The Wall Street Journal
By MAUREEN SCARPELLI

The recession has taken a beating on local businesses, but many consumers still want to support and patronize their neighborhood shops. If you’re a small retailer or service provider, highlighting your local roots can keep the regulars coming in – and even attract new customers seeking to improve their hometowns’ economic health by buying from local merchants.

Here are three best ways to showcase your origins – and win community support.

1. Hold contests or events that capture local flair. Take a hint from Nathan’s, which holds one of the nation’s most famous annual events every summer at its original location on Coney Island’s Surf Avenue: the International Hot Dog Eating Contest. Thousands have packed the beach every Fourth of July since 1916 (with the exception of two years) to see dog-snarfing competitors eat as many as they can in 12 minutes.

Although Nathan’s sells their dogs around the world, the company wouldn’t think of holding the event anywhere but Coney Island. “I’ll be traveling around the world and no matter where I go, someone will always come up to me and tell me how their grandparents kissed for the first time at Coney Island,” Nathan’s CEO Eric Gatoff says. “The centerpiece of our brand is that store.”

On a smaller level, businesses can hosts events that show off their own signature styles and welcome members of the community to participate. Hideaway Pizza, which was founded in Stillwell, Okla., built its reputation by delivering pizzas in painted Volkswagen Beetles. Now, several of the company’s stores host “Big Stuff” fundraisers, inviting local groups such as high school teams or church groups to fit as many people as possible into VW bugs. The events raise money or awareness for local charities and causes.

2. Team up with other local businesses, especially those with complementary products or services. Galaxy Cookies of Westport, Conn., has had its labels on the pizza boxes of its next-door neighbor, Four Brother’s Pizza, since starting up in 2004. Galaxy owner Connie Grant encourages pizza eaters to sit in her store, since the Four Brothers location is small. Four Brothers also lists Galaxy Cookies on its catering menu, giving Galaxy an extra 5% in business it normally wouldn’t have since the cookie company doesn’t cater. The pairing up has made Galaxy Cookies an office favorite, says Ms. Grant, now that businesses can easily tack on a dozen or so with their pizza order.

ESSpa Kozmetika, a day spa in Pittsburgh, decided to pair with a women’s retail company, Carabella, hoping to break into an older demographic. The two shops, located a 15-minute drive from one another, struck a deal: Carabella gives a spa gift certificate to anyone that buys a Cinzia Rocca coat worth 25% of the purchase price (with a cap at $150). The campaign has brought new customers to ESSpa, which co-owner Scott Kerschbaumer credits to the neighborly collaboration.

“The desire for local, it’s always subconsciously been there,” says Mr. Kerschbaumer. “But recent economic turbulence has pushed it to the forefront.” ESSpa also orders lunches for customers using the services of Luma, a high-end restaurant across the street.

3. Join or start a grassroots business alliance. At least 30,000 small businesses belong to local alliances, which generally provide information, support and advocacy for independent businesses, says Stacy Mitchell, researcher and writer for the nonprofit Institute of Local Self Reliance based in Washington, D.C.

Areas without alliances could be ripe for a start-up, as Lisa Boet, who owns a French bistro in Naples, Fla., discovered. She wrote a letter to the Naples Daily News called “Small Businesses are the Soul of Naples” two years ago – and when more than 25 restaurants contacted her, she decided to form the restaurant coalition Naples Originals.

“The reality is that most of us are… mom and pop establishments – we can’t afford the big marketing,” says Ms. Boet. “This sort of thing has really helped our businesses.”

Throughout the year, Naples Originals members contribute $50 gift certificates, which are then sold quarterly for 30% of the price on the group’s website. The group typically sells out of gift certificates within an hour of posting them and self-publishes a regional dining guide with a circulation of 50,000. Ms. Boat is hoping other industries start their own similar coalitions.

“The whole idea is to strengthen in numbers,” Ms. Boat says. By “marketing ourselves as small-business owners, we’ve actually created a brand. We’ve become the voice for our business.”