Although 71 percent of the city’s 1,069 businesses are independent, Tim Dempsey, East Lansing’s community and economic development administrator, said the city’s business environment is changing.

The city doesn’t track how many independent businesses have been replaced by chains, Dempsey said.

“We haven’t seen as many new independent businesses as we have in years past,” Dempsey said. “The reality is it’s a very competitive market.”

Part of the problem for independent businesses is rent prices, Dempsey said. At $12-$24 per square foot — with most stores about 1,500-2,000 square feet — the rent isn’t cheap, he said.

The trend of many chain businesses emerging isn’t only affecting East Lansing. Throughout the country, independent businesses are shutting their doors.

From 2002-03, 21,185 small businesses opened in Michigan. During that same period, 20,876 closed, said Todd Anderson, vice president of government relations at the Small Business Association of Michigan.

Nationwide, 44 percent of small businesses stay open for more than four years, Anderson said.

“There’s a lot of turnover,” Anderson said. “It’s really difficult to start a small business.”

Tough competition

Gary Ignat has experienced firsthand the difficulties a small-business owner faces.

Ignat opened Iggy’s Deli, 623 E. Grand River Ave., in 2004. But with heavy competition leaving him without the customers he needed to stay in business, Iggy’s closed its doors Jan. 1.

“It was obvious to me that most people today are geared toward eating at chain (restaurants) rather than independent restaurants,” Ignat said. “We thought we would be able to work through that.”

Even Bell’s Greek Pizza, which has been open for 36 years, has felt the effect of chain restaurants.

Bell’s employees said it’s competing with more than other pizza chains. Two new places that draw potential customers are Potbelly Sandwich Works, 233 E. Grand River Ave., and Cosi, 301 E. Grand River Ave., said Bob Beagan, manager at Bell’s 225 M.A.C. Ave. location.

“I can tell you there are a lot of people because they’re on that corner, and their sandwiches take about half the time as our grinders do, with people being a little more impatient nowadays, they don’t want to wait for eight minutes on a grinder — they want their sandwich in two minutes,” Beagan said.

With chains eliminating much of its lunch crowd, Bell’s has grown dependent on college students who spill into the restaurant for 94-cent pizza slices after nearby bars close.

“If it wasn’t for the bar rush, we wouldn’t be open,” Beagan said. “We can’t live off of lunches here.”

“Chain“ging business

Michigan’s slumping economy has been particularly hard on small, independent businesses, Dempsey said.

Because independent businesses lack the resources and funding that many chain businesses have, small businesses often find it difficult to withstand a recession.

With other areas of the economy growing, including high-tech and research and development, small businesses have struggled, Dempsey said.

“The changing nature of the economy has definitely impacted the potential entrepreneurs going into the retail industry,” Dempsey said.

That’s been good news for chain businesses.

Armed with profits that dwarf those generated by small businesses, chain businesses have created customer bases through massive advertising campaigns and marketing studies, Dempsey said.

Andy Austin’s shopping preference is evidence of those marketing efforts.

When the biosystems engineering senior heads to buy clothes or grab a bite to eat, he usually sets his sights on chain stores because he said he knows what he’s getting and the prices are sometimes cheaper, Austin said.

“I think the chains do better just because the students know them, and if they have a chain back home — and they like their services or their food — they’re going to go there,” Austin said. “If I’m going to get something to eat, I’m going to go to Taco Bell or Jimmy John’s or McDonald’s.”

Finding a niche

Many small businesses are struggling to compete with chains, said Tom Scott, senior vice president of the Michigan Retailers Association.

“It’s not unique to East Lansing,” Scott said. “It’s happening all over the state, it’s happening all over the country.”

To compete, independent businesses often target specific markets, Scott said.

“You have to do something that makes you stand out,” he said. “You have to give your customers a reason to shop with you.”

Atmosphere and fair trade coffee are Jasmine Angelini-Knoll’s reasons for choosing to visit Espresso Royale, 527 E. Grand River Ave., instead of a Starbucks.

“If you’re more localized, you’re more able to deal with your customers in terms of being more responsive to them and also providing more quality things like fair trade coffee,” the political science senior said. “I know when you go into Starbucks you can expect it to be the same wherever you go.”

Catering to book collectors has helped Curious Book Shop, 307 E. Grand River Ave., keep its doors open since 1973.

Ray Walsh opened the shop after selling books and comics as a student at MSU.

In 2001, one the biggest booksellers in the nation, Barnes & Noble, moved into the block from its former Okemos location.

But because Curious sells comics and vintage books, Walsh said his business hasn’t suffered.

“We have a number of books that they don’t have and vice versa,” Walsh said. “And because our selection is significantly different from theirs, we have many books that are out of print that people are looking for … they send people our way and we send people their way.”