insights on the local trend

april 2010

I S S U E 2

Buy from thy neighbor

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tbd soup is a series of reports on consumer insights and trends published roughly once a quarter and authored in collaboration by the team at tbd—everyone with a unique, informed perspective and an instinct for studying consumer behavior and market response.

How are consumer insights like soup, you ask? They’re both nourishing. They

can look complex but start with a simple base. (Despite the French name,

boeuf bourguignon is essentially beef stew.) And they are both something to

share.

While we’re at it, conventional wisdom suggests that starting a meal with a

bowl of soup can help you stay healthy and eat less. Likewise, we think that

starting any branding effort with a solid foundation in consumer insights can

help your brand stay healthy.

We launched the series in Fall 2009 with “The Good Things in Life,” a broad

look at the impact of the recession on consumer behavior and how consumers

are defining value. In this new issue, we dig deeper into one of the topics

introduced there: the trend toward buying local. You’ll find a few new features

in this issue, including an at-a-glance poster you can keep on your wall. We

hope that future issues will include still more new ideas, innovation and

inspiration—that’s the essence of tbd soup.

C O N T E N T S

4 The World Goes Local

6 What’s Driving This Trend

8 Buy from Thy Neighbor Poster

10 Deep Dive: Value

11 Deep Dive: Technology

12 Brands to Watch

14 On Local, Buy a Local

15 So, what now?

16 Glossary

17 Credits & Thanks

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Produce.

Meat.

Cheese.

Chocolate.

Coffee shops.

Hotels.

Clothing.

Candles.

Cupcakes.

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the world goes local

Everything seems to be going local.

Food is at the forefront of the “localvore” trend, perhaps the product

of other established trends toward health and wellness and global

responsibility—consumers want to know how their food affects

not only their own bodies but also everything else it has touched

along the way. We’re asking more questions—how was it grown,

processed, packaged and shipped—and local is a shortcut to those

answers. As evidence of this rapidly growing trend, farmers markets

and CSA (Community Supported Agriculture) memberships are now

almost a staple of urban living, connecting city slickers to a more

pastoral ideal.

Apparel is another category that’s taking notice, but here the questions

are mostly ethical—who made it, what were their working conditions,

how much were they paid. Not everything made offshore is bad, of

course. There are different connotations surrounding shoes made in

China than, say, shoes made in Italy.

And the trend is influencing consumer behavior in a range of other

categories, including the beloved automobile. To our parents and

grandparents, “Made in the USA” meant saving American jobs; to us,

it might also mean a smaller carbon footprint.

Indeed, local has come to mean different things to different people:

High-quality or fresh

Authentic

Trusted/ traceable

Supports my community

Original/ Obscure

Relevant to me/ shares my values

Sustainable/ environmentally friendly (with exceptions)

Experiential

In the simplest terms, “local” means buying from our neighbors.

MSNBC’s newsvine.com asked readers: “How much are you spending at local businesses?”

I’m spending more to support them during this recession

33.4%

I’m spending less because I need to save money 20.5%

About the same 26.4%

Ownership doesn’t matter to me, price does 19.8%

But if you look at the deeper reasons why we buy local (see Drivers on

the next page), “local” is about much more than proximity. Local is

about connecting your consumer to the origin of your product. If they

share the same zip code, an inherent connection already exists. But

you can also connect consumer to origin though storytelling.

Is buying local really a new thing? Is it solely the province of small,

independent companies? And what’s driving this trend, anyway?

No. No. And, keep reading.

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i s l o c a l a l l a b o u t p r o x i m i t y ?

o r i s i t a b o u t s o m e t h i n g b i g g e r ?

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i s l o c a l a l l a b o u t p r o x i m i t y ?

o r i s i t a b o u t s o m e t h i n g b i g g e r ?

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what’s drivingthis trend?

The local trend is not in fact new—the

Hartman Group, consumer researchers in

Bellevue, Washington, has been reporting

on the trend since 2005 (about the time

the organic trend went mainstream). Your

hippie aunt had the “Think global, act local”

bumper sticker in the ’70s. And before

industrialization took farmers to the city and

globalization took manufacturing overseas,

buying local was just what you did.

Why are consumers seeking out local products and services now?

