Archive for 2007

Going local: the real competition for Whole Foods

Several newspapers today are picking up a story about growing competition in some markets between Whole Foods and Trader Joe’s. I wouldn’t be surprised if Whole Foods’ PR people had a hand in getting the story placed because it lends credence to Whole Foods’ argument that its proposed purchase of Wild Oats will not eliminate competition, and therefore the FTC should not block the merger.

The better argument for this may very well be the success of New Seasons Market here in Portland. New Seasons is winning customers’ allegiance all over the Portland metropolitan area, even with the presence of Whole Foods and Trader Joe’s. Unlike in many major metropolitan areas, Whole Foods has not been able to dominate the market for its preferred “college-educated” demographic in Portland. If anyone is doing the dominating today, it’s New Seasons, along with Zupan’s Markets, another home-grown grocer.

I spent yesterday (Sunday) working at a food booth outside two New Seasons Market stores. All the proceeds from the barbecue sales went to a non-profit organization I am involved with to promote vibrant local economies based on independent locally owned businesses. New Seasons Market is a member of the organization and a poster child for what these businesses mean to a community. The Market is deeply committed to the Portland area and to the success of family farms in Oregon.

At least when it comes to food shopping, Portlanders appear to get the importance of buying from independent locally owned stores. If this awareness spreads to other cities around the country, Whole Foods may discover that its greatest threats are not the other national or international grocery chains. It’s all of us who are saying yes to the relocalization of our food producers and retailers.

Monday, July 30th, 2007
Posted in Business & Economics, Oregon, Sustainability | No Comments »

Local currencies for local economies

One of the ideas that keeps getting bounced around among advocates for promoting sustainable economies based on independent locally owned businesses is creating a local currency. Even BusinessWeek is getting into the act this week with a look at the Berkshares program, a creation of the E.F. Schumacher Society. The Society’s executive director tells BW, “One of the important roles that a community currency plays is as an educational tool that reminds people about their local businesses, local economy, and develops a sense of pride in the region and those businesses.”

Friday, July 27th, 2007
Posted in Business & Economics, Sustainability | No Comments »

When will the tragedy end?

Here in Portland, many miles from the city of New Orleans, 100 or more evacuees from hurricanes Katrina and Rita have lost a vital piece of public assistance. Catholic Charities says it has exhausted all of its $350,000 in hurricane relief funds, ending what has been described as “Portland’s longest-running large-scale program” to help evacuees resettle in our community.

This is yet another reminder, if indeed you need one, that a great American tragedy is still unfolding, with no apparent end in sight. The two-year anniversary of Hurricane Katrina is almost upon us. Soon media will descend upon New Orleans to report on the progress, or lack thereof. Some reporters will go looking for hopeful signs of recovery and find them. Others will bear witness to the thousands of still-empty and forlorn homes and commercial centers that cover wide swaths of the city. And they will ask incredulously why so little has changed two years removed from what the locals call The Storm.

Like thousands who have volunteered to help in New Orleans, I got up close and personal early this year with the physical and emotional devastation caused by the flooding. I was part of a volunteer crew that gutted homes for a week under the coordination of Medical Teams International. I interviewed homeowners and others while I was there. Our team coordinator Alex, a 37-year-old life-long resident of New Orleans, lost three friends to suicide in the course of three weeks in November and December 2006.

“Two were specifically related to the situation with their home and not to be able to get any headway, and basically living in cars. One of the guys actually hung himself at his house. The other guy shot himself. The third guy crashed his car.” A fourth friend killed himself with alcohol and pills just a couple weeks before we arrived. Same age as Alex, this guy had given him his first job in banking. Alex evolved that position into a lucrative financial career. Then the storm changed everything for everyone.

I have seen or read nothing that makes me believe the situation is vastly improved from what we saw back in January. My ears still ring with the words of Lee Eagan, an affluent local business owner whose family roots extend back hundreds of years in New Orleans. His home was spared by the flood, but hardly his emotions.

“I stand on my front porch. Two blocks from my house the water stopped. If I looked north from my house eight miles to the lake, everything flooded. If I look to the east, out this way, 23 miles, everything flooded. Now you do the math and you figure out how much geography, how many houses, how many people, how many photographs, how many wedding dresses were lost. And then you add it all up and you come up with one word: depression.”

It makes me wonder how those evacuees who had depended upon the generosity of Catholic Charities in Portland are feeling today.


Staying away in droves

So the crowds were thinner than expected at today’s opening of IKEA in Portland, according to KGW TV. Good. Maybe most Portlanders are too smart to be fooled by the hype. Or maybe they just listened to all the broadcasters telling them how to avoid traffic jams around the store and decided instead to stay away.

I just saw the TV report and don’t have a link directly to it, but I did capture one quote from a local IKEA spokesperson who downplayed the impact the store’s opening would have on other (local) retailers. “Lots of people will be out buying home furnishings more regularly now than they would otherwise,” the gentleman said. And I suppose more electronic gadgets when a Best Buy opens, or more books when a Barnes & Noble opens or more everything when a Wal-Mart opens. As if dollars magically appear in our wallets anytime big-box retailers come to town.

There’s only so much disposable income to go around in any community. A retailer doesn’t add disposable income, except when the money it generates stays in the community and multiplies among other local merchants, producers or suppliers it does business with. That’s what makes independent locally owned businesses part of the fabric of a community and what makes IKEA and others like them part of the fraying edge.

