January 28, 2000

BIBA defends chain store ban at chamber debate

The Boulder Chamber of Commerce hosted a panel debate Jan. 20 on the Community Vitality Act, a proposal by the Boulder Independent Business Alliance (BIBA) to limit new chain or “formula” businesses from locating in Boulder.
The panel, moderated by Daily Camera columnist Clint Talbot, included Jeff Milchen, BIBA director; Stacy Mitchell, a research associate with the Institute for Self Reliance and author of “The Hometown Advantage: How to Defend Your Hometown Against Chain Stores and Why it Matters”; Sean Maher, owner of the Ben & Jerry’s franchise in downtown Boulder; and Phil Shull, president of Deneuve Construction Services and owner of the Bookends Café in Boulder. Shull is also the chair of the Boulder Chamber board.
Following are just a few highlights of the lively discussion, edited for length by The Business Report. The debate, which included audience questions, ran for more than an hour and a half at the chamber. After panelists each made opening remarks, these were some of their answers to the moderator’s questions. Clint Talbot: What is the problem and if there is a problem, what if anything should we do about it?
Stacy Mitchell: There is a problem. We have seen a tremendous shift in every sector in about the last 15 years. I talked about local pharmacies, 11,000 gone since 1990; two chains now control almost one-third of the hardware market and local hardware stores, in turn, are going out of business. Local bookstores have gone from 58 percent of the market in 1972 to 17 percent today. Blockbuster has one third of the market nationwide, Starbucks has 2,200 outlets and one firm Wal-Mart controls fully 7 percent of all everything – all consumer spending – that’s cars, books, computers, the whole thing. So there is this tremendous thing and although just because you may not have felt it so strongly in downtown Boulder yet, it’s coming. It has been going across the country. And I’m very impressed with this community for even having this discussion at this stage of the game because what I’ve seen elsewhere is after they lose it, they are trying to figure out how to get it back.
Jeff Milchen: Despite what’s been said here, we are not talking about a free market. I could go for hours about the myriad of different subsidies that chain businesses receive at the state level, at the national level and at the local level. If we had a free market, we wouldn’t be here debating this. This is not about free market economics. We have a system where wealth translates very readily into political power and the large businesses are very readily using that political power to stack the deck in their favor. If we sit here and do nothing but vote with your dollars and that’s the end of it, we will see our communities nationwide become clones of the same sea of chain stores. I don’t want to see that happen.
Phil Shull: If you want to see rents go through the ceiling, just make Crossroads the only place you can build a formula business in town. That’s a formula for dysfunction. First of all, it’s not just a black and white issue. It can’t be. None of us live that way and the way businesses are evolving is not that way. Where does the Boys Scouts of America come in, where does Planned Parenthood come in, where does Kaiser Permanente come in? These are all essential businesses to most communities and I don’t consider those to be inherently evil. I think we go there because they offer services and products that we want. To try and craft a script where certain kinds of businesses should be – we have those tools already. We have actually in most cases more public process than anywhere else.
If I’m IMAX Theaters and did not want to be at Crossroads, where would we put them? And would we be upset about that? That’s the kind of business – a venue that I think has a reason to be in Boulder. They are definitely a formula business and they are not a bad one as far as I’m concerned.
Sean Maher: On a national level, most people are familiar with the corporate philosophy the company (Ben and Jerry’s) was built upon: social activism and giving back to the community. As a national company, Ben and Jerry’s gives back 7.5 percent of its profits to non-profit groups across the country. What they do is to encourage us locally – we are locally owned and we are independent – they encourage us to spend our marketing dollars – sorry, Clint, but not in the Daily Camera but working with non-profit groups. I couldn’t even estimate how much ice cream a year we donate to non-profit groups to help them raise money for their causes. That is how we spend about 80 percent of our marketing dollars, in community giving.
Talbot: Should we distinguish between this type of formula business and another that would be less involved in the community?
Milchen: The words good, bad or evil are not used by us and we are not talking about individual businesses, we are talking about the overall community.
When you look at what is happening with that overall picture, we are systematically taking control from the hands of people who live in the community and giving it to remote institutions that do not have that direct attachment to the community.
Mitchell: For franchise businesses, there is really quite a range on how much autonomy a local owner is allowed to have. And unfortunately in most franchises today, local owners don’t have very much autonomy and there certainly isn’t a lot of support for the kinds of things like giving money back to the community and the kinds of things that Ben and Jerry’s encourages its franchises to undertake.
The other thing I want to mention is to clarify the definition of a formula business restriction. Because at times I think you can shorthand here in saying this would ban all chain stores or all absentee owner stores and that’s not actually the case. What it says is that Starbucks or Ben and Jerry’s or whoever can still locate here. They just can’t look and operate quite like any other Starbucks in the country. So it pretty much outlaws uniformity and it certainly is a deterrent to most chains. I think it was Phil who was talking about how can we have these corporations that do business in our community to give back to the community? That’s one way. To say that if you are really committed to Boulder then you can open a store that is not quite like any of your other stores nationwide. And that’s really a measure of your commitment.
Talbot: Is there any distinction between a large corporation that perhaps isn’t involved in the community, but does pay its employees fairly well and gives them benefits that they then use in the community in which they live?
Mitchell: Overall I think you tend to see the commitment is higher on the local business end. I saw some figures recently where Wal-Mart is moving very aggressively into the grocery business and it pays its workers who are not non-union about $6 an hour, and that is substantially lower than the grocery stores that they are putting out of business. Talbot: Do you think the best way to deal with this is to start an educational campaign to buy locally?
Maher: I think what the Independent Business Alliance has done to date, in a positive way, is to talk about the benefits of buying locally. I guess my problem with the CVA is it’s not a positive thing, it’s a negative thing. I think you always get more results and better results with a positive approach as opposed to attacking a certain class of businesses.
Shull: I think there’s a variety of educational tools and educational programs about helping economically disadvantaged businesses, locally owned start-ups. Those services are available.
Maher: Just to echo what Phil is saying, I think there are a lot of positive things we can do to encourage locally owned small businesses. We could create a pool of capital for them to borrow from, we can talk about educational resources, we can educate people on how small, locally owned businesses are more beneficial to the community. I would definitely take that tact before we resort to a more extreme measure of trying to ban chain stores from coming to our market.
Milchen: The question is, what are we going to do? Are we going to sit back and let these other factors take their toll on our community or are we justified in acting? What I’m saying is that the third component of the Community Vitality Act is the way to act. It is an outline for engaging the community in discussion and I hope a lot of other great ideas will come out of these forums.

The Boulder Chamber of Commerce hosted a panel debate Jan. 20 on the Community Vitality Act, a proposal by the Boulder Independent Business Alliance (BIBA) to limit new chain or “formula” businesses from locating in Boulder.
The panel, moderated by Daily Camera columnist Clint Talbot, included Jeff Milchen, BIBA director; Stacy Mitchell, a research associate with the Institute for Self Reliance and author of “The Hometown Advantage: How to Defend Your Hometown Against Chain Stores and Why it Matters”; Sean Maher, owner of the Ben & Jerry’s franchise in downtown Boulder; and Phil Shull, president of Deneuve Construction Services and…

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