Importance of Independent Businesses

Our nation has a plethora of skilled bargain hunters. A whopping 79 percent of AmericansMain Street 25 and older categorize themselves as bargain shoppers and 83 percent compare products online before they make a purchase[1]. Roughly 36 percent[2] of Americans admitted to feeling guilty if they pay full price for an item.

Comparisons between various cultures often reveal surprising results when it comes to workmanship and originality. A survey[3] provided insight about intrinsic values driving purchasing decisions between American and Chinese consumers. The survey was geared towards luxury purchases because that is normally where higher quality components or individuality become the forefront compared to items that are mass-produced. It’s amazing the vast differences between how the two distinct cultures view craftsmanship. The Chinese, whose business model is synonymous with mass production, do not solely base their purchasing decisions on price whereas that is a dominating factor for American consumers. An article in the Chicago Tribune[4] highlighted this sentiment revealing that U.S. consumers gravitate towards cheaper items regardless of where they are made. Yes, it’s great to get a fantastic bargain, but at what expense? In many Asian countries, where many of the mass-produced items are manufactured, forced labor, child labor, and human trafficking still exists and allows large companies to sell their products so cheaply. The International Labour Organization[5] estimates that 9.5 million people in the Asia Pacific region are victims of forced labor. The organization also reports that there has been a significant spike in debt bondage.

One of my colleagues just returned from Italy and showed me an awesome pair of hand-made sunglasses he purchased from a street side vendor. I have worked with hundreds of artisans through the years and have never met anyone that hand-made sunglasses! The workmanship was impeccable and the price was in line with what a higher-end pair of sunglasses would cost from a major brand in the United States. I cannot imagine the loss America will face if we lose the craftsmanship that has been the backbone of our nation for centuries.

Luxury products

Recently I was awaiting the arrival of attendees for a meeting and had a bit of extra time. I was in a small Chicago suburb that I hadn’t been in for a while so I took advantage of the opportunity and walked around the downtown area while I waited. This suburb always had a thriving downtown area loaded with independent businesses. Historically, it has been a model community for what successful downtown districts should resemble. I was saddened to see how many storefronts had “For Lease” signs in them or brown paper covering the windows. A vibrant restaurant scene still exists but the independent businesses are disappearing from the landscape. According to data obtained from the U.S. Census, new business formation is beginning to reach pre-recession levels which should be good news for local communities. Yet, the jobs created from these businesses have declined since the late 1990s. This is relevant because it means many remain as non-employer businesses due to limited opportunities for growth. Data indicates there are roughly 7.5 million establishments in the U.S. of which 3.5 million have under four employees. The graphic below represents employment gains and losses from new businesses formed and those that have ended during the period of 1993-2015.

US Census Employment gains and losses

With price solely dominating American’s purchase decisions, no wonder independent businesses across the United States are experiencing difficulty maintaining their profitability or hiring additional staff which, ultimately, leads to a decision to close their doors. It is almost impossible for smaller entities to compete on price with larger businesses, since they primarily purchase mass-produced items in large volumes.

Over the last couple of years in America there has been a stronger push for locally sourced food. Numerous restaurants around the country are striving towards “farm to table” menus which feature products made throughout their area. Hopefully we can carry this concept further to the artisan and independent business community. Everything shouldn’t always be about the best bargain or the bottom line. Other important factors also need to be considered. Hopefully next time you think about a purchase, you won’t solely base that decision on price.

 

[1] Boston Agent Magazine, October 8, 2015. Survey: Americans Bargain Shop for All Things – Except Loans. https://bostonagentmagazine.com/2015/10/08/survey-americans-bargain-shop-for-all-things-except-loans/

[2] Consumer Reports Magazine, April 30, 2014. American’s bargain-hunting habits: What shoppers will and won’t do to save a buck. http://www.consumerreports.org/cro/news/2014/04/america-s-bargain-hunting-habits/index.htm

[3] Jing Daily, December 5, 2014. China’s luxury consumers buy for quality while Americans seek bargains https://jingdaily.com/chinas-luxury-consumers-buy-for-quality-while-americans-seek-bargains/

[4] Leverone, Bob, Associated Press. Article appeared in the Chicago Tribune. April 14, 2016. Poll: Americans prefer low prices to items ‘Made in the USA’, http://www.chicagotribune.com/business/ct-americans-prices-vs-made-in-usa-20160414-story.html

[5] http://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_075504/lang–en/index.htm

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