Updated: Aug 28, 2018
There are many reasons why people choose to not shop locally. But by far the biggest reason is price. Unless you are one of the very few people in this world who have the luxury of not having to pay attention to the cost of things you buy, then you are going to be at least partially driven by price.
Price is such an interesting topic when it comes to shopping locally. Along with managing costs, it ultimately determines if a business can operate profitably, and is one of the easiest things in the marketing mix to alter. Unfortunately for many local businesses, particularly when talking about small to medium enterprises, price is not something that they can compete with on a global scale.
I once spoke to a bottle shop operator who said that the price that he could purchase his goods for was higher than what some of the big box retailers were selling it for to the public.
There are several reasons why this occurs, such as the bigger retailer generating a higher turnover and hence being able to negotiate a cheaper price from the supplier. Or the ability of the bigger retailer to stock loss-leader products as a strategy for attracting customers.
Shoppers should not consider price in isolation though, and hence businesses and community groups need to hone in on the other factors that influence purchase value in order to compete in this area. Factors such as:
the quality level of the goods being purchased
the cost of delivery
the cost of travelling to another town to purchase a good for a slightly cheaper price
what you are potentially giving up in terms of post-purchase service
This mainly comes down to communication though, and ensuring that locals are taking these things into consideration when deciding on where they should purchase certain products. All of these should be addressed in any shop local campaign.
Another way to combat this, is to look for ways that you can incentivize shoppers over and above price. This can be done a number of ways, and in fact, most strategies that I talk to local businesses about would fall into this category. However, a very direct example would be having a prize draw linked to shopping locally. e.g. ‘Shop local this Christmas and go into the draw to win $10,000 worth of local vouchers’. This is a very common strategy in a lot of communities, and its main aim is to try and give an extra incentive to shop local.
Price is always going to be something that local businesses will struggle to keep up with, and so business owners and business groups, such as the chamber of commerce, need to continually over deliver in other areas as well as get creative in how they can offer extra incentive to local shoppers. Failure to do so will result in more local dollars flowing out of town.