Buy local movement saved many small Minnesota retailers

The buy local movement that crystallized during the holiday season saved several small retail shops in Minnesota that had dismal years because of the pandemic.

And those stores are hoping the movement stays alive in 2021 as the economy hopefully opens back up as enough people are vaccinated. The stores' fortunes are important since they fuel smaller retail areas from Stillwater and Excelsior to Grand Avenue in St. Paul and rural downtowns.

"People shopped local like they have never done before" during the holidays, said owner Bill Damberg, owner of Brightwater Clothing & Gear in downtown Excelsior. "I can't count the number of customers who said they wanted to patronize Excelsior stores. We have four blocks of small shops, no chains, and there's not a vacant space available on Main Street."

Damberg's business during the year's fourth quarter rose by nearly 20% over last year, offsetting losses in earlier months.

Shop owners spent the year scrambling to adjust to pandemic-related restrictions — building websites, setting up curbside pickup, creating a safe in-store shopping experience at the same time they were redoing loans or rent agreements, applying for government loans and grants and losing colleagues to furloughs, layoffs or closures.

Sometimes all for nothing. Retailers that sell clothes and shoes were the hardest hit as spending shifted due to the pandemic, shrinking more than 12%, according to Coresight Research.

But the buy local campaigns — and the traffic that followed — gave retailers an emotional boost.

"Tears were shed when the retail committee of the Northfield Chamber of Commerce discussed its holiday campaign of 'Be local, buy local' during a Zoom meeting," said Krin Finger, owner of the Rare Pair shoes and apparel store in the college town south of Minneapolis. "I took it one step further and put up signs in my windows that said 'Buy local or bye local.' "

With Carleton and St. Olaf mostly online, Northfield's retailers lost a big chunk of their customer base in students and their parents. Even with the increase in interest, Rare Pair's sales declined by 15% in the last quarter.

Red Balloon Bookshop on Grand Avenue in St. Paul, though, had one of its best holiday seasons ever thanks to deliberate attempts to support local businesses, said owner Holly Weinkauf.

Business was up 20% over the holiday months. Before the pandemic, the store would get 30 to 60 online orders a month. During the holidays, it received more than 100 a day, Weinkauf said.

Gift-card sales nearly tripled because many loyal customers asked their family members to buy their gifts from the local children's bookshop.

Weinkauf and others said the buy local effort was much more deliberate in 2020. But many also said they put time and effort into the fundamentals of both business and marketing practices that may have paid off at the end of the year.

Damberg enhanced his Brightwater website but earned scant sales from it. He attributes targeted buying and regular communication. He wrote monthly e-mails to his customers called tThe Shopkeeper's Journal, musings of a magical time spent Up North before the pandemic hit and nods to warm, toasty clothing without being blatantly promotional.

Finger scrapped the usually tasteful, aesthetically pleasing window displays at Rare Pair and instead lined up the shoes with the price clearly marked to grab the attention of the fewer amount of people walking by.

For years, retail analysts have said that small shops need to tell their stories to establish a narrative that sets them apart from larger competitors.

Karl Benson — co-owner of Cooks at Crocus Hill locations in Stillwater, North Loop in Minneapolis and on Grand Avenue in St. Paul — said the pandemic gave him the opportunity to sharpen his focus.

When many popular sellers weren't available due to supply-chain issues, he doubled down on local products. When 10-inch skillets were back-ordered from suppliers, he found locally produced jams.

"We enticed people with stories rather than promotions," he said. "We packaged pasta machines with Baker's Field flour of Minneapolis and Italian hardware with foods from Great Ciao in Minneapolis. We wanted to create that authentic time around the dinner table."

Kitchen stores benefited from homebound families with a newfound interest in cooking, but many other small retailers were reminded how important restaurants are to their businesses.

The buy local movement started early in the pandemic when people realized that unless they supported their favorite restaurants, they would close. The support then trickled down to book, toy and clothing stores.

"People knew they could still get the best price online, but during the pandemic, people became less price-resistant," said Craig Rowley, a retail expert at Korn Ferry in Dallas.

The restaurant closings hurt traffic to neighboring shops in the small retail areas in Minnesota.

"Restaurants do a good job of supporting small businesses by bringing people into an area," said Matthew Marsh, a retail industry expert at Deloitte business consultants in Minneapolis.

Edina-based Evereve, which runs 94 stores across the country including 10 in the Twin Cities, saw brick-and-mortar store sales decline by 25%. Online sales tempered the losses.

"Never before was I so excited to be down only 11%," said Mike Tamte, co-chief executive of the chain. "We were planning about a 33% drop for our brick-and-mortar stores."

Nationwide, holiday sales rose by more than 5%, according to the National Retail Federation. But despite gains for some retailers, 65% of small businesses did not post a revenue gain in the fourth quarter, according to Veem, a global payments network.

Sales at Shop in the City in Edina and Stillwater decreased by about 15%, but owner Jake Sanders is thankful to still be open.

"2020 was not a good year, but I saw a glimmer of hope at the end," he said. "Retail isn't dead but it's getting triaged."

Consumer behavior is difficult to predict, but some experts think that people are hungering for retail therapy almost as much as travel escapes.

"There will be a need to get out and shop as people get past the pandemic and feel more comfortable walking down the streets to check out the shops," said Marsh from Deloitte.

But shop owners also must remember what got them through 2020, and continue to invest in e-commerce and clarify what makes them stand out from competitors, said Carlos Castelan, managing director of the Navio Group, a management consulting firm in Minneapolis.

Damberg said Brightwater made it through 2020 because of more than $100,000 in government loans and grants.

"It's allowed me to get on solid ground. Without it, Brightwater may not have survived," he said.

But he is feeling more confident going into 2021 because not only did he get a boost at the end of the year, but he also became a better business person. He knows the reason why every single item is in his store. Now, he is hoping the buy local sentiment will remain.

"People are realizing the value that small shops provide," he said. "The feeling is there is light at the end of tunnel."

John Ewoldt • 612-673-7633