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Everyone is talking about job creation these days. While certainly important, I feel the conversations fall short. I believe there needs to be a broader discussion if we want to see true, sustainable progress.
Laudable efforts are being exerted to bring national retailers into urban areas. The openings of Meijer and Whole Foods in Detroit (and a new Nike store coming soon) are testaments to the city’s success in emerging from bankruptcy into a city worthy of national chains’ attention. However, I don’t believe that turning the city into a giant shopping mall of big box stores is the answer. Here’s why:
It’s true that Meijer creates nearly three hundred much-needed jobs per store. When a big company like Meijer opens a store in Detroit, they provide management expertise, support, and a strong infrastructure back home in Walker/Grand Rapids. They then hire many local folks at $8–11/hour to staff the store. If they work hard, these employees can eventually move up to management positions and earn a decent living.
Why does this solution fall short? Because, while I’m a firm supporter of job creation, I’m an even bigger believer in ownership creation.
Instead of keeping them consolidated and hidden deep in a huge building in the middle of a sprawling parking lot, let’s take some individual departments and help turn them into storefronts on Main Street owned and managed by an entrepreneur from the community. These new owners would then create jobs for others in the community. If employees work hard in thisentrepreneurial environment, they are likely to learn more than just how to stack shelves. They are likely to be better prepared if they someday choose to open their own business. We’d be opening more doors…both literally and figuratively.
Contrary to the corporate perspective, entrepreneurs tend to be proud of helping their employees launch their own businesses. Locally-owned stores have a better chance of starting a cycle of ownership creation/job creation than do chain stores. In chain stores, the ‘cycle’ consists mostly of turnover, which is estimated to be 60% per year. In terms of net job creation, studies by independent economists show that big-box stores eliminate more jobs than they create.
Let’s focus our support on opening independently-owned stores in cities.
Additionally, the Meijer store in the example above receives its merchandise from one of their distribution centers in Lansing or Newport, MI, and pays the salaries of support staff working at Meijer HQ in Walker, MI…which is where all the store’s profits are sent as well. While this is great news for the Grand Rapids area, I think Detroit needs to strengthen its own economy some more before the city is in a position to be so generous.
The effect of independent ownership on communities is profound. Per dollar of revenue, locally-owned businesses hire more local workers, purchase more goods and services from other local businesses, and contribute more to local charities than do big-box stores. In other words, more money is pumped into the local economy when its retail is locally owned.
Numerous studies have also shown improvements in property values, health, employment, earnings, crime rates, voter participation, etc. in communities with a greater concentration of locally-owned businesses. With a preponderance of local retail, communities become healthier, more walkable, and generally better places to live.
According to a 2015 poll by the National Association of Realtors® and the Transportation Research and Education Center at Portland State University, the ‘walkable neighborhood’ concept counts as a key factor for millennialsin deciding where to live. They favor developing communities where people do not need to drive long distances to work or shop.
The evidence all leads to one conclusion: we need to provide greater support for citizens working toward retail ownership, and to our existing independent retail store owners. Citizen Retail is the company/movement I started, designed to help open and support local retail businesses in Detroit…and across the country. We’re just getting geared up, but we plan on helping citizen entrepreneurs start and build their retail businesses; then we’ll let them do their thing to rebuild our communities.
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