Small business, not big box, carries the load in local economies

Some people are concerned with the closure of Alaska Sam's Clubs, but I'm not.  The big-box store concept is designed to offer lower prices, but it is a terrible model for local economies.  Cheaper is not always better.

Consider the fact that the South Anchorage Sam's Club did nearly $100 million a year in sales. Management has stated 3 percent to 5 percent of the $100 million stayed in the Anchorage economy in 2015. This is only 3 to 5 cents on the dollar, which covered the operating overhead for the store including wages. Box store "local" overhead is low because they centralize many key business expenses at their headquarters, in this case in Benton, Arkansas.  This is where the Sam's Club lawyers are located, as well as their accountants, bookkeepers, buyers, upper management, human resources and advertising executives (all the high-paying jobs).

[Alaska Sam's Club stores among dozens nationwide to be closed by Walmart]

Imagine if that $100 million had been spent at locally owned and operated businesses. That amount of sales could support 100 small businesses. One hundred small businesses that would likely spend their overhead and profit right here in Alaska. How many accountants, lawyers, managers and advertising jobs would that create? How many janitorial jobs, window washers and snow removal businesses would these locals need? Most small businesses spend 30 to 50 cents on the dollar locally.

Small businesses support much more that just the people they hire directly; they support many professional jobs and other businesses as well. The exchange of money is what defines a local economy and makes it strong.

Total sales of national chain stores in Alaska equate to tens of billions of dollars.  Most of these dollars leave our state and our economy the very next day, wired back to their national headquarters. These big stores don't even use a local bank to funnel your money out of state. The primary beneficiaries are the executives and shareholders of these corporations, not Alaskans.

[Shop locally, Alaska, and invest in your own community]

In an ironic turn, the big-box stores are now losing sales to Amazon and the Internet and it has many of them scrambling, even the mighty Walmart. The main advantage big-box stores had was price and selection, and Amazon seems to do both better. Amazon however, contributes nothing to our local or state economy. They don't hire anyone from Alaska. They don't pay local property taxes or even Alaska corporate income taxes.

The convenience and pricing Amazon offers are a real challenge for small business as well, but this challenge is not insurmountable. Small business can compete if there is a level playing field. Local knowledge, local culture and local community have value. The challenge facing all small business is to offer something to the consumer that adds value over the alternatives. Small retailers must offer better service, the right selection for Alaskans and even price matching. Local restaurants have to offer better food and drink, and many do. Every small business has to pay its taxes and hire local people. It is time for local governments to recognize this and help level the field. Alaska small business currently creates more jobs than the entire oil industry in Alaska. Some may not realize that creating a system that promotes small business would create many more local jobs than the proposed gas pipeline, and the jobs created would be permanent.

Why should these large corporations have access to our markets if they don't contribute their fair share? Local and state governments must find a way to protect and value small businesses for the economic contributions they make.  National chains and Internet stores should be held accountable for extracting our economic wealth, just like we hold the oil companies accountable extracting our natural resource wealth. If these corporations don't spend their overhead and profits locally, then exploring ways to tax these huge corporations should be a priority for our state and city leaders. Retail giants like Amazon and Walmart that rake in billions annually should have to contribute more than a few low-end jobs to the economies they are exploiting. It's time to think outside the box.

John Staser co-owns Mountain View Sports and Adventure Apparel with his wife, Julie, and is a former member of the ADN guest editorial board.