Wednesday, November 23, 2011

The Un-Walmart

A few weeks ago, I boarded Amtrak's Adirondack train and headed to Saranac Lake—or at least as close as I could get to the isolated village in the Tri-Lakes region of upstate New York. I went to cover the opening of the Saranac Lake Community Store, a department store that was organized and financed by residents who raised more than $500,000 from the community by selling shares in the store. The village badly need a general store: its lone Ames department store had closed, and while there was a vibrant mix of merchants on Main Street, certain items such as bed linens and underwear required a 50 mile drive to the nearest big box store. Yet the only retailer interested in locating in Saranac Lake was Walmart, which wanted to build a supercenter there. Many locals rightly feared that a store that huge would swamp their village, with its year round population of 5,000. So they took matters into their own hands and decided to open their own.

As I wrote in my story for  the New York Times, it's the retail equivalent of the Green Bay Packers: a department store that won't pick up and leave when a better opportunity comes along or its parent company takes on too much debt (as the bankrupt Ames chain did).

The story was the #2 most-emailed story in the Times for much of the day, which I think reflects how the idea of community ownership and initiative resonates in these days of protest and unrest. Last week, I heard from Melinda Little, one of the organizers of the store and the current president of its board, who said that her phone has been ringing off the hook since the story ran with calls from "folks all over the country who want to invest and/or want to emulate the model." One local small business owner made a $6,000 investment. (The share offering closes in December).

Community-owned stores are not unfamiliar in the American West, where towns with dwindling populations have a hard time attracting and retaining businesses. They are also thriving in the rural UK, where villagers have banded together to create their own general stores, pubs and post offices when faced with shutdowns. There are now over 260 community owned shops in England, Scotland and Wales, according to the Plunkett Foundation, a UK organization that helps rural communities combat decline in their areas by setting up community enterprises. Each year, some 400 village shops are shuttered, with community owned ones replacing about 5% of them, according to Plunkett. These enterprises are often more than just a shop, they are the beating heart of village life.

They have also proven to be quite resilient. Community shops have a 97% success rate, compared with a national UK business survival rate of 46.8%, according to a report produced by the Plunkett Foundation last year (a pdf of which can be found here). The shops operate with an average gross margin of 21%, in part due to the a large reliance on volunteers, and 22% of net profits are reallocated to community projects.

Retailing is a notoriously tough business, especially in an age of mega-retailers who wield their clout to demand price concessions from suppliers. Yet that model may be running its course: Walmart's same-store sales in the U.S. have been down for 9 consecutive quarters, and behemoths like Borders and Blockbuster have gone bust. And as the success of 'buy local' campaigns has shown, people may be tiring of the soulless, cookie cutter big box shopping experience.

A community-owned enterprise, in contrast, is about more than commerce, it is about relationships and a sense of place. And that engenders loyalty and trust that a big box will never have, even if profits are modest. The Saranac Lake Community Store shows that alternatives are possible. And for that we should be thankful.

Update: Port Townsend, Washington—a town north of Seattle with a strong local investment ethos—plans to open a community-owned store to replace a general store that recently closed. Read the Seattle Times article here.

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jimmy wilson said...
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