The Economy Says You Should Shop Local

We’ve shared some blog posts and articles about the multitude of reasons to shop local before, but there’s often one big thing stopping most people from doing it: big chain stores can often offer bigger discounts than local shops. However, even though the price per product may be higher, there’s tons of economic benefits to shopping local!

1- The Money You Spend Stays in Your Town

When you buy from a big corporation, very little of the money you spend goes back to your community. The employees who work there are paid of course, and in the case of franchises, the franchise owner may be locally based and help keep the money local (though many franchise owners own multiple locations in varying cities and states, multi-unit franchisees account for about half of all franchise businesses). But for the most part, the profits earned by a chain store in your neighborhood go directly to a corporate headquarters or CEO’s pocket elsewhere.

The numbers vary, but some estimates say that every dollar you spend at a local businesses circulates another $2-$3.50 around the local economy, vs just $1 spent at a chain store. Another study found that $68 out of every $100 spent at a local business stayed in the local economy, vs just $43 spent elsewhere. This means that instead of CEOs of multinational corporations continuing to get richer, members of your community can build wealth, create more jobs, and reinvest in local infrastructure. In Colorado, buying local produce and meat is especially powerful: “Agribusinesses in Colorado contribute $40 billion to the state economy on an annual basis and provide more than 170,000 jobs. It’s one of the top industries in the state — when people buy locally, they’re supporting that” (Wendy White).

2- Local Businesses Support Other Local Businesses

In addition to keeping money in local economies, local businesses often hire other local businesses to help them out: local architects, builders and painters to help set up their shop, local print shops for their fliers, and local producers distributors for their products. Because chain stores and restaurants are often just copies of existing designs and models, and use the same promotional materials, they don’t have nearly as many needs or opportunities to support local businesses.

3- Prevents Monopolies and Preserves Variety

Shopping at big businesses can be appealing- they have lots of items at low prices. But big businesses just keep getting bigger, despite numerous antitrust laws aimed at preventing massive corporate consolidation. When a business faces competition, it is motivated to provide a variety of quality products and services for their consumers. If a business is the only option in town, they lose the incentive to serve customers well, and if they want, can overcharge customers for basic necessities.

Plus, even though smaller businesses may not have as many individual items as bigger businesses, they often carry unique items, and many small businesses together ultimately leads to a larger product selection! Small businesses can also adapt more quickly to the needs of their consumers and can focus on a smaller group of people- big companies have to worry about pleasing the masses, so their product offerings have to be more generic.

4- Puts Your Taxes to Good Use

Big businesses are often physically large as well- the average Walmart is 187,000 square feet! Large stores use lots of infrastructure supported by city taxes, and while they do pay city sales tax, the demands they place on city infrastructure can actually lead to a net loss of tax revenue (and ultimately, a cost to the taxpayers). However, small local retail stores use far less resources, resulting in a positive tax revenue for taxpayers and reinvestment in city infrastructure!

So whether you were already a fan of local businesses or are just thinking about branching out and expanding your shopping choices, we hope this gives you an extra incentive to shop local! Let us know if you think of any other great economic benefits of shopping local that we should add to our list!

 

 

Sources consulted:

https://www.entrepreneur.com/article/244839#

https://www.amiba.net/resources/localhero/

http://www.fransmart.com/multi-unit/

http://www.csbj.com/2016/08/26/buying-local-produces-big-economic-results/

https://sustainableconnections.org/why-buy-local/

https://www.amiba.net/resources/multiplier-effect/

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