The pandemic has exposed many hidden vulnerabilities in the world of business. We’ve seen hundred-year-old brands like Neiman Marcus file for bankruptcy. Supply chains across industries have been upended. And even Zoom, which overall has fared well during the pandemic, came under fire for lax security measures and concerns around “Zoom-bombing.”
In all of the topsy-turvy we’ve experienced over the past months, one of the common threads we at the Sterling Woods Group have identified is the importance of keeping things local. For both consumer and B2B relationships, there are benefits to your community, local business owners, and yourself.
Let’s take a closer look at the ways buying local is increasing in importance and how brands can capitalize on this trend toward shopping local.
Trend 1: Increasing Support for Fellow Business Owners and Leaders
Let’s start with the most obvious: If you’re reading this article, you’re likely the leader of a small or mid-sized business. You know firsthand how difficult it can be to find customers, master marketing, manage supply chains, and otherwise keep your business afloat even in the best of times. The pandemic has created unprecedented hurdles for leaders of businesses everywhere.
According to figures from the Bureau of Labor Statistics, only about half of all small businesses make it to the five-year mark. And the most recent data we have is for businesses that were founded in 2014. It’s likely the numbers will be even bleaker when we see how the pandemic has affected young local businesses.
The good news is that the numbers also demonstrate a consciousness among the general public about the importance of showing the love to local businesses right now. A survey from the National Retail Foundation found that half of all consumers have made a purchase specifically to support a small local business during the pandemic.
How to Make the Most of the “Support Local” Trend
If you’re a local business owner, now is the time to lean into the support from your community. Consider, for example, creating a membership program for neighbors. No matter what size business you own, a well-designed membership can generate great results.
Last year we wrote about a local brewpub that started a membership program for beer lovers in the community. There were already several breweries in the area, so the Moby Dick Brewing Company needed a way to stand out. By creating the Mug Club, a program to reward and celebrate their regulars, they built up excitement around their brand. The membership was so popular that it sold out in under a week!
Now is a great time to make your regulars who are supporting you throughout this crisis feel special. A membership program provides them with a long-term, recurring way to support you financially. And it allows you to provide them with special services and products that make them feel like VIPs.
Trend 2: Greater Investment in Your Community
The benefits of buying local go beyond the four walls of the establishment you patronize. A thriving local business community strengthens your neighborhood socially and economically, too.
Local businesses hire local. And we’re not just talking about hiring a local staff or team. They’re also more likely to have a local agency handle their PR and marketing. They’ll hire a local cleaning service to keep their office or storefront tidy. They’ll buy ads in the local newspaper.
A report from Civic Economics found that chain retailers recirculate 13.8 percent of revenue in the local economy. Local businesses, by contrast, keep 48 percent of their revenues in their own backyards.
A stronger local economy means lots of great things for the people that live there. You can invest in better public services like education and public transportation. Your community becomes more desirable, and property values rise—it’s a virtuous cycle.
How to Make the Most of Your Local Business Network
The benefits of a healthy local business scene affect both your work and personal life. So why not do your part to strengthen that community?
Look for ways to build partnerships with other local businesses. Everyone is struggling right now, and two heads are often better than one. In one of our recent Campfire Chat interactive webinars, leaders shared some unique partnerships they’ve seen develop since the pandemic began.
One attendee cited the example of a brewery who sold primarily to restaurants in New York City. Of course, with all restaurants in New York now shuttered for months, they needed to find an alternative way to get their product out there. So they teamed up with local pizzerias to create a deal: pizza and beer delivered, together, to your door!
The brewery benefited by tapping into the pizzerias’ existing delivery platform and network. Meanwhile, the pizzerias were able to offer their customers something more than soda to accompany their slices.
Another Campfire Chat attendee shared a story from the B2B side. As a CPA, he’s been tapping into his professional network, making connections between his clients and other best-in-class service providers. Here, again, we see the importance of paying it forward and strengthening the local networks you already have in place.