What emotional needs are we filling? There are many drivers and not

all consumers care about all of them. You might remember from high

school that Maslow’s Hierarchy of Needs suggests that the more

resources you have, the more you can afford to care about things

bigger than you. So it helps to know who your consumers are and

where they sit in this hierarchy:

In order from survival to self-actualization, here are some of the drivers

of the local trend:

u n c e r t a i n t i m e s . In times of recession and war, people tend

to turn inward, focus on their own security and that of their families,

nest and simplify. Spending locally can be an act of patriotism or

simply an act of survival—the money we spend locally is typically

reinvested elsewhere in the community, keeping people (like us, we

hope) employed.

a c h a n g i n g v a l u e e q u a t i o n . As we mentioned in our first

issue, value no longer means cheap. In fact, buying cheap, mass-

produced products might not be cheap in the long run. Buying local is

one way we make sure we’re getting the most for our money.

f a c t o r y b a c k l a s h . Consumers are growing distrustful of long

supply chains (aka middlemen) and industrialization—a hangover

perhaps from our 1950s intoxication with all things processed, from

baby formula to chemical fertilizers. Sure, if you live in Omaha, you

are buying local when you buy a ConAgra product. But for most of us,

local means it was made by hands, not machines.

c o r p o r a t e e x c e s s . In the spirit of “voting with your dollars,”

consumers want to know who or what they are supporting with their

purchases. Highly-bonused executives at a faceless corporation in a

faraway place? Or Melanie and her family at their bakery on 5th Street?

The closer we can get to the producer, the more we can hold them

accountable.

g l o b a l i z a t i o n b a c k l a s h . The WTO riots of 1999 turned

globalization into a dirty word. For those consumers who have guilt

about buying goods made with cheap foreign labor, local goods are

one antidote.

a s e a o f s a m e n e s s . Consumers are overwhelmed with choices

that are not always differentiated. And that makes it hard for the

image-conscious among us to be differentiated. Local products and

services allow consumers to tell stories of obscure finds and show off

their discerning taste.

g l o b a l w a r m i n g . Politics aside, the climate change debate

made everyone more aware of their energy use—even Walmart is

taking notice. Everything we do and buy contributes to our carbon

footprint, so consumers now look at how products are produced,

packaged and shipped. It’s worth mentioning that as much as 40%

of the energy used in the food system goes towards the production

of chemical fertilizers and pesticides—which might make an organic

farm 100 miles away look better than an industrial farm 10 miles away.

But in most cases, the shorter the trek from producer to consumer,

the better.

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l o c a l p r o d u c t s a n d s e r v i c e s

a l l o w c o n s u m e r s t o t e l l s t o r i e s

o f o b s c u r e f i n d s a n d s h o w o f f

t h e i r d i s c e r n i n g t a s t e .

10Lead Paint Home Depot Roger & Me “King Corn”

Toyota Mall of America Made in China The Gap

Real Estate Bubble Too Big to Fail Mad Cow Disease WTOOmnivore’s Dilemma Type 2 Diabetes Unemployment Wal-Marte.coli 16,000Starbucks in 50 countries Bernie Madoff31,000 McDonald’s in 119 countries Fast Food Nation

Goldman Sachs Bear Sterns The Great Disruption

{ think global, act local }

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Lead Paint Home Depot Roger & Me “King Corn”Toyota Mall of America Made in China The Gap

Real Estate Bubble Too Big to Fail Mad Cow Disease WTOOmnivore’s Dilemma Type 2 Diabetes Unemployment Wal-Marte.coli 16,000Starbucks in 50 countries Bernie Madoff31,000 McDonald’s in 119 countries Fast Food Nation

Goldman Sachs Bear Sterns The Great Disruption

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deep dive: valueIn our Fall 2009 issue, we looked at the evolution of economic

utility, or value—it’s no longer simply the product of price and

quality. Value is now a subjective concept fraught with multiple

considerations and trade-offs—and often, too many choices.

Consumers are looking for help navigating it all, whether through

word of mouth, advertising, press, critics and increasingly,

certifications and labels such as Fair Trade, organic and yes,

local.

