In 2016, the Local Economy Is No Longer Local

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2016 Fireworks

The “connected local economy” has been a persistent theme this year at Street Fight — the topic of articles, the subject of panels at our conferences, a matter of ongoing debate and deliberation — the idea being that technology is changing our relationship with the local store and how local economies operate, but consumers continue patronizing local businesses for a variety of reasons (because they are part of the fabric of the community, because they offer immediate gratification, sometimes even because they offer the best deal).

Guess what? As we head into 2016, the local economy isn’t really local anymore. Yes, we still shop at local stores and that activity still makes up more than 90 percent of total retail sales, but the Walmart in the nearby shopping plaza isn’t the only competitor the local supermarket or department store needs to keep an eye on. Increasingly, it’s a host of online vendors, starting with, but not limited to Amazon, and the growing crop of on-demand startups that have become an indelible feature of the local business landscape — both enablers and usurpers of their merchant partners.

In my first piece for Street Fight, I talked about how consumers can’t act locally without first thinking globally — resorting to one of a handful of powerful platforms that touch almost everything we do today to get valuable information that will influence our decision. Information is place-specific but in a digital world it has no specific place; it belongs everywhere, and the expectation is it will be available anywhere. In that regard, Google, Facebook, Twitter, et al are with us wherever we are and they facilitate and filter our information needs depending on the context we supply.

More recently, I suggested that companies providing on-demand services also think globally, primarily in terms of their ambitions and expansion, but they must act locally by default. Without local consumers expressing demand for them to aggregate and match to local providers supplying desired goods or services, the on-demand economy has no business. On-demand platforms are part of the fabric of the local economy, but they are not intrinsically local businesses. Rather, they offer the same appeal to consumers as a multi-location franchiser: the same service wherever you happen to be.

As such, the local economy cannot be considered intrinsically local either. Whether a local business is connected or not, that merchant faces challenges from platforms that are developed across the country or even on the other side of the globe and deployed locally, often to exploit market inefficiencies the local chamber of commerce is ill-equipped to remedy.

But it’s not all bad news for the local store. Being part of the connected local economy can widen a local business’ local reach as well as open doors to national and even international opportunities, something that was far more difficult in the pre-internet era. Plus, one could argue that the push behind same-delivery stems from a need (or a desire) to disrupt the last mile of commerce that local businesses in effect already own, but don’t necessarily manage to the best effect.

All that is to say, part of the reason Street Fight’s daily feed and newsletter are and will continue to be populated with news about Google, Facebook, Amazon, Uber, Groupon, and Instacart, to cite just a few of the regularly recurring names, is these companies to a large degree set the terms for the world we inhabit today. They define the landscape in which companies of all sizes do business, a role felt acutely at the local level, where they can simultaneously be best friend and biggest foe.

That doesn’t mean covering these platforms to the exclusion of the local business landscape. But they don’t think of local as a self-contained ecosystem; shifts in technology adoption, media consumption, and spending patterns both online and off mean we can’t either. Look for connected commerce to be a key theme in the local-but-n0t-local economy in 2016.