Fighting the Local Curse of Bigness: A Case for Store Size Caps

imageWhat I loved about Northwest Hardware in Austin, Texas was the phenomenal customer service. Every time I went in, someone would talk to me in detail about my project or problem and steer me in the right direction, even if their solution was less expensive than what I was originally thinking. Sadly, we stopped by a few weeks ago only to discover that it had recently closed.  The loss felt strangely close to me. After all, as a consumer I’d like to be able to shop with my values of supporting small and independent businesses that anchor the local community. Yet with the disappearance of stores that provide this option, I find myself pushed into a handful of large, consolidated big box options that lack the intimacy of a community shopping experience. Looking at trends around the country, it is clear that this consolidation has been a slow creep for a long time now. Perhaps what I find most disturbing about it though, is this sense of inevitability that small, local, and independent brick and mortar retail is a product of a bygone era.

But then I started reading Melvin Urofsky’s fantastic biography of famed lawyer and future Supreme Court Justice Louis D. Brandeis.

As it turns out, this very topic was at the forefront of our political discourse a hundred years ago. It was the age of the corporation, and powerful companies were buying or forcing their long-established smaller independent competitors out at every turn. The “progressive” movement, which included both political parties, came out strong for the independent business, arguing that the takeover of monopolies was not in the best interest of the country.  Brandeis felt that the reasoning in support of unchecked corporations completely missed the point. Per Urofsky:

“He rejected the argument that the growth of large corporations represented an irrevocable law of economic development, nor did he accept the monopolists claims that by operating more efficiently, they provided the public with better goods at lower prices, so that all Americans could enjoy a higher standard of living. To Brandeis this missed the whole point of what America meant. Yes, he agreed, people should be well housed and well fed and have opportunities for education and recreation. A free nation demanded no less, but ‘we may have all these things and have a nation of slaves.’ Material comfort, or at least the basic needs of life mattered, but freedom tied to opportunity mattered more.”

For Brandeis, the success of any organization largely rested on the competency and judgment of the person in charge, but when businesses or government grew too large, they became unmanageable. This is because once a person is three or four layers removed from production, they don’t know what is happening in their own firm.  Whether business or government, Brandeis felt that the greatest efficiency and service to the public happens when organizations are small and limited. To this end, over the course of his own lifetime, Brandeis was concerned about the shifting economic landscape that sent the nation’s economy moving in the exact opposite direction.  Again, per Urofsky:

 “‘Half a century ago,’ Brandeis told a congressional hearing in 1912, ‘nearly every American boy could look forward to becoming independent as a farmer or mechanic, in business or in a professional life; and nearly every American girl could expect to become the wife of such a man. Today most American boys have reason to believe, that throughout life they will work in some capacity as employees of others, either in private or public business; and a large percentage of women occupy like positions.’ The rise of gigantic industries caused this shift, and the consequences would be devastating to the nation. The boy would work, he would produce, he might even do better as an employee than as an independent farmer or mechanic. But where would he be able to test himself? Where would he have an opportunity to wager his future on his own ability? How would he develop the strong and independent character that came from daring and succeeding, or even from daring and failing? Democracy reflected the character of its citizens, and a nation could never have a vibrant democracy without people, individuals with pride and strength to take chances.”

Further, Brandeis warned that the health of our American democracy very much depends on the ability of people to truly and rightly believe that they can take ownership over their own economic destiny.

Time and again Brandeis emphasized that individual opportunity stood at the heart of political freedom. ‘You cannot have true American citizenship, you cannot preserve political liberty, you cannot secure American standards of living,’ he informed the Senate, ‘unless some degree of industrial liberty accompanies it.’ He understood that not all men would be independent; many would work in factories and for others even on small farms or in small businesses. But if people no longer felt they controlled, at least in some measure, their own economic destiny, then the traditional basis of the political structure would itself be threatened. Jefferson had believed that democracy rested on the shoulders of the yeomean farmer; Brandeis expanded that notion to include small-business men and professionals. Employees dependent upon large corporations could be coerced, and as more and more people worked for these companies with no hope of economic independence, the danger of business influence and control over politics increased. ‘There cannot be liberty without industrial independence,’ Brandeis said, ‘and the greatest danger to the people of the United States today is becoming, as they are gradually more and more, a class of employees.’”

A hundred years later, many of these concerns identified by Brandeis are not only playing out at the national level, but at the local one as well.  But despite the odds, becoming a city of employees rather than independents is not an inevitability. There are ways to protect independent businesses like Northwest Hardware!

A good starting place is recognizing the reality that every community can naturally only support a limited amount of retail. That retail space can be made up of a mosaic of small pieces or a few large players. In this way, the pure size of large big box retailers has the potential to suck all the oxygen out of the room so to speak, making it extremely difficult for independent retail businesses to either coexist or enter this market in the first place.  This not only has a dramatic effect on the character and quality of life of a community, but also in determining if this retail employment is made up of independent entrepreneurs or a class of employees.

Over the last fifteen years, a handful of communities are realizing that they have the ability to make a difference in this space by using their local zoning code to enact store size caps that prohibit stores of a certain size. While  in these places the typical store size cap is 50,000 square feet (about the size of an average grocery store), enacted caps range all the way from 4,000 to 6,000 square feet in some San Francisco neighborhoods to 150,000 square feet in Santa Fe, New Mexico. According to the Institute for Local Self-Reliance,

“Store size caps help to sustain the vitality of small-scale, pedestrian-oriented business districts, which in turn nurture local business development. Store size caps prevent the many negative impacts of big-box development, such as increased traffic congestion and over-burdened public infrastructure, and they protect the character of the community by ensuring that new development is at a scale in keeping with existing buildings.”

Some great resources, including model ordinances for store size caps can be found on the Institute for Local Self-Reliance website here and here.

Northwest Hardware not only offered great service at reasonable prices, but it provided its owners a means to not just be an employee but seize control of their own economic destiny. A hundred years ago, Louis Brandeis and progressives of the era recognized that such opportunity was essential to both the health of our nation’s economy and democracy. While much of what is going on at the highest levels are beyond our reach, there are tools such as the store size caps that give us the tools at the local level to start taking control of our economic destiny one community at a time.

2 thoughts on “Fighting the Local Curse of Bigness: A Case for Store Size Caps

  1. As someone involved in brick and mortar retail as well as internet commerce, I predict the following about the future of retail: There will be a hollowing of the middle. Retail will have a sharp divide between the stores with commodities, and the small boutiques with precious goods. In my perfect world, consumers would be conscious of the wide-ranging effects their consumption has when they choose to shop locally, but as a boutique retailer I know that is a pipe dream. As far as municipalities regulating store size, I think will drive the big stores to the next town over. Witness how small towns metastisize to surround the newer, bigger Wal-Mart on the edge of town. It sounds harsh, but I would argue that an increase in gasoline tax, stopping the subsidization of parking, and increased investment in public transit would be more effective methods in decreasing the square footage of retail. I would guess that would also increase the diversity of retail, and thereby increase the quality of the retail experience. See “The Experience Economy” by Pine and Gilmore: https://hbr.org/1998/07/welcome-to-the-experience-economy

    It is going to be hard to make it too expensive – or difficult- for me to drive 15 miles to Costco so I can get three month’s worth of tp!

    Like

  2. Pingback: More Than Employees: A Local Economy Autopsy | The New Localization

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