Speaking of local, vintners have been creating value this way for

centuries—you’ve probably heard the term terroir, French for “land”

or “territory” and often translated as the “taste of place.” But many

wine makers spent the last decade trying to make their products

more consistent and accessible, and in the process, eroded

much of that local authenticity and differentiation. Regional wine

growing commissions (most notably the Champagne region) are

now working to reclaim their turf. Coffee growing regions are also

catching on—Ethiopia recently trademarked the use of Sidamo,

Harrar and Yirgacheffe, three of its most famous regions.

Products that aren’t differentiated are seen as commodities,

interchangeable and not worth paying a premium for. Telling a

“local” story is one way you can differentiate.

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deep dive: technologyIn the quest for quality, consumers enjoy more access to

information than ever before. And we share what we learn with

our social network. A recent study from Ruder Finn revealed

that Americans are spending nearly three hours a day on their

mobile phones. And 91% of mobile device users (and 79% of

desktop users) are spending time on social networks. This means

storytelling is more important than ever—both the stories we tell

our consumers, and the stories we enable them to tell on our

behalves. Mobile devices equipped with GPS are also making

“local” immediate—the Locavore iPhone app helps you find

what’s in season and available at your nearby farmers markets;

the Around Me iPhone app helps you find the closest grocery

store, book store or coffee shop (no need to resort to the familiar

golden arches); and the Foursquare helps your friends find you.

Technology is helping us eliminate geographic barriers, allowing

for the growth of niche communities based on interests, affiliation

and yes, location.

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brands to watch

A C E H O T E L

This small boutique hotel chain is working carefully to create a unique

experience at each of their locations. Faced with heavy competition, Ace

Hotel differentiates by purchasing and renovating historic buildings

instead of new construction—just one way they honor the existing

community. Then they collaborate with local artists, restaurants

and businesses to create a unique, local flavor at each location. In

Palm Springs, the hotel store sells only goods handmade by locals.

The Portland location furnishes all of its rooms with Pendleton Wool

blankets and locally made PEARL+ soap. And many guest rooms

(ranging from communal bunk rooms to private suites) are furnished

with original murals from local artists.

A M E R I C A N A P P A R E L

The fashion industry made “sweatshop” a household word and the

largest, most beloved brands felt the most heat. Nike, for instance,

was exposed in 1996 for using child labor in Pakistan and to this day

symbolizes to some all that is wrong with capitalism. While some

progress has been made here, the industry still heavily relies on

cheap, foreign labor and materials. Enter American Apparel. Based in

the warehouse district in downtown Los Angeles, they’ve figured out

how to manufacture “well-designed basics” right here, paying their

workers much more than other companies pay their offshore labor

and even more than other Los Angeles-based garment makers. They

offer progressive benefits and policies to their workers and pronounce

their clothing “sweatshop free.” It’s working. The company is now

selling their American-made clothing in other countries, including

ironically, China.

A N T H R O P O L O G I E

Owned by the same company as Urban Outfitters and Free People,

Anthropologie is definitely a chain but works hard to avoid feeling like

one. Buyers shop local estate sales, artists and flea markets for an

eclectic assortment of clothing, accessories and home decor. Each

store hires an art director to curate an ever-changing store experience

that celebrates local color. And the stores themselves are designed

to feel informal and unpredictable—reminiscent of a flea market—

inviting customers to explore, linger and return often.

C U P C A K E R O Y A L E

Jody Hall is credited with bringing the cupcake craze to Seattle but

she’s no longer the only one game in town. Increased competition

forced her to up-level her product. So she hired a local pastry chef to

revamp her recipes and in the process, set out to buy more ingredients

locally. They worked with a local and sustainable flour manufacturer

to custom mill a cake flour to their specifications. And they feature

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local, seasonal ingredients as much as possible too, including Rainier

cherries, Skagit Valley strawberries and locally foraged huckleberries.

There are still a few ingredients they can’t source locally, like sugar and

vanilla, but they happily tout that their cupcakes are “66% local.”

