Creating Local Value: What motivates people to buy locally?

Posted by on Mar 12, 2014 in News | No Comments

The idea of “buying local” is one that bucks the trend for globalisation. As more and more goods become imported, it’s becoming increasingly important for many consumers to understand where the products they buy come from, and how they get to market. It’s a predicament that balances comparative advantage for production against the personal values of consumers, and has polarized markets, with distinct sides favouring buying local, or globalised economies of scale. It is routine for consumers to choose a side without really understanding the factors at play, with many suggesting price, quality, and community are significant. We look into the real reasons that people choose to buy locally, and whether they are grounded on real evidence.

Firstly, what is buying locally? The term in itself is ambiguous, being applicable to both inputs (e.g. products and services), and outputs (e.g. business models). The general consensus is that ‘local’ refers to a product that has a “small number of intermediaries, or small distance, between the producer and consumer” (2). Longer supply chains mean that everyday consumers are further from the production process, preventing them from being fully aware of their daily consumption decisions, both in terms of general impact and derivatives (3). This lack of knowledge coupled with geographical distance from the production process may result in consumption decisions based on assumed factors rather than relying on evidence-based decision-making.

Commonly cited reasons for buying local include quality, freshness, supporting local producers, and ecological concerns. Surprisingly price, however, is generally less evident (4, 5). The same studies do however suggest that supporting local businesses does inject money into the community, increasing local economic growth as well as contributing to a uniqueness in value proposition. It also has been shown to support producers in connecting with customers, promoting a feeling of community whilst supporting local jobs. These benefits are reflected by consumers’ reasons for buying local, but there are also several misconceptions surrounding buying local that aren’t realised in the manner, or to the extent, that consumers may expect.

Creating Local Value graph

Source:  Freedman, M. 2013. (5)

In our next blog we’ll be checking out what these misconceptions are and what they mean to the consumer. Check in for more information on a great love local initiative in Geraldton at http://pollinators.org.au/ or visit our blog: http://pracsys.com.au/blog.

1 – http://freakonomics.com/2012/06/07/you-eat-what-you-are-pt-2-a-new-freakonomics-radio-podcast/

2 – Aubry C., Kebir L., Pasquier C. (2008), The (re) conquest of local food supply function by agriculture in the Ile de France region, Proceedings of 2nd International Working Conference for social scientists “Sustainable Consumption and alternative agri-food systems”, May 27th to 30th 2008, Arlon, www.suscons.ulg.ac.be/
3 – Dickson M.A., (2001). Utility of No Sweat Labels for Apparel Consumers: Profiling Label Users and Predicting their Purchases. The Journal of Consumer Affairs, Vol. 35 No. 1, pp. 96-119.
4 – Marino, D., Mastronardi, L., Franco, S., De Gregorio, D., Cicatiello, C., & Pancino, B. (2013). Farmers’ Markets, Producer and Consumer Behaviour: Analysis of Interactions with the Metrics of Sustainability. Proceedings In Food System Dynamics, 0(0).
5 – Freedman, M. (2013, January 9). Adding Value – anticipating the needs of a changing society. Retrieved from http://www.igd.com/our-expertise/Shopper-Insight/shopper-outlook/11927/Adding-value-anticipating-the-needs-of-a-changing-society/