BRATTLEBORO — We've got to talk.
With the holidays behind us and the serious work of economic development for the next half century clearly in our sights, it's a great time to discuss how we can keep our Main Street and local businesses viable for the long term.
Leading up to the holidays, Jacob Roberts and Bethany Thies wrote excellent articles touting both the benefits of shopping locally and the challenges with executing such a vision in a community of limited means.
Locally and nationally, people are discussing how local business can survive and thrive - but they're having the wrong discussion. The work of the buy-local movement is very important and needs to continue, but that is only one piece of a larger puzzle.
Local business and shopping as we know it are in the process of changing forever. Counting on movements of a few percentage points of people's total income to save the local economy is like using a garden hose to fight a forest fire.
Instead, we need to look at the changing landscape of retail and local business and create businesses that will thrive in the new economy of the next 50 years and longer.
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What will the next economy look like?
Commodity products bought in stores from local vendors will never be price-competitive with companies like Amazon or giant retailers that can scale their operations to sell massive quantities cheaply. Attempting to sell the same stuff as everyone else at a higher price is a recipe for failure.
This is particularly true given the shrinking piece of the economic pie available to the middle and lower classes. For 85 percent of the population, money is in short supply. For most families the calculation is (whether consciously or not), “do I give this dollar to a local business or my child?” One doesn't need to be a parent to know how most will respond.
The good news is that the landscape of the future is not necessarily stacked against local businesses. It is, however, stacked against those who try to continue on the same path.
For centuries, we had an agricultural economy, then we had an industrial economy. We are now moving into an era that some are calling the “connection economy.”
The connection economy is a broad concept showing that mass-produced goods (virtual and physical) will quickly decrease in price - if not free, then to a cost so low that only retailers that can scale and sell in very large quantities will be able to do so without adding value. Goods will not be in short demand.
Yet, many of the challenges of the connection economy simply cannot be met by big-box and Internet retailers. Connection to community, to people, to nature, and to our inner selves is the currency of the coming generations. This new economy consists of three primary drivers.
1. Connection: People are eager to connect; small businesses can facilitate that connection to attract and retain paying customers.
At the core of every human being is the need to connect with other human beings. Unfortunately, the more we've connected with the vast information available to us via the Internet, the less connected we've been with one another.
There is a reason coffee shops and other “third places” (home being the first, work the second) have sprung up as rapidly as the Internet has proliferated in our work spaces and homes: people feel more isolated than ever. The more time that individuals spend in front of computers, the more they need to meet their innate, tribalistic need for connection to other people.
2. Customization/uniqueness: Businesses can give people something unique that simply cannot be acquired through a big retailer or web store.
Customization can come in the form of products or services. As products become hyper-commoditized, people's desire for the unique increases. Even though the middle class is cash-strapped, they are often willing to pay a little bit more for something out of the ordinary.
And, thanks to new technology and tools, local people can produce custom products (and services) cheaper than ever before.
Uniqueness can come in the form of place. (There is only one southern Vermont, or one Grand Teton National Park, or one New York City). It can come in the form of connection to a group of individuals with similar interests, or with a common interest in an unusual speaker or author.
There are unlimited possibilities for uniqueness. The key to lies in offering something that cannot be done elsewhere at scale.
We are lucky to live in a supremely unique place. We have a thriving arts community with a natural beauty, and we are a day trip from any one of three large, metropolitan cities. We must find a way to capitalize on this good fortune, and attract more people here as visitors and permanent residents.
3. Collaboration: Businesses can bring together multiple communities that have heretofore been in separate silos.
Traditionally, education, business, government, and media were completely independent entities that rarely, if ever, interacted. These days, the lines between all of these are blurring.
Blogging has allowed journalism to be done by anyone, freeing voices to be heard that otherwise would have been missed and reducing the power of the traditional gatekeepers of news. While the quality of this input to the public sphere is debatable, like it or not, it's here - and it has the power to influence the public and drive change like never before. These new reporters inevitably bring together people, businesses, and government.
Educational institutions that are willing and nimble can work with local employers to customize curricula to meet the needs of local businesses, ultimately benefitting the schools, the students, and the community.
Municipalities are making their information public, allowing software applications to be written by individuals and companies that facilitate government running more smoothly at lower cost.
These are just a few examples of new ways in which collaboration across industries is changing business at the local and national levels.
By applying one or more of these attributes - connection, collaboration, customization/uniqueness - we will create a local business community that is financially sustainable for the next 50 years.
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Some local businesses out there right now survive and thrive by using the principles of the connection economy, either as a completely new business model or, more popularly, in a combination of selling commodity goods with some aspect(s) of connection, collaboration, customization, and uniqueness.
Here are just a few examples of either combining commodity products with connection economy ideologies or creating whole new local businesses based on those principles.
• More Than Words (MTW) is a wonderful independent bookstore in Waltham, Mass. While living in Somerville, Mass., I could walk to multiple adequate bookstores that sold exactly the same books as every other bookstore and Amazon.
Yet I would regularly get in my car and battle Boston traffic for 30 minutes to go to MTW. Although I didn't know it at the time, I went there because the store was using aspects of the connection economy.
MTW organized book groups right at the store and connected me to people with similar book interests in my community. I would go to the store to meet others like me, and then I would buy books and coffee. I surely spent more money there than at those bookstores closer to home.
MTW's business model is based on collaboration. It is a not-for-profit that works with at-risk youth to show them how to run a business and become responsible working adults.
The executive director is not a bookstore owner per se. She affiliates herself with the schools, local social-service agencies, and philanthropic organizations, in addition to running the bookstore.
The arrangement not only allows the youths to learn real-life skills, but it also reduces the pressure of meeting monthly expenses by having philanthropic funding available in low-sales months. That's real connection and collaboration at its best.