Wednesday, July 25th, 2007
Posted in Business & Economics, Oregon | No Comments »

Someone’s idea of economic development

The Oregonian continues to cover the opening this week of the IKEA store near the Portland airport. Sunday’s article looked at what we might see happen here based on what has occurred in the year since IKEA opened in West Sacramento. Here are a few revealing excerpts:

• Ikea not only has delivered a tidy sales tax boost to West Sacramento…it also has attracted several big-name retailers that have provided further construction and retail jobs. In addition, the store has drawn shoppers from as far as Redding, Calif., and Reno — overnighters staying in local hotels and dining at restaurants serving dishes other than the store’s gravy-soaked meatballs.

• Within the first year, West Sacramento received $1 million in sales-tax revenue from the store, amounting to 7 percent of the city’s overall sales-tax proceeds, said Kay Fenrich, chief executive of the West Sacramento Chamber of Commerce. The figure does not take into account revenue from stores that have since flocked to be near Ikea. “Before Ikea, we had no retail,” Fenrich said. “You had to cross the bridge for furniture, sheets, a dress, anything. Once Ikea made their announcement about opening here, the other big-boxes couldn’t scramble here fast enough.”

• Ikea cites Target and Wal-Mart as competitors, but retail experts say independent discount furniture stores could at least briefly say goodbye to as much as 25 percent of the customer traffic, said George Whalin, a San Diego retail consultant who grew up in Sacramento and followed Ikea’s opening there. “Ikea impacts everybody who serves consumers who want inexpensive furniture,” Whalin said. “There’s not anybody that’s immune.”

• “They’re killing us,” said Haide Critcher, who, with her husband, opened Big Al’s Furniture in the 1960s. The large warehouse store in Sacramento, like Ikea, offers affordable furniture that sometimes comes boxed for customers to assemble.

• “Ikea put West Sacramento on the map,” said Diane Richards, West Sacramento’s economic development coordinator. “Everyone thinks you’re so much more fun and exciting.”

These observations and quotes are revealing in many ways. First, they underscore why municipalities, especially in states with sales taxes, like big boxes — they generate more sales tax receipts. From the first big box, then from the subsequent big boxes that follow magnets like IKEA. But the question is at whose expense? If people are traveling from Reno and Redding, they are not spending their money in those communities and those cities lose tax revenue as a result. Oregon does not have a sales tax, but IKEA will surely pull in shoppers from the region’s smaller communities whose business base will suffer as a result.

Second, what happens to West Sacramento tax receipts when Reno and Redding (or some other nearby city) gains an IKEA or some similar trendy big box to stay competitive in the retail arms race, as they most certainly will?

Third, even though national big box retailers tend to see other national big boxes as their competitors, it’s the independent locally owned stores that take the brunt of the competitive hit, such as Big Al’s in nearby Sacramento. Cities across Americas now share a soul-killing homogeneity as their retail landscapes are littered with the same chains. Meanwhile, the big boxes fight it out over who can extract a larger share of local incomes (and ship it off to who knows where).

Fourth, what does it say about our society when the arrival of a retailer is seen as putting a community “on the map” and making it “much more fun and exciting”? Public officials in towns across America still equate suburban strip-mall retail development with economic development and, in the case of West Sacramento, raising a town’s self-esteem. I can only shake my head.


In comes IKEA, out goes our money

How fitting that the new Portland IKEA store is located near our airport because starting next week hundreds of thousands of dollars from area shoppers will be flying out of here to Europe and elsewhere. IKEA has cultivated a reputation around value for money and business practices that are touted as sustainable and employee-friendly. But when the dust settles on their grand opening, what will remain is nothing more than another big-box chain retailer taking locals’ hard-earned cash for the benefit of absentee management and shareholders totally disconnected from our community.

Undeterred, some 150,000 people from this region are expected to fall all over themselves getting to and through the 280,000 square foot store during its first five days of opening. According to IKEA, also on hand to mark the grand opening will be the Portland mayor and former mayor, a governor’s representative, and the heads of the Port of Portland and Portland Development Commission. The store will employ 400 “coworkers” (IKEA’s term) and is expected to be the magnet that draws many more (out of state) retailers to the long-planned and mostly vacant Cascade Station district. For those and other dubious reasons, you can expect city and state officials will join with IKEA dignitaries in boasting of yet another economic development victory for our region.

Of course, nary a word will be spoken about the effects IKEA will have on the area’s locally owned independent retailers who must now compete with IKEA. How many jobs will be lost among these businesses as a result of IKEA’s arrival? What economic and civic impacts will be felt when IKEA’s profits leave the area (which they will) instead of staying and multiplying across the local community? And what’s sustainable about having another big-box retailer encouraging thousands of us to get into our cars and drive miles to shop? (I know there is a light-rail connection nearby, but let’s be realistic about how many IKEA shoppers will actually use the train.)

For those of you still saying, “But it’s IKEA!”, consider what The Economist magazine found after it investigated IKEA’s absurdly complex financial structure orchestrated by founder Ingvar Kamprad and his family. “Clearly, the Kamprad family pays the same meticulous attention to tax avoidance as IKEA does to low prices in its stores,” the authors concluded.

So before you join the throngs at IKEA next week, imagine a plane with your money headed to Sweden.

Thursday, July 19th, 2007
Posted in Business & Economics, Oregon | No Comments »