Directors Column

From old economy to “new localism”

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I am constantly reminded that the power of Main Street is that our downtowns fulfill a social as well as an economic purpose. I see that our best local programs tap the interests, funding, and passion of people from every corner of their community, not just the business community. In fact, it would be fair to say that the “social” goals, such as quality of life, access to amenities and services, sense of identity and belonging, and sheer love of old buildings, are more powerful drivers for some people than the “economic” goals of job growth and reinvestment.

Is that to say that the social good of Main Street now trumps the economic “ROI” we deliver? Absolutely not. In fact, recent trends are proving that these dual drivers of Main Street initiatives are morphing into something we’ve never seen before, which could be a more powerful form of local commerce and may be one of the pathways that can lead us out of the “old economy,” which is crumbling around us as we speak. For now, I am calling this phenomenon the “New Localism.”

The New Localism is more than just mom & pop shops, farmers markets, and “buy local” campaigns. The New Localism, which has been quietly gaining steam in cities and Main Streets over the past few years, has flown under the radar of our perception. Without us even knowing it, a radically different model of commerce has started to take shape. If you consider the traditional players in each part of the chain of local commerce—consumers, retailers, producers, and investors—we are beginning to see a merging of these once-distinct roles in the form of community-owned enterprises.

The New Localism gives power to the people in a new way—by giving them opportunities to get involved and have a voice in shaping commerce. This is taking many different forms. One example is an amazing venture launched by a Main Street program in Waterville, Maine—Barrels Community Market. The shop creates an outlet that never existed before for 250 area producers and does so by relying on residents with a desire to “work local” as well as “buy local.” At Barrels, a staff of 25 volunteers keeps the business running.

New Localism changes what it means to be a small independent business on Main Street. The Mercantile in Powell, Wyoming, is a great example. After lamenting the loss of their local department store, local residents bought the vacant 7,000-square-foot store, sold $500 shares to “citizen investors,” and re-opened. Powell became the poster child for this type of success story when it caught the attention of CBS Nightly News and NPR. Dozens of towns have since replicated Powell’s formula, proving that an enterprise with a community mission can serve both our social and economic goals.

Local producers—once thought to be a dying breed thanks to industrial farming and global manufacturing—are making a comeback. An enterprising community-initiated business, the Company Shops Market in Burlington, North Carolina, signed up 2,150 local investors in a town of 9,000 and opened a co-op that serves not only as a Main Street anchor, but as a market for small-scale food producers.

Finally, nowhere is the conventional model for commerce more in turmoil than in the area of finance, for producers and retailers.  Investment, especially in the form of bank lending, continues to be hard to come by for most of our mom & pop businesses. Last year, in fact, one of the largest banks in the U.S. revealed that 95 percent of its small business customers had only one source of financing available to them: high-interest credit cards!

With the prospect that conventional financing may never return as before, a new model for community-led investment is starting to pop up. One of the most intriguing examples comes from Port Townsend, Washington—a past GAMSA winner and defiantly “all local” downtown. Just a few years ago, residents decided they needed to do more than just “buy local” to have a thriving local economy. Why not invest local as well?

Their solution, called LION (Local Investment Opportunity Network), lets citizens put their money where their passion lies. In just a few short years, they have successfully matched small local investors with local entrepreneurs, financing everything from the renovation of the local theatre to the downtown bike shop. They think their model can be replicated anywhere and have even developed an online “toolkit” other communities can use. Visit LION’s website to find out more.

For now, traditional commerce still dominates our downtowns and local economies, but to grow in a meaningful way—that meets both our economic and social goals for Main Street—the New Localism offers the promise of both, and our Main Streets and organizations can be great places to start.