there is more public awareness of the nutritional benefits of organic and seasonal produce, and people want to know where their food comes from. Farmers’ markets tick many of localization’s boxes: they boost the local economy, they engender a sense of community by allowing consumers to interact directly with producers, and the reduction in food miles ensures that produce is fresher and more environmentally sound. Home-delivery services for local produce have also proved to be an excellent low-capital start-up idea.

Harvest Cycle supplies organic fruit and vegetables by bicycle to homes in Sarasota. The produce selection changes according to what’s in season, and customers can choose what they want online.

As the localization trend spreads, so will the business opportunities in your area. Because small business owners are local enterprises by nature, they are ideally poised to play an active part in the localization trend – whether in the form of increased sales, community partnership or targeted sponsorship. Engaging with your neighbors not only makes good business sense, it can make for a more fulfilling experience and a more satisfying and sustainable way of life.

For more articles and profiles on the trends shaping today's business landscape, download OPEN Book: A Practical Guide to Essential Trends.