Trend 3: Keeping the Supply Chain Local
The pandemic exposed a number of vulnerabilities in the global supply chain. With the entire globe shutting down in waves, big businesses that rely on suppliers outside their local areas had trouble meeting customer demands.
The failings of the supply chain were particularly stark in the food and agriculture industry. While store shelves sat barren in March, suppliers who had no way to pivot away from their restaurant customers to individuals were throwing away massive quantities of food.
The New York Times reported that dairy farmers were dumping as many as 3.7 million gallons of milk daily in March and April. There are a number of reasons for this: With restaurants closed, there were tons (literally) of excess product. Because milk is perishable, there was no way to store leftovers in silos or freezers.
Additionally, because a certain percentage of producers’ buyers were usually wholesale customers, packagers didn’t have enough retail-appropriate containers on hand. They couldn’t pivot to increase their output for grocery stores. And with illness tearing through packaging plants, fewer drivers on the road, and an increased demand for refrigerated trucks to get more food to grocery stores, the entire system buckled.
These major failings of the global food supply chain have opened many business owners’ eyes to the dangers of relying on a far-flung network. When your suppliers are in your own backyard, there are fewer potential failure points along the way. Even if you’re not dealing with perishable products, keeping your supply chains tight means greater control over any pivots you need to make.
How You Can Strengthen Your Local Supply Chain
Now that we’ve stabilized from the initial shock, this is the time for leaders to reevaluate how their businesses operate. As we discussed in another recent Campfire Chat, we’ve addressed the immediate safety concerns around the virus. We’ve adequately bailed out the proverbial boat and are no longer taking on water. We’re now at a stage we’ve labeled “taking stock.”
Make a list of all of your suppliers. Then start reaching out to your local network. See if there are nearby alternatives to some of your more distant vendors.
Ask if your neighborhood vendors would be amenable to making a deal right now. If you agree to a longer-term contract, they might be willing to cut you a more favorable deal in exchange for the security of knowing you’ll be sticking around.
Take a look at your data. Were some products performing favorably before the pandemic but took a big hit recently? If getting your hands on those products is a challenge, and they’re not doing much good for your business, now might be the time to say goodbye.
It’s also important to remember that not all shifts that happened in the last few months will be permanent. As you consider how to establish long-term supply chain solutions, consider how things might move again in the future. We’re still adjusting to “the new normal,” and things may change more in the coming months. Keeping a consistent eye on your data will help you make the right moves as we all forge ahead into the unknown.
The pandemic has caused most of us to rethink the ways we operate in the world. Some are doing that on a personal level—deciding to get takeout from a local restaurant rather than a chain, for example.
Executives can also do that for their businesses—perhaps by opting for a local print shop who can hand-deliver postcards to you, rather than relying on one of the big guys, who might be experiencing shipping delays. No matter what kind of purchases you’re making, the trend is now towards buying local.
And there’s power in numbers. When local businesses unite to help each other out, and the individuals in the area commit to buying local, your community grows stronger.
About the Sterling Woods Group, LLC
The Sterling Woods Group’s mission is to help clients make sense of their data to predictably grow sales. We apply data science to help you optimize your sales funnel, improve your marketing ROI, launch new products successfully, and enter new markets profitably.
We use a hypothesis-driven, data-supported methodology to discover insights that no one else is paying attention to. Then, we help you assemble the right sales strategies, marketing plans, technologies, and resources to seize this opportunity.
About the Author
Rob Ristagno, founder and CEO of the Sterling Woods Group, previously served as a senior executive at several digital media and e-commerce businesses, including as COO of America’s Test Kitchen. Starting his career at McKinsey, his focus has always been on embracing digital technology and data science to spur strategic growth.
Rob is the author of A Member is Worth a Thousand Visitors and is a regular keynote speaker at conferences around the world. He has been featured on ABC, NBC, CBS, Fox, and Digiday.
He holds degrees from the Harvard Business School and Dartmouth College and has taught at both Harvard and Boston College.
Rob lives outside Boston, MA with his wife, Kate; daughter, Leni; and black lab, Royce.