Tuesday, March 2, 2010

What is the acceptable premium for buying local?

This morning, I took an additional hour to get into the office and did a long overdue book run at the Barnes and Noble in the Bon Marshé building on Merrimack Street.  I picked up The Paddy Camps, The Black Swan, and Outliers.  I had a nice but brief conversation with a woman who worked there over how wonderful she thought my book selection was, then headed over to Market Street to go to Brew'd.  I picked up What is the City? by Paul Marion, who blogs over at Richard Howe's blog as well as -of course- a coffee.  The barista mistook me for someone else and had the wrong type of coffee pre-made for me, but either way... After that, I dropped into Market Street Market for my usual early week run for fruit to bring to work, and a loaf of bread.  I ran into the same barista in there as well as having a conversation with Janette Nason about the horrible hours that Barnes and Noble maintains (M-Sat 10-5, closed Sunday) and CVS (which is a little better.  Fun fact if you didn't know it:  the first CVS was on Merrimack Street).  We discussed how one of my favorite things about her store is the hours cater to those of us who live downtown, and then, who exactly her customers are.  I pointed out that due to the markup, my take was much of the elderly, disabled, and otherwise low income crowd that lives in the area most likely are doing most of their shopping at Market Basket.    From my own experiences in there, this certainly isn't universally true - but a small store can't possibly compete price-wise with the Demoulas's (Demouli?).

So, I get to work, happy with the amount of shopping I was able to do on foot in my own neighborhood that morning, and discussed my purchases with a co-worker.  He pointed out that on two of my books, I paid $5-$10 above what I would've at say, Amazon.  Even Barnes & Noble's website (and probably their large stores in Nashua and Burlington) was significantly less than I had just paid.  While I defended, to an extent, the extra cost (in some cases, 50% extra) as buying local, it is true that that is a very significant premium to pay - and not even to a company that is locally owned and operated...or even likely self-supporting as it is associated with UMass Lowell (one of the biggest visible benefits that school has downtown).  It reminded me of the new Lowe's in the Highlands, versus driving to South Nashua and buying the same thing tax-free.  I had this to say on Topix (yes, I'm sadistic and post in opposition there from time to time, knowing I'm going to often just get screamed down with no real discussion.  That didn't happen here, I'm happy to report):

For people in Lowell, Lowe's in Nashua is an extra 30 minutes and will burn a gallon of gas getting there and back. Plus, Lowes in Lowell pays taxes to our community, our state, and employs our residents. By the time the real extra costs of shopping on the DW is factored in, Lowell might be the better deal.
 So, where do we draw the line?  What are the intangibles and the real cost benefits of spending extra down here?  Or in the Merrimack Valley in general as opposed to New Hampshire?

What's good?

  • Local businesses make your neighborhood more vibrant, attractive, and livable. 
    • It's a living situation improvement
    • It increases the value of your property to live somewhere that isn't full of empty stores
  • You often have a relationship with the employees and live nearby the other customers
  • They employ local people and pay local taxes, and are often supported by local banks
    • This money is more likely to be re-invested locally
  • Time is money, and not spending time in the car is a benefit to you, the environment, and likely, your sanity
  • You feel warm and fuzzy for doing a Good Thing.
What's bad?
  • You pay more: economies of scale.  Money you spend extra could potentially be used elsewhere for other benefits to you or your community.  In the bigger picture, you might be making the wrong choice for both you and your community
  • The selections tend to be inferior, which often makes a trip unsuccessful, and therefore, a waste of time.
  • Sometimes, the service is not superior and things take longer to get, again, wasting time
  • They are more likely to have inferior hours, which is an inconvenient waste of time.
The balance, for me, is not readily quantifiable.  I buy about 50% of my books at the downtown Barnes and Noble, because their hours suck, they are expensive, and their selection is only decent (I have about a 75% success rate getting what I'm looking for.  It would be lower but I know the types of books they carry by now).  Once that's weighed against the convenience and the coolness of being able to say you have a bookstore in your neighborhood, that's where I end up - 50%.  

I make a point to shop at the Market Street Market for my staples, because even though I know I'm paying somewhat more than I have to and sometimes walk out empty-handed and end up going somewhere else, it is a huge plus to me that they are there.  I eat food every day.  I don't like stopping at supermarkets for simple things.  I like being able to get simple edibles across the street from my house and talk to the owners.  Food is not all that expensive.  Paying $2 for a $1 yogurt isn't going to break the bank unless my yogurt intake goes up significantly.  They usually have what I came in for.

