The Benefits of Buying Locally

Each year brings more national chains transferring locally-owned businesses throughout the country. We see clones replace unique establishments. People across the country are losing sense of community in their town, and consider this trend a symptom, but could it be a cause as well? Also, what are the impacts of this trend on our economic well-being?

It seems obvious that we do business where we notice we receive the best value for our time and money. Insights, however, are not always accurate when we are lacking some of the essential information for fully informed decisions. We see and hear the omnipresent ads of corporate chains every day, but are collectively under-informed about the many important values independent businesses provide us individually and as a community.

Some economists would call the chain infringement a natural trend. Tough for the family who owns the small business, but it doesn’t really affect the economy. Overall sales may even go up a little when a chain drives out a small independent, so what’s the problem?

The disappearance of local businesses leaves a social and economic void that is palpable and real – even when it is unmeasured. The quality of life of a community changes in ways that macroeconomics is slow to measure, or ignores completely. Let’s look at some of the issues.

It’s time to consider the real costs to a community that loses its local business base. Independent local businesses employ a wide array of supporting services. They hire architects, designers, cabinet shops, sign makers and contractors for construction. Opportunities grow for local accountants, insurance brokers, computer consultants, attorneys, advertising agencies and others to help run it. Local retailers and distributors also carry a higher percentage of locally-made goods than the chains, creating more jobs for local producers.

In contrast, a new chain store classically puts in place a clone of other units, eliminates the need for local planning, and uses a minimum of local goods and services. In a company-owned store, the profits are promptly exported to corporate headquarters. These factors lead local independent merchants create a multiplier effect in the local economy of 2– 2 1/2 times that of a chain outlet while many communities focus on sales tax revenue; we need to remember that the one-time tax revenue is only one part of the economic picture.

Small manufacturers are also affected since they rely on local retailers to give their new products a chance. Local retailers are freer to take chances with the goods of a new manufacturer, or a product that is not part of a national sales plan. Therefore, small manufacturers and a wide variety of service industries have a clear stake in the nationwide health of local retailers.