February 11, 2005

National chains outsell local stores

TOM SHARPE | The New Mexican

The Santa Fe Economic Development Review Committee has welcomed a proposal for a new study on how nationally owned chain stores dominate local businesses.

Elaine Sullivan of the Santa Fe Alliance said spending at chain stores is growing 21/2 times faster than at independent businesses in Santa Fe. And while 45 percent of money spent at local businesses stay in Santa Fe, that's true for only 13 percent of spending at chain stores, she said.

"Every day, more dollars are flowing to national chain stores with headquarters in other cities," Sullivan told the committee Thursday.

The Santa Fe Alliance is a nonprofit organization formed two years ago to study local economic conditions. In 2003, it commissioned Angelou Economics of Austin, Texas, to study the effect of chain stores in Santa Fe. Angelou Economics previously conducted another study for city government that resulted in the city's economic plan.

Sullivan said the alliance's own study of Santa Fe gross-receipts-tax revenues indicate the city tax base is being eroded by the drift toward chain stores. If this continues, she said, either city services will have to be reduced or taxes raised.

Sullivan said a new study should focus on what segments of the economy are most dominated by chain stores.

"What are the major leakages?" she asked. "What are the ones that could most effectively be plugged?"

Sullivan said information on the effect of buying from local businesses could be used to educate business owners and consumers -- "if we could get their attention."

Members of the committee peppered Sullivan with questions.

Sayuri Yamada Matthews wanted to know why Santa Fe residents prefer to shop at national chains.

Sullivan said she believes this occurs not simply because national chains offer cheaper prices, but because they use psychology and intensive advertising to convince customers they have cheaper prices, even when it's not true.

Lillian Montoya-Rael said she believes it is important to educate consumers that a lower price tag is not the only factor in purchasing.

Alex Pattakos said by choosing where to buy goods, consumers are, in effect, voting for types of political policies in their community.

Fidel Gutierrez suggested the study focus not only on private businesses but also the effect of government entities like the public schools buying from national chains.

Gary Ehlert, executive officer of the Santa Fe Area Homebuilders Association, said while many government entities have local-preference clauses, purchasing codes usually give preference to the lowest cost.

Joel Serra suggested the study look at Internet sales as well.

Don Wiviott, committee chairman, said it appears committee members agree with the Santa Fe Alliance about commissioning a new economic study of the effect of buying locally.

He appointed a subcommittee to start looking into the process of hiring an economist and the study's cost.

©The New Mexican 2005

 

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