S T A R B U C K S C O F F E E C O M P A N Y

In the 90s, their ambitious goals for growth required store openings

to be unencumbered by approvals and expense—and the cookie-

cutter approach was born. And so were the jokes: a Starbucks on every

corner, a Starbucks inside another Starbucks, McCoffee. What’s more,

in order to have more control over the ingredients in their food (a good

thing), the company reduced the number of bakery suppliers and the

variety of offerings. While some customers love the consistency of the

brand, others have tired of it. Last year, the company quietly launched

a project called “street level coffee.” The stores, each named after

the street they’re on and not named Starbucks, were designed with

materials reclaimed from local landmarks and offered locally sourced

artisan food. Whether or not this local approach is sustainable and

scalable for the company remains to be seen, but it does demonstrate

a belief at the corporate level that local is worth the investment.

S T U M P T O W N C O F F E E R O A S T E R S

As Stumptown expands beyond the City of Stumps (Portland,

Oregon), they are working hard to let each community shape them

instead of trying to shape each community. For instance, the Brooklyn

store makes a café mocha with locally sourced chocolate and milk.

And Stumptown doesn’t roast at one central plant and then ship to all

stores; each city has its own roaster. Finally, each coffee itself comes

with a card tucked into a pocket in the bag, romancing all the details

of its (faraway) origin. Sure, that’s a slightly different expression of

the local trend, but if you look at the drivers again, they’re all here—

authenticity, traceability, obscurity, etc.

W A L M A R T

Recently, the mega-chain launched a local produce program, sourcing

from farms near each store (which are often located in rural areas to

begin with) and offering them at prices comparable to or less than

Whole Foods. This helps them grab a share of the growing market

for local and organic and keep shoppers in their store longer. They

say that they want to help rebuild farming communities and perhaps

that’s true. As Michelle Harvey, of the Environmental Defense Fund,

said, “It’s getting harder and harder to hate Walmart.” Furthermore,

Walmart is helping make the local (and organic) trends accessible and

affordable—no longer just a luxury of the affluent.

m o v e m e n t s t o w a t c h

Make Local Habit, makelocalhabit.com

3/50 Project, the350project.net

Move Your Money, moveyourmoney.info

Local Harvest, localharvest.org

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on local, by a localOne of the best ways to understand your consumers, of course, is to listen to them. Sure, sometimes there’s a difference between what

they say they do and what they actually do. (For example, we insist that the recession made us more frugal—but then we go buy an

iPhone.) But when you listen closely, you can hear their true aspirations.

J e a n i e M o r t o n

Bend local since 2006

I spent the first 36 years of my life just outside of Chicago.

I purchased my groceries at Jewel, a large chain grocery

store. I shopped at Nordstrom, Marshall Fields and the Gap.

The employees of these businesses were my neighbors and

friends; they were part of my community. I was loyal to my

local businesses. But since moving to Bend, local has taken on

a new meaning to me. I have become ‘locavore’; I buy much of

our food from the farmers market and the local family-owned

grocery store and our milk is from a nearby dairy farm. I feel

that the food is fresher and chemical free and as a parent trying

to keep my family healthy, this is very important. I believe we

are also helping the local farmer, the local economy and our

community. Originally, buying local meant how far I drove to

purchase goods. Now, it means much more. And I don’t mind

spending more for it.

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so, what now?It’s not enough to have the information; we want you to have the inspiration. But before you overhaul

your brand in a push to go 100% local, it might help to remember:

local is just one way consumers are filling a deeper emotional need for connection and belonging. With that in mind, could you:

Tell stories about where you source your materials or ingredients?

Provide the raw material so your customers can tell your stories for you?

Label your products for transparency, i.e. carbon footprint, source of all ingredients, etc.?

Show up where locals show up, i.e. farmers markets, community events, other relevant locations?

Invite your customers behind the scenes, i.e. a factory tour, meet the designers, guest bartend, etc.?

Craft your communications in the voice of real people (customers? Employees?) instead of the corporation?

Could you invite your customers to call Mike or Bob or Judy, instead of calling a “Customer Service Department”?

Partner with other local businesses for promotions, advertising and events?

If local doesn’t fit your master brand, can you carve out a local sub-brand?

Offer locally sourced coffee and pastries (and tell their story) in your lobby?

Offer locals a “share” of your company?

Even if your product is not literally local, can you connect consumers to origin through storytelling?

(If you are a chain) Decentralize enough to allow for a localized assortment?

Let each store/branch support a different local cause?

Sell or show local art?

Let your employees (who are locals themselves) influence the brand and keep it locally relevant?

And remember that local means different things to different people. What’s important to your customers?

