Can 'free shops' boost the local economy?

Can giving away free stuff be an economic development tool for local retailers?

Wrexham, a town in Wales, is giving it a try. A local volunteer group known as Free Economy Wrexham opened a shop in the city's market that gives away free donated items. The idea is that you drop off things you no longer want and get things that other people don't want in an effort to save unwanted goods from landfills. One person's trash is another person's treasure, right? Sure, but it also might be a venture that's treasured by local businesses. BBC reports:

Dr Gareth Harvey, lecturer in consumer psychology at Wrexham's Glyndwr University, said giving customers something for nothing could have a positive knock-on effect for the local economy.

"If you receive something that's unexpected you receive a positive boost to your self esteem," he said. "It's a mood effect, a positive effect. Happy people have a tendency to buy more, so there's a potentially good effect on the neighbouring shops."

The shop, which opened late last year, has been so successful that organizers are hoping to add another free shop.

Of course, more research would need to be conducted to see just how big of an impact the free shop has on sales at surrounding retailers. But as a nearby jewelry store owner told BBC, "It's great, it's bringing people in."

Could this is a fix for America's dying shopping malls?

Free shop could boost Wrexham's economy Dr Gareth Harvey claims [BBC]

Photo: Flickr/Vertigogen

This post was originally published on Smartplanet.com