Photo: Esther DysonChain, chain, chains…. the seduction of big-box stores call to us in the deep, sultry sound of discount, and the lure of low prices are hard to deny. But things are changing. As suburb residents flee back to the city, the scale of monotony is being downsized and localized.
National chains are becoming local brands.
The average Walmart store is close to 200,000 sq ft; that’s the size of Facebook’s new office, four football fields, and three-hundred sixty-three New York studio apartments. But in 1998, Walmart tested a 40,000 sq ft Neighborhood Market store, and now has 200 of those around the country. Not be outdone by itself, Walmart then cut their stores in half again to the 15,000 sq ft Marketside prototype that focuses on fresh food. This month, they’re down to a miniscule 10,000 sq ft in an existing building on the college campus of Arkansas. And soon, Walmart will materialize in New York City, one of the last bastions of place.
But it might all end up alright; don’t shed a tear just yet.
The U.S. Constitution’s basic tenet is based on the federalist rule of national governments allowing States to operate independently. National chains can do the same. I like to call it corporate federalism: the notion that national brands can allow local stores to operate independently. Imagine a business where novelty isn’t fed to us as New and Improved!, but as genuine difference and discovery. The national chain’s local brand would depend on the area’s local identity and needs.
Here’s an example. Duane Reade recently responded to chain disdain from young hipsters and yuppies in the Williamsburg section of Brooklyn by including something most neighborhood drugstores do not have: a specialty beer bar that features nine local, craft and imported beers – and the store allows for tastings.
Duane Reade is the first to undercut local businesses not just on price or assortment, but on experience. And not just a brand experience (any old chain can do that), but a local one. In an ideal world, corporate federalism would mean local chains purchase goods and services from other local businesses and return more of their revenue to the local economy – just like local businesses do.
Essentially, national chains would create local brands within their umbrella that would benefit from the efficiencies of the larger organization. Local employees would be free to adapt the brand to their neighborhood. It’s a tall order, but with the behemoth giant Walmart actually becoming smaller, and Duane Reade customizing their stores to match neighborhoods, it’s not too far off.
Our shared experiences no longer need to be those of purchases and parking debacles from Ikea, Walmart and Starbucks. Instead, national chains have the opportunity to build and expand upon the je ne sais quoi feeling that defines a sense of place.
If chains operated as local brands, the money would stay local. The focus would be on the depth of the experience, not the scale of the box. Economies would improve. And there wouldn’t be too much to crow about anymore. Perhaps there wouldn’t be as many local jobs since the national headquarters would remain elsewhere, but that is the reality of scaling a business, and the changing nature of work. Our jobs can be location-independent, but the places we live cannot.
Indeed, if chains were operated as local brands, it would be hard to find a weak link.
22 replies on ““Chain of Fools” No Longer”
I like the idea in theory, but worry that the shopping experience of browsing small markets will become diluted.. for example say you have a shop owners from Ukraine, Ethopia, and The Netherlands, products are going to be unlike anything you’ve seen but if a chain comes in and starts to operate as a local brand I can’t help but think there will be economies of scale to be gained and essentially we’ll be buying what a corporate buyer thinks is unique. It will be catering to the all mighty dollar – similar to your post about the devolution of news outlets, if you don’t pay writers, online stories shift to the outlandish instead of thoughtful journalism, anything for a click. If we switch to chains corporate operations will always have an eye on cost, which means buying in bulk. A few weeks ago I was in NYC in the village and found 2 independent chess shops on one block, I just think I probably would shed a tear if this unique shopping market, an organism of interesting shops was turned into chains. I’m by no means an expert, but this is my initial reaction.
I guess my question is: How would national chains create local brands but at the same time use efficiencies of the larger organization?
Patrick – I am definitely all about local business, don’t get me wrong. But I do think it’s interesting how chains are trying to compete now. Instead of the predictability (and reliability) of sameness, they are stepping out to try to cater to local areas.
I think this is in reaction in part to the dislocation of the internet, which brought about this trend of hyper-local. And the more dislocated we are, the more we crave intense experiences.
Duane Reade is obviously making it work, but I also think some grocery stores are a good example. I am thinking specifically of a grocery store back in Madison, WI which was the ultimate grocery experience. Beautiful, pristine store with tons of local selection in the produce section and all throughout the aisles. The national brands were there too, but they all co-existed peacefully.
For me, I have this constant conflict with scale, because with scale is the mass efficiency that you’re talking about. But if there’s even a small way to get around that, I think we’ll start seeing new kinds of models.
Also, local stores are becoming chains which is another interesting change. It’s like the two are switching places… which to me, has exciting implications. I am not sure I answered your question, but hopefully!
Do you know who does this well? Whole Foods. Each Whole Foods store carries an assortment of locally made/grown items. I have a serious addiction to a locally made hummus that I purchase each week at my neighborhood Whole Foods. They take this idea even further by including the local community in their charitable efforts. I love that I can donate to local organizations/schools while I’m grocery shopping. I love even more that a national chain is making concerted effort to represent and give back to the local community.
I’m not the biggest Whole Foods fan, but I don’t know if that’s warranted. I think I perceive Whole Foods as elitist whether that’s a fair assumption or not, and that food says a lot about class in America.
Not to mention, we have a Whole Foods very close to us, and whenever we go, it’s completely packed. I can’t stand that!! Ha. I need to grocery shop in peace.