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glossaryYou may have noticed that the trend industry loves to reinvent language. Not all of the following terms were used in this issue, but you may find them in other conversations around the local trend:

1500 miles: Widely believed (and oft repeated) to be the average number of miles our food travels from farm to plate. The number is misleading but has helped to make consumers more aware of their “food miles.”

Big Organic: True to the laws of economics, when demand for organics grew, suppliers did too. Some consumers doubt that anything big can remain good, hence the label a la Big Tobacco and Big Pharma.

Carbon footprint: The amount of carbon dioxide you are creating by just living your life, via airplane travel, car commuting, how you light and heat your house and how much waste you produce.

Food miles: The number of miles your food travels from farm to plate.

Foodshed: Borrowed from the term watershed, this describes the rural area where your local food (meat, eggs, milk, produce) comes from.

Greenwashing: Marketing puffery intended to make a company look environmentally friendly.

Locavore (or localvore): Someone who passionately consumes local products and services.

Seed to table: Also farm to plate or soil to cup. Describes the long journey an agricultural product takes from origin to consumer.

Slocal: What you get when the slow food movement and the local movement get married and have a baby.

True cost: The sticker price on that apple is just what it costs you to take it home today. But the true costs include the costs to society and the planet. It could also cost us health care premiums and environmental cleanup if it turns out to be, well, a bad apple.

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credits & thanksPHOTO CREDITSCOVER / Photo http://www.flickr.com/photos/kamshots/193501256/ Photographer http://www.flickr.com/photos/kamshots/ License CC BY 2.0PAGE 2 / Photo http://www.flickr.com/photos/wendypiersall/4370773527/ Photographer http://www.flickr.com/photos/wendypiersall/ License CC BY 2.0PAGE 6 IMAGE 1 / Photo http://www.flickr.com/photos/pixietart/4799569/ Photographer http://www.flickr.com/photos/pixietart/ License CC BY 2.0PAGE 6 IMAGE 2 / Photo http://www.flickr.com/photos/vatobob/2136501005/ Photographer http://www.flickr.com/photos/vatobob/ License CC BY 2.0PAGE 6 IMAGE 3 / Photo http://www.flickr.com/photos/focaum/4368620141/ Photographer http://www.flickr.com/photos/focaum/ License CC BY 2.0PAGE 7 IMAGE 1 / Photo http://www.flickr.com/photos/zarajay/1516027705/ Photographer http://www.flickr.com/photos/zarajay/ License CC BY 2.0PAGE 7 IMAGE 2 / Photo http://www.flickr.com/photos/francesca_rauchi/151382244/ Photographer http://www.flickr.com/photos/francesca_rauchi/ License CC BY 2.0PAGE 7 IMAGE 3 / Photo http://www.flickr.com/photos/prosto/2946988707/ Photographer http://www.flickr.com/photos/prosto/ License CC BY 2.0PAGE 9 IMAGE 1 / Photo http://www.flickr.com/photos/paperfacets/3721595873/ Photographer http://www.flickr.com/photos/paperfacets/ License CC BY 2.0PAGE 9 IMAGE 2 / Photo http://www.flickr.com/photos/sidelong/1118694763/ Photographer http://www.flickr.com/photos/sidelong/ License CC BY 2.0PAGE 9 IMAGE 3 / Photo http://www.flickr.com/photos/seeminglee/3866336217/ Photographer http://www.flickr.com/photos/seeminglee/ License CC BY-SA 2.0PAGE 9 IMAGE 4 / Photo http://www.flickr.com/photos/clayirving/4318582539/ Photographer http://www.flickr.com/photos/clayirving/ License CC BY-ND 2.0PAGE 12 / Photo http://www.flickr.com/photos/oskay/339996940/ Photographer http://www.flickr.com/photos/oskay/ License CC BY 2.0PAGE 13 / Photo http://www.flickr.com/photos/goincase/2837788308/ Photographer http://www.flickr.com/photos/goincase/ License CC BY 2.0PAGE 14 / ACE HOTEL / Photo http://www.flickr.com/photos/gideon/2978917791/ Photographer http://www.flickr.com/photos/gideon/ License CC BY 2.0PAGE 14 / AMERICAN APPAREL / Photo http://www.flickr.com/photos/saekooo/2752992348/ Photographer http://www.flickr.com/photos/saekooo/ License CC BY 2.0PAGE 14 / ANTHROPOLOGIE / Photo http://www.flickr.com/photos/kevinvirgo/4205210619/ Photographer http://www.flickr.com/photos/kevinvirgo/ License CC BY 2.0PAGE 14 / CUPCAKE ROYALE / Photo http://www.flickr.com/photos/doctorow/2503269847/ Photographer http://www.flickr.com/photos/doctorow/ License CC BY 2.0PAGE 15 / STARBUCKS COFFEE / Photo http://www.flickr.com/photos/digitalcolony/3790373124/ Photographer http://www.flickr.com/photos/digitalcolony/ License CC BY 2.0PAGE 15 / STUMPTOWN / Photo http://www.flickr.com/photos/stopdown/2167847784/ Photographer http://www.flickr.com/photos/stopdown/ License CC BY 2.0PAGE 15 / WAL-MART / Photo http://www.flickr.com/photos/aka_kath/422217715/ Photographer http://www.flickr.com/photos/aka_kath/ License CC BY 2.0PAGE 18 / Photo http://www.flickr.com/photos/kio/4141715515/ Photographer http://www.flickr.com/photos/kio/ License CC BY 2.0PAGE 19 / Photo http://www.flickr.com/photos/tao_zhyn/2450284882/ Photographer http://www.flickr.com/photos/tao_zhyn/ License CC BY 2.0

