Economic Studies

These economic studies show how shopping at local, independent businesses is not just a nice thing to do, it is truly one of the best ways to strengthen and sustainably grow our economy. These studies contain the data that shows that through buying locally we can create more jobs and retain more of the wealth of our community right here in Western Massachusetts.

Does Local Firm Ownership Matter?

From a study titled “Does Local Firm Ownership Matter?” by Stephan Goetz and David Fleming, Economic Development Quarterly, April 2011, analyzed 2,953 counties in the US, including both rural and urban areas, and found that, after controlling for other factors that influence growth, those with a larger density of small, locally owned businesses experienced greater per capita income growth between 2000 and 2007. The presence of large, non-local businesses, meanwhile, had a negative effect on incomes.

The Home Sweet Home Study found that purchasing home improvement products from locally-owned retailers generates twice as much local economic activity than purchases made at big box chain stores. Together, the two largest national home center chains sold more than $114 billion in goods in 2013 (excluding installation services). If just 10% of that business gone instead to independents, hometowns around the country would enjoy the benefits of an additional $1.3 billion in economic activity.

Click here to see the complete Home Sweet Home Study.

From a 2012 study in Salt Lake City, Utah, Civic Economics found that the local retailers return an average of 52 percent of their revenue to the local economy, compared with just 14 percent for the chain retailers. Similarly, the local restaurants re-circulate an average of 79 percent of their revenue locally, compared to 30 percent for the chain eateries. Please see this graph below and click on it for more details on this study:

Comparing the current data to the 2007 Economic Census, the Salt Lake City metropolitan area produces annual retail store sales across all lines of goods (excluding motor vehicles and gas stations) of roughly $9.5 billion. Assuming this survey provides a representative sample of area independent retailers, a market shift of just 10% from chains to independents would retain an additional $362 million in the regional economy every year. Salt Lake City area restaurants produce annual sales of roughly $1.25 billion. Again, assuming this survey provides a representative sample, a market shift of 10% from chains to local restaurants would retain an additional $125 million in the regional economy.

From the Andersonville Study from Chicago (Please click on the image below for a larger view.)

Economic studies on buy local

This chart above from the Andersonville Study shows that when you spend a $100 at a local business 58% more money on average stays in your community compared to what would have happened if you spent that hundred dollars at a national chain store. To see this great report showing the economic benefits of shopping with locally owned, independent businesses follow this link to the Andersonville Study:

The chart below shows that if people in West Michigan shopped just 10% more often at local businesses that it would keep an extra 53 million dollars in wages in their community and create over 1,600 new jobs. What would be the effect if we did the same here?

Economic Impact Analysis study of Local Merchants and Chain Retailers Austin, Texas 2002

Click here to see a study about Western Massachusetts:

Pioneer Valley Planning Commission's Plan For Progress

Thanks for thinking Local First and shopping at the great locally owned, independent businesses here in the Pioneer Valley!