I have seen some great initiatives from them, like you mention, including allowing people to pick up their CSA boxes at their stores. I don’t know that donating to local charities is as important as purchasing locally and using local services though. Again, I think food is such a nuanced issue, and probably one of the most present in the local movement… no easy answers.
Yeah…see I’m just going to come right out and own the fact that I’m a produce snob. I’m a vegetarian and I’m now gluten-free, so Whole Foods supports that lifestyle for me. Plus, it is about three blocks away from where I live!
That said, I am going to be participating in a CSA this summer.
As far as local charities, I think it depends. Although I’m a big fan of making an impact through economic action, I thought it was great that our local WF was raising money to install salad bars in local schools.
Haha, love it. I’m with you – I’m an elitist when it comes to food as well. I just like to think about what that means since it’s really a privilege to have that lifestyle. I’ll be really curious to hear your experience on the CSA and if you feel more of a connection to the farmer, local food, and your nutrition. I’ve never done it, but loved the Farmer’s Markets in Madison. It sounds like you’re well-informed on your choices which I think is key… most people are not :)
You are right, it is a privilege. I often think about that, to be quite honest. I will keep you posted on the CSA. :)
I have to say although I joke and call it ‘whole pay check’ which umm it definitely can be. I do appreciate that it is different and offers food that caters to different lifestyles as Megan Skiff points out below. I do agree with what your saying about shopping in peace though but it’s hard to find that anywhere!
Ha! I think Ryan agrees with you. He can’t even find the type of food he likes to eat there, but I personally love it. Interestingly, I saw a study recently that Whole Foods isn’t that much more expensive, if at all for what that’s worth.
In some parts of the country, Traders Joes is a GREAT alternative to the high(er) prices of Whole Foods.
You might want to check out this article. Probably a bit sensational, but also probably what we already knew at heart – we could buy most of what is at Trader Joe’s (and I would guess it is similar at Whole Foods) at a regular grocery – and for cheaper.
I shop at Hot Mom Kroger so I can hit on women who have rich husbands who are never home, but pay for them to go to the country club and do yoga all day, but make no mistake I thoroughly enjoyed Trader Joe’s in Charlotte. For me it was about the experience, and ridiculously amazing service.
I think they’re onto something with this: “With the greater turnover on a smaller number of items, Trader Joe’s can buy large quantities and secure deep discounts. And it makes the whole business — from stocking shelves to checking out customers — much simpler. Swapping selection for value turns out not to be much of a tradeoff.”
They avoid the overwhelming paralysis of your standard grocery stores cereal line. Plus, where else are you gonna get $2, now $3 buck Chuck?
Ryan wins for best comment on Kontrary to date: “I shop at Hot Mom Kroger so I can hit on women who have rich husbands who are never home, but pay for them to go to the country club and do yoga all day.”
Lame.
Can we talk about how sad it is that I can’t by $2/$3 buck Chuck because I live in Pennsylvania and our liquor law prohibit the sale of alcohol in grocery stores? You can feel bad for me, starting now. :)
I don’t think this is a sustainable model. Here’s how I see it going: As the “Duane Reades” of the world break into the market, they’ll probably pay a fair price for the beer–they’ll have to because there are countless other places doing the same, so the brewers can draw a fair price. But as soon as they’ve started to push out the competition, they’ll also drive down the prices of the beer to the point that the brewers can’t stay afloat. At which point, they’ll start passing off beers like Blue Moon (which is produced by Coors and is a perfect example of the scenario you describe above as applied to a product) as “hip.”
So in the end, we’ll all be sipping Coors beer at Wal-Mart. The American Dream.
Alli – ugh! I hope not. I think you’re right though. That could definitely be one of the paths this trend follows. This is what I find fascinating though – at one point does scale inhibit authenticity? When do we say, okay, stop growing! Can you ever have scale that benefits local community? That is the sweet spot that I’m interested in.
Or is that a misplaced ambition? Do we even need scale?
Do we need scale? Actually a question I’ve thought about a lot lately. The problem I’ve been seeing with scale is that it seems to take quite a bit from community without giving near as much back. And while efficiency is great, untempered efficiency is a race to the lowest common denominator.
Well said. Efficiency is so built into our economy, I don’t know that it’s possible to get around it with trying completely different models. Perhaps when chains try to let local in more, we’ll stop valuing everything in profit just a wee bit.
This part of your article is incorrect: “If chains operated as local brands, the money would stay local.” A chain – no matter how small the store footprint or how many craft beer bars it opens will always keep less money (as a percentage of money spent) local when compared to an independent shop.
I love scale. I love convenience. I love big chains changing with the times and catering to local tastes.
More money (than current) will stay local when chains (as Whole Foods has been cited below) stock some locally-based products, but on average, “for every $100 spent in locally owned independent stores, $68 returns to the community through taxes, payroll, and other expenditures. If you spend that at a national chain, only $43 stays local.” (Source)
Again, I don’t mind chains changing, but don’t mislead your readers into thinking that customization is always better (on a macro-standpoint) for a local economy.
Thanks for clarifying, Sam! It wasn’t my intention to state that all the money would stay local. I tried to bring up the point that headquarters would most likely be elsewhere so obviously not all the jobs (and money) would be local, but yes, I should have said that more outright.
I think localization is better than what we have now, but is it optimal? Certainly not. As I mentioned to Alli, I’d love to see the sweet spot where scale, authenticity and impact intersect. As business strategies evolve with the times, that is what interests me.
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