Conversely, ultimately, I feel that Olive that and More, the defunct sandwich shop, fell on the wrong side of the equation for me.  They were expensive, slow, and when they used to sell staples, often didn't have what I needed that day.  While I miss their breakfast sandwiches (I used to joke they were so slow they must fly to France for every croissant) and don't like the empty space, they simply weren't going to squeeze any more business out of me for those reasons.  I wish Northeast Pet hadn't been forced out of there.  At pet shop or a music (instrument) store would be a nice addition down here.

Even New England-Wide Newbury Comics has largely fallen out of favor with me.  They are somewhat local, but CDs are a dying format.  At this point, I have about a 50% success rate at this point getting what I came in for.  Even Best Buy is better than that, and national faceless giant Amazon has everything, doesn't require getting in a car, and is usually a better deal.  A CD store downtown would be a poor economic move, but I'd be more likely to have a relationship with the owners, discuss things I'd be likely to like, etc.  I haven't had that since my first few years of college, when the last downtown Troy record store closed.


  1. I like to shop locally because I generally find it easier, more convenient, and I feel the service is better. I work downtown and live in Pawtucketville and if there is something I need that I can pick up downtown on my lunch hour or on my way out of work, I'll do it. It just makes my life easier.

    I have also found that since the Lowell Target has been open, I will generally shop there instead of the Nashua location, even though Nashua is closer to where I live. The Lowell Target is easier to get to, more manageable, and generally a much more pleasant shopping experience.

  2. Another good is you have those books in hand now, not in 3 days or a week. Sure, most of the time you don't need a book right away, but some days you do. Then compare that extra $5 to overnight shipping, and it's not so bad.

    As for the Target, I have friends in Westford who shop there, so there are more people shopping in Lowell now than before...it's not just Lowell residents who no longer go elsewhere (as I've heard some people predict).

    Oh, and if you live in Mass and shop in NH, you are still supposed to pay sales tax...so another good is if you are ever audited, you don't have to pay penalty fees.

  3. Great post, and it made me think a lot about some of my buying decisions and how they've changed since I first moved to downtown Lowell to now (and the change is that the premium I'd be willing to pay for something downtown has gone down a bit, probably for several reasons).

    I think it all has to come down to self-interest. You and both previous commenters all hit on the idea that the convenience of having something now has a *value* that can justify a slightly higher sticker price for something. If I can get a dozen eggs at Market Street Market, even for fifty cents more than Market Basket, or 75 cents more than the Wal-Mart on 38, it makes total sense to do it.

    I also agree that from an aesthetic point of view, the neighborhood seems/feels better when there aren't boarded up or empty storefronts. All things being equal, I'd rather have an Olive That than not, but if service and quality are lacking, my *enthusiasm* for a downtown business is only going to go so far.

    As much as a critical mass of people is rooting for the downtown to succeed, consumers are always going to weigh the cost-benefit of the way they shop...if someone isn't offering a great product, great service, or a you-can-only-get-this-here uniqueness, they're going to go belly up.

  4. Why would anyone want to pay more for something when you can go somewhere else and get it cheaper? I mean, its simply basic economics. Drive up to NH and save money, its the latest carze these days!

  5. I'll admit I never made it beyond high school economics class, but I feel "basic economics" is really an oxymoron. No monetary transaction can really be as simple as "it costs me fewer dollars right now, therefore it's cheaper." although we often think of it that way.

    Certainly, time is money. The retired or the otherwise cash-strapped are going to be more willing to trade time for money, but not everybody will.

    Like I was getting at, isn't there often quite a few hidden costs and side-effects to any economic decision? Any time you spend a dollar, it could've been spent elsewhere. Look at all the fights about outsourcing: at what point is the unemployment and underemployment that is caused (in the real world) not worth sending jobs overseas? Doesn't destroying the purchasing power of the lower class at some point negate the ability to create goods for less money?

    This is normally where the government gets blamed for things like the minimum wage, OSHA, up to and including the EPA. The other side goes after NAFTA, WTO, etc. If these were simple questions, intelligent people wouldn't be arguing about them.