Economic Recovery

Buy local and save the economy

Buying New Zealand-made goods is being promoted as a fast way to restore the economy and save jobs. Mark Jennings looks at the efforts to get Kiwis to 'buy local' and whether they are working.

Campaigns cajoling consumers to support local manufacturers and retailers are coming at us from all directions. Post-lockdown patriotism is being pushed by the banks, supermarkets, business associations, city councils, forestry companies, newspapers, real estate agents and social media influencers.

There is some evidence they are having an impact. Kiwibank, which could also be a beneficiary of the swing to local, says it has noticed a surge in spending on local products and services among its customers.

“People are spending and many of the local businesses that bank with us are reporting their best-ever months. We are not sure if it is the ‘freedom effect’ (after lockdown), or people buying because they love a good special or deal, but I think the sentiment (to buy local) is there,” says Dylan Newbold, head of business banking.

“One thing that coronavirus has taught is the issue of supply chain risk. We’ve probably always liked the idea of buying local but now it also guarantees delivery.”

Businesses, not surprisingly, have a newfound enthusiasm for pushing their local credentials.

Ryan Jennings, executive director of the Buy New Zealand Made campaign that licenses the iconic Kiwi in a triangle trademark, says he has had a years' worth of applications in just eight weeks.

Sarah Colcord, the founder of the recently-started New Zealand Made Facebook page, says she’s been swamped by small to medium companies wanting to post offers and products on her site.

“We have approved 20,000 posts with another 6000 waiting to be listed. The waiting time is about two weeks but businesses are willing to wait because they can see the success others are having.”

Campaigns urging local shoppers to buy New Zealand goods are not new – they’ve been around for more than 100 years and met with varying degrees of success.

The first took place in 1908 when manufacturers in Auckland, Canterbury and Wellington banded together for “New Zealand Industries Week”.

Supported by the New Zealand Shopkeepers Association, big city retailers put on promotions in their shop windows. The railways ran special excursion trains to bring country people to see the displays.

In 1924, the government challenged Kiwis to lift the economic value of New Zealand manufacturing and “Help to Make it £100,000,000 By 1930”. The Department of Industries and Commerce wanted the public to “secure self-reliance by making New Zealand more self-contained”.

Publicity stunts, or perhaps more generously, innovative marketing techniques, have played a part in most of the campaigns.

In 1931, fashion model Esther James walked the length of the country wearing only New Zealand-made clothing and eating locally-produced food. She was the first person to achieve this feat, arriving in Stewart Island six months after leaving Spirits’ Bay in the Far North.

As World War II approached, the government ordered the New Zealand Railways Department to paint the sides of locomotives with the slogan 'Buy New Zealand Made Goods'. Fifty-seven locomotives, pulling mainly passenger trains, carried the message until June 1940.

The notion of keeping the money at home encouraged different sectors and interests to align.

The Manufacturers’ Federation and the trade union movement joined forces with local packaging giant PRINTPAC-UEB to re-invigorate the campaign in 1988.

A decade later the Government threw some serious money behind the idea, courtesy of a cooperation agreement signed by the Labour Party and the Greens following the 2005 Election. M&C Saatchi was hired and an $8.3 million marketing campaign rolled out between 2007 and 2009.

The advertising campaign exceeded all its targets but a report by consultants, Martin Jenkins, threw doubt on its effectiveness and concluded there was little evidence that 'buy local' campaigns were worthwhile.

“Overall, while the Buy Kiwi Made (BKM) campaign has achieved many of its objectives, we have not found convincing evidence of significant behavioural impact commensurate with the cost of the campaign. The economic impact of the campaign therefore appears limited.

“New Zealand has a history of running buy-national campaigns, and many other countries have, and continue to, run them too. Evidence from both New Zealand and abroad suggests that buy-national programmes, while raising awareness and generating a ‘feel-good factor’, in fact do not significantly affect consumer behaviour."

The Martin Jenkins report also referenced the earlier work of Fenwick and Wright in 2000, which found there was no significant difference in the sales of firms that were members of the Buy NZ campaign that began in 1988 compared to non-members.