• Green Fleet Bicycle Shop. In many ways, Green Fleet Bicycle Shop is like any other local bike store in the country. It sells brand-name bicycles and accessories, and its staff does repair and maintenance work.
What makes Green Fleet special is that it supplements the business with tours of Nashville, Tenn., where it's located. In this way, the shop uses connection and uniqueness to increase revenue.
From a connection perspective, customers can take tours with other people with an interest in biking and the local area. Uniqueness plays a role because the Nashville area is, in and of itself, very unique.
Many business communities around the country, and certainly in southern Vermont, could make such a model work, whether it be in bicycles, theaters, tattoo parlors, or just about any enterprise that can capitalize on the uniqueness of its products, surroundings, and culture.
• Community-supported agriculture (CSA). Although the concept of the modern CSA has been around for centuries, it fell out of favor as the Industrial Revolution grew and mass-produced food became more popular.
Now, CSAs are thriving again. Collaboration, and to a lesser extent connection, are the characteristics that make a CSA an example a connection-economy business.
In the industrial food system model, the financial risk lies with the small farmer, who can be really hurt in a bad-weather year.
By collaborating, the farmer and the customers share the risk and the rewards. In a bad year, the farmer still makes a living wage because the customers accept somewhat less food for their money. If it's a bumper-crop year, the farmer might make a little less profit than if s/he sold the large yield on the open market.
Particularly in larger cities, the connection aspect of a CSA is apparent. People there enjoy seeing their neighbors and fellow food friends at the local pickup stops. Bustling cities can be incredibly lonely places, but the pickup gives people a chance for connection to their neighbors and, to some extent, their farmers. In a smaller community like ours, where the farmers are local, there is no question that a direct connection to the farmer is a wonderful benefit for all involved.
• Green Mountain Marketing Group. A great example of a Connection Economy business is happening right here in southern Vermont. Green Mountain Marketing Group is the company behind the Green Mountain Adventure Challenge and the Independent Television and Film Festival (ITVFest). These initiatives involve collaboration and combine uniqueness of place with connection-economy marketing.
The Green Mountain Adventure Challenge is a treasure hunt that takes place in Wilmington and the surrounding mountains. People come from up and down the East Coast to do the challenge.
The ITVFest is an annual event to highlight independently produced, original and unaired television pilots, webseries, films, and other video content.
Green Mountain Marketing Group owner Phil Gilpin collaborates with local inns, restaurants, and retailers to bring them business. He uses the uniqueness of place to bring in visitors for this special event. Finally, he markets to people in Boston, New York, and other regional hubs almost solely via social media.
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The term “disrupted industry” has been used extensively over the last two decades to describe those industries that have been completely or partially upended by new technologies.
We can already see how some disrupted industries have responded to the connection economy.
News organizations are a primary example of a disrupted industry. As information has become free to consume over the Internet, news organizations have had to change their revenue model. Although they still have the responsibility of distributing news, many now earn a significant portion of their profits through events such as conferences and summits.
Their readers tend to have similar interests, and live events allow them to connect with other like-minded people (connection). At these events there are often well-known writers or thought leaders (uniqueness).
Music is another example of a disrupted industry. Musicians used to make most of their money by selling records. As music has become free over the Internet, they now make their money through live performances.
These live events provide connection and uniqueness and, when planned properly, they also demonstrate a collaborative spirit by making space available for nonprofits, local community organizations, or local choral groups, for example.
From a systemic perspective, the effect on a business owner in a disrupted industry is similar to the total disconnect suffered by a person who's been “dumped” from a long-term relationship.
To the person feeling victimized, at first the relationship problems come as a total surprise. Then the person holds on to the status quo by every means possible but finally recognizes that the relationship in its current state is over.
This acceptance can be incredibly freeing. Now the couple can decide together to try and give it a go in a new way, or end it altogether.
The key to making a transformation to the next phase is both parties facing the reality that the old way of being is over forever. Until then, it is anything but liberating for the person who feels they have no control over the situation.
The shock to the system is the same for a disrupted industry, where the market is the spouse who requires change. No matter what the business owner wants (such as keeping things the same), s/he needs to go through the painful process of denial, admission, and acceptance before arriving at the point of liberation and new opportunity.
Sometimes that new opportunity means closing the business and moving onto something completely different (breaking up, if you will).
Sometimes it means adjusting the business to a new model that works financially and psychologically for the owner (staying together in a different way).
Main Street and local businesses are not going away. The ones that survive will adjust and embrace the aspects of the connection economy.
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The road on which we must travel to adapt local businesses to the Connection Economy model will be a rocky one.
As a community, and as business owners, we must be patient with ourselves and take appropriate risks. This is a marathon, not a sprint. Change will happen slowly, over one or two decades.
Some of the attempts at change will fail at first. Failure and learning is the nature of innovation. There should be no chastising a business or community organization that tries a new initiative, only to see it flop. It's about learning from the experience, adjusting, and moving on in an improved state.
We need to start charting a new map - a map that provides direction on how to succeed as local businesses in the next 50 years. Then we must start going down some roads on that map. Many roads will lead to dead ends and perhaps even cliffs. But eventually, we will find some on-ramps to the highway of the connection economy.
When we do, we will have put in place a major puzzle piece to functioning as a vibrant, sustainable community.
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The work of the buy-local movement is important because it educates people on the effect that their spending has at both the local and global levels. That puzzle piece is important and needed.
But let's change our discussion to a more realistic set of criteria that looks at local business as a disrupted industry with a need to adjust to the connection economy.
The sooner we “break up” our relationship to the old model of selling commodity goods with little or no added value, the sooner we can move on to a healthier relationship where people are connected - and our communities are rebuilt tighter than ever before.