Note from Charlie – a note from my friend and colleague Jeff…

May 11th, 2017 Charlie Funk
Charlie Funk

I am departing from past practices today and posting an article written by my friend, Jeff Plagge, who is the President and CEO of Northwest Financial Corp. in Arnolds Park, Iowa.  Jeff is a former Chairman of the American Bankers Association, one of the highest honors a banker can receive. He is one of the most cerebral bankers I know and, like me, grew up in a small town in the Midwest.

I will only add that my upbringing in Lancaster, Missouri was similar to what is described below. Yes, we must move on as time passes and society evolves. But that doesn’t mean we should blindly accept that “the new way is the best way.” Jeff makes salient points below. I reprint this with his permission:

When I was growing up in rural Iowa in the 60s & early 70s, most small towns had a general store, a grocery store, one or more cafes and gas stations, a meat locker, a hardware store and a collection of other small merchants. You could get pretty much anything you needed on a day-to-day basis by just going into town and buying it. Everyone knew the merchants and the merchants knew everyone shopping with them. It was first name basis and friend to friend transactions.

Over time, it became a special event to drive to the larger nearby town to get a better selection of merchants and goods and services. Many times you ran into friends who were doing the same thing. However, on other occasions you wouldn’t run into anyone you knew. What a relief. No guilt for shopping out of town and not supporting the local merchants. Over time, the patterns gravitated from those larger nearby towns to even larger towns because of the advent of shopping malls. Shopping had now transitioned into becoming an entertainment event.

As shopping patterns changed, the small town merchant became the place you went only for those absolute items that were needed now and couldn’t wait. Shoppers would wait to get everything else when they had more time to drive to the larger community. Transactions at the small town retailers became fewer in number and smaller in dollar size. As those retail transactions were lost to larger communities, some small town merchants just couldn’t hang on and closed their doors. Other merchants hung in there until they were ready to retire. But that was when they found out there were no buyers for their store, due to declining revenues. So they just liquidated everything, closed the doors and retired.

While all of this was happening, local citizens bemoaned the fact that they were losing their local merchants. Not only were they losing their local merchants but now they had to drive to the larger towns for even those must have items that they needed right now. There was no longer a local option. But the worst thing they were losing, that wasn’t recognized at the time, was the community support given by those local merchants to the community. That support was in the form of donations, school support and their leadership and volunteerism at various community events.

Some local citizens connected the dots and worked hard at continuing to support those local merchants. Others just couldn’t make the connection between their changing shopping habits and the decline of the local merchants and the stability of the community itself. They just couldn’t understand why all of the local stores were closing. Over time jobs declined, populations declined, schools merged, community events disappeared and those small towns became less and less viable. Many went and continue to go by the wayside, just like their former merchants.

Today we see what I call “the ruralization of urban America.”  In the name of endless choices and convenience, online entities like Amazon and very large retailers with a strong online presence have now become the place to shop. No longer do we need to drive to or even walk to a local store to shop. We can just go online, find the items, order them and return them if they don’t work. No need to talk to anyone, fight the crowds, find depleted inventories or a limited selection or take the travel time to get it all done.

The result is the same decline of big name retailers in the larger communities. And as we know, that decline has hit some long time traditional retailers hard as well as some fast growing start-ups. Shopping malls are also going by the wayside or declining at a rapid pace. Shoppers are more and more fickle and if a merchant can’t immediately meet their needs, there is one online that can. We call this progress and it is a train that is speeding down the track at an increasing speed.

The question is where does it stop? You can now virtually buy everything and anything online. You can order your groceries on line and have them delivered. Or call a restaurant, tell them what you want and have it delivered. Even McDonalds is now talking about home delivery. No need to go to a movie, just order it up on Netflix. No need to talk to anyone face to face. If you want to communicate, send a tweet or post something on Facebook, Instagram or the host of other social media options. And feel free to be rude. Say whatever you want. Surely you won’t ever have to meet the targets of your comments face to face.

By now you get my drift. It is not the retail transition or the transition to everything online that is the loss. The real loss is the people to people connections and genuine interactions. The question is, will we be like the small town citizens that realized too late why their local stores were all closing or will we connect the dots soon enough to change our behaviors and patterns? Based on the rash of large retailers and malls going bankrupt and/or closing, I suspect the latter.

Sometimes progress isn’t very progressive in the bigger picture.

Charlie Funk

About the author

Charlie Funk is President and CEO of MidWestOne Bank. He works with the MidWestOne team to oversee the daily operation of the bank.

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