When 'buy local' is not the best option

Onehunga is an Auckland suburb not yet to be overrun by national chains

There are supposed to be benefits choosing to shop at the local merchant over the national chain: it keeps profits from going offshore, creates jobs and helps foster vibrant communities.

That's what people are told.

However, people who experience bad service or are ripped off are often left powerless to do anything about it.

An anecdote passed on to NBR ONLINE through an Auckland reader illustrates the point.

Needing to get a pair of leather shoes repaired, he opted to take them to his local cobbler in Onehunga rather than use the Mister Minit chain at the mall.

Mister Minit would have been more convenient, but feeling a sense of social duty and an affection for his community, he went out of his way to support local business.

After three failed attempts by the cobbler to repair the shoes over a four-week period, the customer insisted he be refunded his money, as would be in order under the Consumer Guarantees Act.

The cobbler refused, instead launching a tirade of abuse at the man, suggesting he'd been "wearing them wrong", eventually calling him a "white mother f***er" and telling him to get out of his store.

When the man replied the law insists a refund be given, the cobbler yelled: "I don't give a f*** about your law!"

Shocked, the customer backed away, determined to complain to the Consumer Affairs Disputes Tribunal.

However, he decided not to, considering the cost and time involved in going through such proceedings.

But the principle remains: customers who choose to shop at a local, independent store are all but powerless to fight against poor service.

When shopping at a large chain, however, there is always someone higher up to complain to.

Large companies are always keen to protect their image, so will often go out of their way to ensure the customer is happy.

It is hoped, however, that experiences such as this are far and few between. That mostly, independent businesses understand that good service is paramount.

Why shopping locally matters

The New Economics Foundation (NEF), an economic think tank based in London, found goods bought locally are twice as efficient in terms of keeping the local economy alive.

NEF researcher David Boyle told Time the problem with many local economic is not that there is not enough money coming in, but what happens to that money.

"Money is like blood. It needs to keep moving around to keep the economy going."

When money is spent at large chain retailers instead of the local corner store, "it flows out, like a wound," Mr Boyle says.

While there is a place for large, corporate retailers, and competition is healthy, shopping at independent stores prevents what the NEF calls "clone towns", where all main streets look the same with the same fast-food and retail chains.

In Auckland, this is especially important. The city has grown from a collection of small villages expanding and eventually merging together.

Each suburb has its own identity and culture. Local business helps keep that culture alive by providing services unique to that community, rather than generic corporate branding fostered by the national retailers.

Onehunga – the place of the shoe repair incident which prompted this piece – is one suburb which is yet to be overrun by national chains.

The main street is a vibrant, bustling economy with independent bookshops, cafes and clothing shops.

National chains are well-represented in the nearby Dress Smart mall, but the main street itself has retained its unique culture.

If it is to stay that way, local businesses have to compete with the large chains by providing superior service.

It is as important as ever for local retailers to bend over backwards to keep customers coming back, if not for their own businesses' sake, but for the good of their local business district.

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5 Comments & Questions

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These buy local campaigns are ridiculous. If the local product is the best choice, then consumers will buy it. If it isn't, it will improve because of the competition, or it will die. That's as it should be, and exactly how it is. I don't need to be told how to spend my money. Neither does anyone else.

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I think you are confusing buy local with buy the cheapest. Buying local may not be the cheapest but it is best for the economy.

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Henry Horse. Be Careful. You may be part of the next corporate burger meat export shipment to the UK. My local butchers getting my business.

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So 1 person's experience at a local cobbler makes buying NZ made an illegitimate argument??

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Even if the goods are (on the face of it) more expensive - the economic case for keeping the money here in NZ is compelling.

Take our company New Zealand Insulators as an example:

5 of NZ's 27 electricity networks use a specific 22kV porcelain insulator - some 20,000 per annum.

As at the start of 2011, all but one had migrated to a cheaper imported insulator.

At NZI in Temuka we were down to making just a few hundred each year.

During 2011 three networks agreed to pay 20% more for a (better) NZI product made in NZ.

We now make 1,800 a month, 2 new jobs have been the direct result - plus a more viable factory.

Just one product, just three customers – and yet a dramatic impact.

Here's the Import Replacement maths on this example:

> 18,000 22kV insulators now being made in New Zealand rather than arriving in a container.

> Imported Insulator - cost NZ$8, sell NZ$11.

> NZI brand Insulator - cost NZ$11, sell NZ$14.

> 18,000 x NZ$8 (cost of product not imported) = NZ$144,000 Import Replacement dollars**.
> NZ economy grows by exactly NZ$144,000, every year.

> NZI sales & factory volumes grow, 2 new jobs for Kiwis & a better insulator for our networks.

Plus, the two Kiwi employees pay about 20% PAYE into NZ's coffers, in this case avoid two people drawing the dole - and that's ignoring the very concerning social costs of unemployed, disconnected people in our community.

Go to nzinsulators.co.nz/about nzi/import replacement for a wider discussion on this important topic.

** In NZI's case there are two imported ingredients in our porcelain recipe, but they make up only a small fraction of the final cost. The case for Import Replacement is particularly strong when the product is entirely homegrown (like NZI).

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