INC NEWS - DukeCards help national chains, not local businesses

[John Schelp]

folks,

Dr. Brodhead was kind enough to take my call today on
the WUNC radio show, State of Things. 

After praising Duke for backing off its earlier plans
to build significant retail on Central Campus, I asked
about the high interest rate that DukeCards charge a
business for each student purchase. (Merchants have
told us Duke is getting 18%.)

The high costs effectively keep most local businesses
from participating. So, Duke's system is mostly
supporting national chains (not locally-owned
businesses). Below is our Oct 12 letter to Duke's
president.

Cutting DukeCard costs for local merchants would help
businesses in Brightleaf Square, downtown, Ninth
Street, West End, and small shops in locally-owned
Northgate Mall.

On the radio show, Dr. Brodhead suggested I call his
office this afternoon to talk about cutting DukeCard
costs for local merchants. Will let everybody know
what Duke thinks about this idea.

all best,
John Schelp

****

[sent on 12 Oct 2005]

Dr. Brodhead,

We would like to thank Clay Adams and the Division of
Student Affairs (copied here) for asking for feedback
on Duke's Ninth Street Block Party, recently held in
Old West Durham.

We talked about the Block Party with 9th Street
merchants and at our last neighborhood board meeting,
which also includes representation from 9th Street.

At first we talked about ideas such as scheduling the
event during move-in orientation week, expanding the
target audience beyond first-year students, and having
buses run from West Campus to Ninth Street.

But the conversation soon went beyond these matters.

We talked about a systemic problem that a first-year
student raised in the Chronicle article about the
Block Party (and that we've heard from others).

>From the Chronicle (9/23/05):

>Freshman Melanie Wright said students often do not
venture off campus because they prefer the convenience
of FLEX and food points to pocket cash.

>“It’s easy to get caught up in the DukeCard and
forget about part of the large community,” Wright said

We've heard from Ninth Street merchants that set-up
costs for merchants to participate in the FLEX and
food points is expensive. These costs are compounded
by the fact that Duke apparently skims a percentage
off each purchase. 

These costs, particularly the set-up costs, make it
problematic for small businesses to join. 

The result is Duke's card system mostly benefits
national chains like Domino's and Papa Johns, who have
the resources (and the volume) to absorb the set-up
costs. 

This leaves many small locally-owned businesses near
campus effectively shut out of the system and, as the
quote above indicates, less able to attract student
patrons. (Below is some background on the benefits of
supporting a locally-owned business.)

In fact, some merchants tell us Duke hasn't even asked
them to participate in the program since the late
1980s.

If Duke is truly interested in neighborhood
partnerships, improving town-gown relationships, and
encouraging healthy local business districts near
campus, perhaps you would consider absorbing the
initial set-up costs of these systems (and reducing
the percentage skim-off) so small local businesses
were on a more equal footing with the national chains?


Over the past two years, Duke officials have
repeatedly said they want to support Ninth Street,
Brightleaf Square, and downtown.

Incorporating these suggestions offers Duke a chance
to prove its words through its deeds.

thank you,

John Schelp (president) & Kelly Jarrett (vice-pres)
Old West Durham Neighborhood Association
Diversity, Harmony, Community

== a Duke-Durham partnership neighborhood ==

cc:
Larry Moneta, Division of Student Affairs
Clay Adams, Division of Student Affairs

****

Keep your dollars in Durham? An economic analysis of a
locally owned bookstore yields some surprising
results.

This story starts in Austin, Texas, where in early
2000 plans surfaced for a downtown retail
redevelopment project, to be funded in part with 
city incentive funds. Included in the development was
going to be a big new Borders Bookstore. All of this
was slated for the block at Sixth and Lamar-right
across the street from BookPeople, one of Texas'
biggest and best independent bookstores.

BookPeople's co-owner, Steve Bercu, obviously wasn't
too thrilled about all of this. But instead of just
yelling and screaming, he responded by hitting the
books--the economics books, that is. Bercu hired an 
economics consulting firm to evaluate the economic
impact of local merchants versus national chains. Not
surprisingly, the study showed that local retailers
put more money back into the local economy. What was
surprising was how big the difference was.

For every $100 spent at BookPeople, the study showed
that $45 stayed in the local community. For $100 spent
at Borders, only $13 stayed in Austin, and the rest
"got on a plane at midnight and left," as Bercu put
it. SO THE INDEPENDENT BOOKSTORE GENERATED THREE TIMES
MORE LOCAL ECONOMIC ACTIVITY THAN THE CHAIN BOOKSTORE.
(Capitals added for emphasis).

Feeding this information into the proposed new
development, the consulting firm found that, even with
a wildly optimistic scenario that 50% of Borders'
business was "new" business (not business diverted
from existing ocal merchants), adding a Borders was
actually going to REDUCE local economic activity by
millions of dollars a year.

Bercu took his study to the Austin City Council, where
Borders had little o say in response. The city council
voted to withdraw their incentives for the Borders
project, and Borders withdrew from the development.

BookPeople's financial structure is not all that
different from The Regulator's. (And Border's
financial structure isn't much different from Barnes
and Noble's). So the numbers that Bercu came up with
in Austin would pretty much hold true here in Durham
as well, whichever chain bookstore you wanted to
compare us with.

Of course if you buy your books from some place like
amazon.com, the amount of your money that stays local
is extremely close to a number that starts with zero,
ends with zero, and has nothing but zeros in between.

So, if you like where you live, consider keeping your
money in the neighborhood-where it just might help
your quality of life the most.


source: The Regulator-Irregular (July 10, 2003)