We’ve all been there: You’re walking around a charming local store, and from their carefully curated selection, you find the perfect product. You check the price tag, and you think to yourself “I bet I could find this for cheaper on Amazon.” You slyly pull out your phone and look it up. Sure enough, there it is: The same product, but $2 cheaper. We’re conditioned to be frugal, so why would we not buy from the cheapest distributor? I’ll tell you why:
Understanding the Pricing of Local Products
You may be asking yourself: “Well why are local stores so greedy? They should just sell the product for the same price as Amazon and then I’d support them.” Stores like Amazon can afford to sell these products at a lower price because they do not have the same costs that a local business has.
First, let’s talk about the cost of operating a brick and mortar store. A local business has to pay taxes to the city for their building and the roads and infrastructure that surround it. These stores need to have prime locations to get in person traffic which means egregious property taxes. Ecommerce sites, however, can put their warehouses anywhere. This means they’re taxed more lightly.
Another operating cost is labour. As I’ve visited local businesses over the last months I’ve observed a range of team dynamics, but one thing remains the same: They treat their employees like family. When you make a purchase from a local store, you are supporting more than the business. You are supporting the livelihoods of the employees and their families.
Time invested into the careful selection of inventory is a significant consideration when pricing goods. The appeal of ecommerce sites is that they have everything under the sun available on their sites. That strategy does not work so well for local businesses. Owners and operators put in days, weeks, and months meticulously curating their inventory. They need to strike the perfect balance of browsability and functionality.
When competing with big box stores and ecommerce sites, local businesses need products that make them stand out. I recently had the opportunity to sit down with Greg Stebbe, the owner of Walls Alive in Calgary Alberta. He told me “It takes a lifetime, sometimes, to come up with all of the right sources … I would say, philosophically, I am after vendors who are high end, vendors who can offer me some measure of exclusivity or at least some guidelines that I would be able to count on that I wouldn’t build up their product in the marketplace and then all of a sudden they turn around and say well, thank you very much we’re going to give it to Home Depot now.”
It is also important to local business owners that they know who they are getting into business with. When describing the type of people he would source from, Greg Stebbe said, “They would have to be honest, they would have to be nice. Nice is underrated in the world, and I don’t need to deal with people who aren’t nice. People who say things like ‘Well, it’s just business,’ no it’s not.”
Now, imagine the time that goes into not only finding the right products, but also the right people to source those products from.
They also need to consider factors like the aesthetics of the inventory when it is out on the floor. How can I present this product to consumers? Which products should be next to each other? How do I make my store flow properly? Next time you walk into a store and are awestruck by the ambiance, consider the time and effort that went into crafting that ambience.
If you aren’t convinced that local business owners’ time is worth your dollar, consider how all of this is going to affect you.
The Gradual Disappearance of Local Businesses
If we continue on our current trajectory, one day we will end up with no local stores to browse through. When your dollar is consistently given to big box stores and ecommerce sites, the store where you discovered the product suffers. The revenue that could have come from your purchase is going to other stores that can afford to sell this product at a lower price.
Greg Stebbe, explained it best: “This kind of a business is slowly but fairly certainly disappearing and someday we’re all going to wake up and we’re going to have Walmart and Home Depot to deal with and the online giants. And I’m not sure that that’s really where our society necessarily wants to head, but we vote with our dollars. So when people go online and order something that they’ve seen here because they can get it for $5 less a single roll, what they’re essentially doing is they’re killing the ability for them to come in the next time, because we might not be there.”
We can all agree that the consumer experience in a store is far superior to online shopping. You can interact with the products, see their true colour, feel their texture, and sometimes even test them out. Online, you are limited to text and a small set of pictures that cannot encapsulate all that a product has to offer.
If Calgary does not get passionate about the shop local movement, we are going to lose the local businesses that give our city so much life. To quote Greg Stebbe one last time: “I think Calgary wants to be a great city, and for that you need vibrancy in the entrepreneurial classes.”
I’m not kidding myself, people will always seek out the best price (I know I do). Sometimes the best price is at local businesses, and sometimes it’s on ecommerce sites.
All I ask is that before you go searching for the cheapest price on an in store product, consider the impact of voting your dollar towards sites like Amazon. Consider why the local store had a slightly higher price. Consider the very real possibility that that local store will not be there the next time you want to browse.
If getting the best price is your goal, consider checking out some local businesses before immediately clicking onto Amazon. You would be surprised at some of the deals you can find.
If your goal is to support your community and local economy, there are many great ways to discover the local businesses near you. Consider spending some time getting to know the entrepreneurs in your area. Give them a couple minutes to tell their story, and I guarantee you will be inspired to support them.
If you cannot make it out to all the local businesses you want to visit, consider checking out our platform. We have cultivated the stories of many of Calgary’s beloved local businesses and put them in video format on our website.
Together, let’s make Calgary the vivacious city it so badly wants to be.