Local Merchants Contribute Significantly More Money to Economy Than Retail Chains

Last October, Civic Economics released a new, in-depth local economic impact study, “The Andersonville (Chicago) Study of Retail Economics,” (http://www.civiceconomics.com/Andersonville.) The study adds substantial evidence to earlier impact studies showing that local merchants contribute significantly more money to the local economy than do retail chains.

The Chamber of Commerce for Andersonville, (a Chicago neighborhood), coordinated the study and retained Civic Economics to compare the economic impact of 10 local firms with 10 chain businesses, from restaurants to bookstores to salons. The results showed that local firms generated 70 percent greater local economic impact than chains:

•with a local firm, $73 remains in the Chicago economy.

•with a chain firm, $43 remains in the Chicago economy.

•by a local firm, the local economic impact is $179.

•by a chain firm, the local economic impact is $105.

Ann Christophersen, co-owner of Women & Children First, one of the retail establishments selected for participation in the study, said, “Rather than [city policy makers] wondering how to attract one national anchor, they should be asking how to attract 10 locally owned businesses.” The report stresses that “great care must be taken to ensure that public policy decisions do not inadvertently disadvantage locally owned businesses. Indeed, it may be in the best interests of communities to institute policies that directly protect them.” Christophersen added, “It [the study] can address a question looming in the minds of policy makers who may wonder whether bigger is better.”

The gap in impact between locally owned merchants and their national competitors is due to chain revenues and profits vacating to corporate offices for centralized support services, national purchasing plans and shareholders. Most local merchants buy services and supplies from dozens of local companies and distribute more of their profits locally through local purchases, local taxes and contributions to local nonprofit organizations.

In Whatcom County, “Think Local—Buy Local—Be Local” is a campaign coordinated by business network and community development organization, Sustainable Connections. The campaign encourages residents to Think Local when they are considering where to make purchases, to Buy Local whenever possible and to Be Local by supporting businesses that make Whatcom County unique. The campaign launched one year ago with 200 business and has grown to include more than 350 participants.

Local business owners have seen a surge in interest for local products and for themselves as local businesses. Village Books owner, Chuck Robinson, said, “This campaign has been really successful for our business. There is a new awareness amongst local residents about the personal benefits of shopping with local independents. Business owners in our community increasingly hear from customers that they are choosing their business in part because it’s local.”

In addition, local businesses report they are doing more local purchasing. As Chris Foss, owner of the Greenhouse said, “The knowledge that local businesses return “four to five” times the purchase dollars to our community that national chains do has helped me to more consciously make choices for my business and personal shopping needs. I feel that every dollar spent at a local business helps to reward our local community and economy.” §

This highly visible campaign has also attracted inquiries from communities across North America and is being replicated, as can be seen in the logo from a campaign launching this fall in Portland, Oregon.

Sustainable Connections is a Northwest Wash. network of over 350 local and independently owned businesses committed to a strong community, healthy environment, meaningful workplaces and buying local first. Our programs include the Think Local—Buy Local—Be Local campaign, an apprenticeship program for new farmers, a Sustainable Design (environmentally friendly building) program and numerous initiatives to strengthen and promote local businesses. Visit http://www.Sconnect.org for more information.