WEBSITESHeller, Martin C and Gregory A. Keoleian, “Life Cycle-Based Sustainability Indicators for Assessment of the US Food System,” Ann Arbor, MI: Center for Sustainable Systems, University of Michigan, 2000: 42Kummer, Corby, “The Great Grocery Smackdown,” Atlantic Monthly, March 2010, http://www.theatlantic.com/magazine/archive/2010/03/the-great-grocery-smackdown/7904/Connor , Michael, “Nike: Corporate Responsibility at a “Tipping Point,” Business Ethics, January 24, 2010, http://business-ethics.com/2010/01/24/2154-nike-corporate-responsibility-at-a-tipping-point/Murray, James, “Tesco defends carbon label scheme,” Business Green, May 21, 2008, http://www.businessgreen.com/business-green/news/2217167/tesco-defends-carbon-labelTozzi, John, “To Beat Recession, Indies Launch Buy-Local Push,” Business Week, February 17, 2009, http://www.businessweek.com/smallbiz/content/feb2009/sb20090226_752622.htm“What is Local?”Elephant Journal, August 31, 2009, http://www.elephantjournal.com/2009/08/what-is-local/“Is ‘buying Local’ The Real Deal?” Hartbeat, Hartman Group, http://www.hartman-group.com/hartbeat/is-buying-local-the-real-deal“What Makes ‘Local’ Special?” Hartbeat, Hartman Group, http://www.hartman-group.com/hartbeat/what-makes-local-special, “U.S. clothing firm seeks good fit in China,” Los Angeles Times, April 3, 2008 http://www.americanapparel.net/presscenter/articles/20080403latimes.htmlKwok, Roberta, “Is local food really miles better?” Salon, June 24, 2008, http://www.salon.com/mwt/food/eat_drink/2008/06/24/food_miles/Black, Jane. “What’s in a number? How the press got the idea that food travels 1,500 miles from farm to plate,” Slate, September 17, 2008, http://www.slate.com/id/2200202/pagenum/all/#p2“Eat local, buy local, be local,” Sustainable Table, http://www.sustainabletable.org/issues/eatlocal/“NIKE: Nike Shoes and Child Labor in Pakistan,” Trade & Environment Database, http://www1.american.edu/TED/nike.htm“(Still) made here,” Trendwatching, June 2007, http://trendwatching.com/trends/stillmadehere.htm“American Aparrel,” Wikipedia, http://en.wikipedia.org/wiki/American_ApparelOur own eyes

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“The economic argument behind buy-local campaigns goes like

this: Spending at local businesses, rather than

at chain stores or online, helps local economies because those

firms are more likely to buy from local suppliers and hire local

service providers for needs such as accounting.”

– J o h n T o z z i i n B u s i n e s s We e k