The Buck Stays Here

By Dean Williamson, 5-09-09

During these tough, recessionary times, we take more care about the dollars we spend. So it makes sense that we take a moment to think about where we spend those dollars—just as we think about what we spend them on.

It’s true that Wal-Mart and other discount chains SEEM to have low-low prices, but that’s not always the case; they often raise prices when there is no direct competition, drop prices and rely on corporate funds to run local stores out of business and Wal-Mart particularly has begun drastic changes to its inventory. 

But, I’m not here to bash Wal-Mart, fun though that may be.  I’m here to talk about the positive story of what your dollars do when you spend them at local stores, including local groceries.

When you shop at locally owned stores for your food, clothes, and other needs, you really help support your local economy. Really.

Sure, we hear that a lot—but what does it mean?  Studies in places are varied as San Francisco and Grand Rapids, MI, put some actual numbers to this idea.

Among the findings:

• local businesses buy more goods and services locally and employ more people locally. Every $1 million spent at local stores, for example, creates $321,000 in additional economic activity in the area, including $119,000 in wages paid to local employees. That same $1 million spent at chain stores generates only $188,000 in local economic activity, including $71,000 in local wages.

• If residents were to redirect just 10 percent of their spending from chains to local businesses, that would generate $192 million in additional economic activity in San Francisco and almost 1,300 new jobs.

• if residents of Grand Rapids and surrounding Kent County, Michigan, were to redirect 10 percent of their total spending from chains to locally owned businesses, the result would be $140 million in new economic activity for the region, including 1,600 new jobs and $53 million in additional payroll.

• Local restaurants, for example, return more than 56% of their revenue to the local economy in the form of wages, goods and services purchased locally, profits, and donations. Chain restaurants return only 37%.

• $1 million spent at chain restaurants produces about $600,000 in additional local economic activity and supports 10 jobs. Spending $1 million at local restaurants, meanwhile, generates over $900,000 in added local economic activity and supports 15 jobs.

Start small.  Decide to spend 10% of your shopping dollars at locally-owned stores, and you’ll have a huge impact.  Local stores keep money here—chain stores send it away. Simple as that.

The effect is so great that, in Grand Rapids, about twice the size of Billings, the best thing that can be done with available space and property in town is to make sure that local businesses set up shop.

It may seem as though we are saving money when we go to chain stores, but think about what we save when we go to local stores.  We can strengthen the places we live, help support our neighbors and friends, and help guarantee our communities’ survival.  We can save our places.  No small thing.

The next time you go out to eat at a restaurant, or go to the grocery, consider that where you decide to go will affect where you live.

The full studies available at Local Works: Examining the Impact of Local Business on the West Michigan Economy
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