Retail's Woes Point to Local Gold?

Okay, folks would probably suspect that I'd want to talk about the recent earthquake in Reno that caused a sewer-treatment-plant-damaging rock fall. (Remember, you don't need big earthquakes to cause big problems!) True, true: Renoites (Renoans?) need to be cognizant of their earthquake hazard and get prepared, as the seismologists and emergency managers are saying.

But us resilience researchers, we get excited about subtler things.

Like retail.

I've been wanting to write about retail for a couple weeks now. There have been a lot of numbers coming out showing that retail is struggling right now, with sales down and bankruptcies up.

At some level, bankruptcy is a normal part of the economic cycle. But when a lot of businesses start going under or having to drastically reorganize, I'm starting to wonder about the resilience of the system.

But we're in a recession. (Aren't we?!) You'd expect that if the dominant discourse is that our country and, noting global food prices, the world is in an economic slump, then people would change their buying behavior. This I think is not too dissimilar to how attitudes and priorities would shift in the weeks and months and maybe years after a significant hazard event, such as an earthquake.

Well, maybe, maybe not. According the New York Times, take a look at the changes in consumer purchases during our current GDP stalling:

In March, Americans spent less on women’s clothing (down 4.9 percent), furniture (3.1 percent), luxury goods (1.3 percent) and airline tickets (1.1 percent) compared with a year ago...

Wal-Mart Stores reports stronger-than-usual sales of peanut butter and spaghetti, while restaurants like Domino’s Pizza and Ruby Tuesday have suffered a falloff in orders, suggesting that many Americans are sticking to low-cost home-cooked meals.

Over the last year, purchases of brand name cookies and crackers have fallen, according to Information Resources, which tracks retail sales.

...

Not even beer is immune. Sales of inexpensive domestic beers, like Keystone Light, are up; sales of higher-price imports, like Corona Extra, are down, the firm said.

...

By no means has the economic downturn been bad for all product categories. For instance, sales of big-ticket electronics, like $1,000 flat-panel televisions and $300 video game systems, are on the rise, according to retailers and research firms.

Uh.

Okay.

So apparently when Americans are having to "tighten the belt" they need about as much or more as usual on "luxury goods," airline tickets, flat screen TVs, and video games.

I'm not so sure though. Those sales statistics are based on total receipts, not number of purchases. So while clothing and furniture and food sales may be "down," the demand and, I suspect, the number of transactions (in some form, such as repurposing or remodeling a piece of furniture), is not.

What this data is talking to me about is people's attitudes about substitutes -- how flexible they are in what they buy for a particular need or want.

Airline tickets, flat screen TVs, and video games? Well, there is not enough flexibility in preferences to provide significantly cheaper substitutes.

Food, clothing, and furniture? There is. The Keebler Elves and the Budweiser Clydesdales are really not that important to people, as long as their need is met for a reasonable price (or there is some other incentive).

Where am I going with this, you ask?

Import substitution and replacement.

Wuh?

Import substitution/replacement is a strategy for increasing community resilience by decreasing reliance on importing goods (and services) into the community. The (arguable?) potential benefits are many, including reduced monetary and environmental costs of transportation, increased local multiplier effect (i.e., dollars spent stay inside the community), insurance against failed systems outside of the community (of which the community has little or no control), and higher wages (shifting emphasis of an economy from retail to wholesale and manufacturing/processing).

These data that the New York Times are writing about show me where there is potential for import substitution/replacement: day-to-day needs. Food, clothing, shelter (including furniture) -- these are items that people apparently are not picky about who produces them and where they come from.

In other words, in implementing a strategy of import substitution/replacement to increase community resilience, these are the areas that a community should develop first. (Energy would be another category, as often promoted in the green power movement.)

And when should a community attempt to push an import substitution/replacement strategy? Well, obviously times like now would be good, when consumers are looking for convenient, lower-cost alternatives.

Or perhaps, in the recovery phase of a major disaster. Hmm....