Local Small Businesses Get Boost from Cash Mobs

Mar 28, 2012

The first International Cash Mob day was held recently, with online activists using social media to drive consumers en masse to locally owned stores throughout the world.

Reuters reports on the concept of cash mobs–flash mobs designed to create sudden, local spending–and how they are helping small businesses grow and compete in a difficult economy.

"I grew up in a family with a small business I know these small businesses can't afford a million dollar ad campaign. When you spend $1 at these local stores that stays in the community," said Kelly Ziegler, co-founder of the Cash Mob movement in Kansas City, Missouri.

The recent organized cash mobs included gatherings in Cleveland, Kansas City and New York, and the concept has also been used in Los Angeles, Boston and elsewhere in the U.S. and worldwide.. The concept’s founder, Andrew Samtoy, said the goal is for each participant to spend at least $20 in a locally owned business. Last November, Samtoy, a lawyer in Cleveland, held the first cash mob, and consumers spent on average $40 within an hour and a half. With such success, people in Samtoy’s social media networks picked up on the idea, leading to the inaugural Cash Mob Day on March 24.

There is no standard for how cash mobs are orchestrated. Approaches to rallying consumers vary depending on the location and the organizer. The mob in Cleveland, for example, focused on one business at a time, while organizers in Kansas City, Missouri, drove spending sprees in nine different locations simultaneously. In all cases, the local private sector found an influx of revenue that supports growth, something that is particularly important during slower sales seasons.

These events are a boon to small businesses facing growth-threatening circumstances like high taxes, regulatory uncertainty from Washington, and weak demand from the national consumer base. Cash mobs also give consumers a way to support their community’s small business, said Cleveland independent book store owner, Dave Ferrante. 

"We have a very limited marketing budget and it brought in people who wouldn't have been here. It sounds corny but we really build a base one customer at a time."

Sometimes the most successful innovations are the most obvious. Amy Cortese, the organizer for the Park Slope cash mob in Brooklyn, New York, said of the phenomenon: "It is surprising that no one had thought to do this before."

Given the success with consumers and businesses, however, these flash spending sprees may continue to offer America’s business community much needed commerce and local support.

Read more about how cash mobs are impacting locally owned businesses.

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