Despite the money poured into the campaigns there appears to be little appraisal of the potential prize. What is the multiplier effect of dollars spent on a Kiwi product instead of a foreign one? No one involved in the recent current campaigns seemed to know.

Jude Urlich, who managed the BKM media campaign for the Ministry of Economic Development in 2007, sent Newsroom her notes from the time.

“The evidence for buying Kiwi-made was provided by BERL, which showed that the benefits to the New Zealand economy for every $1m of import replacements were:

- The creation of 11.16 jobs

- Government expenditure on unemployment benefit declining by $118,836.

- Government income tax revenue increasing by $117,214.

- Increase in purchasing power $194,887.

In the wake of the pandemic, 'buy-local' campaigns have been reignited in many countries, including the US, Australia and the UK.

Will Covid-19 finally be the catalyst that turns the feel-good factor into something with a tangible economic impact?

Buy New Zealand’s Ryan Jennings thinks so, but mainly because there were three underlying factors in play before coronavirus brought “a focus and a lens to locally-made products”.

The first is automation and artificial intelligence.

“Automation is allowing local firms to lower operational expenditure and compete with low wage economies offshore. On top of this, manufacturers can now get a brand uplift because they can say it was made in New Zealand.”

Jennings cites Fielden, a Christchurch company that makes filing cabinets as an example of a company that has benefited from investment in automation. “It has allowed them to go to a 24/7 operation and compete against Chinese companies.”

Another example is Auckland company, Taurus Leather. It uses computer-assisted machines to cut cow hides before they are fashioned into leather tool belts by local craftsmen. “They have ended up with very high market share,” says Jennings.

The second factor according to Jennings is the steady rise of ethical buying. “Millennials care more – they want to know that the products they are buying weren’t made with child labour, and the NZ logo is shorthand for that.”

Thirdly, Jennings says consumers have been increasing their environmental focus. “Consumers do care about the environment and generally, New Zealand companies don’t take away from the environment. This is part of a long lasting shift …. it is more than just patriotism.”

Sarah Colcord, whose NZ-made Facebook page now has more than 540,000 members, agrees with Jennings that a fundamental change in consumer behaviour is under way. “People have a new sense of awareness and team of 5 million are suddenly looking for new alternatives and this is helping local businesses.”

Colcord says social media has provided something that was missing from, or hampered, the old Buy New Zealand campaigns. “People didn’t know where to find NZ-made products. I really believe accessibility was why those (previous) Buy New Zealand campaigns didn’t work.

“Social media has been able to connect people with small- and medium-sized companies across the country and internationally. Our page has 50,000 members from overseas. They are not just expat Kiwis, it’s anybody living in Australia, America, Britain and Canada. People everywhere are keen to buy New Zealand products because we have a reputation for good quality and now it is a lot easier to make this happen.”

Colcord says purchases by the page’s members enabled many small business to survive the lockdown period and some, like Christchurch’s Innate Furniture, have even expanded. “My motivation is hearing the success of businesses.”

Both Jennings and Colcord accept the need to keep innovating and not let the current campaigns ebb away.

“Every marketing manager is getting on the buy local train but I worry about what is going to happen when the artificial economy comes to an end. I think it could happen at the end of June when the wage subsidy ends,” says Jennings.

“Local manufacturers will have an advantage over the next couple of years as we struggle to re-open the borders but right now it would be smart to look at our longer-term strategy and we are going to do that.”

Colcord thinks the campaigns can be sustainable. “With us, I think it can carry on. We are putting a lot of effort ensuring it does. We are currently building an app so that companies can get more value and exposure.”

Urlich, of the BKM campaign in the mid 2000s, believes that the sheer scale of job losses caused by Covid-19 will be what locks in the change in consumers’ buying habits.

“Ordinary Kiwis know someone who has lost their job because of it. It’s not too big a leap to connect using our personal purchasing power with helping our mates get back into work, whether that’s by supporting local tourism or buying Kiwi-made. As the pandemic will be affecting the world for much of the next decade, this change in buying habits is more likely to bed-in for the longer term. Even a small shift made by most people will make a difference, although it’s important to keep on reminding ourselves why we should do it.”

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