The Economics of Shopping Local
Shopping local is a big these days. The mantra has been shop local, support small businesses, Shop small etc. Now more than ever it’s important to do this, but have you stopped to understand why? Nerd alert, we’re going to do a bit of a deep dive because understanding the economics of it is important. Intuitively we believe it is a good thing, it feels good to shop locally, but there are numbers to support this.
I truly believe that small businesses are the backbone of communities.
Supporting local small businesses used to be a normal thing in the not so distant past, because most businesses were small and family owned. We would go to the local bakery and buy bread, or the butcher and the general store for our food and staples. I remember going to the locally owned citrus stands in Miami. They were dotted along the highways, one could stop in for a fresh glass of O.J., buy a peck of oranges or ship a box to friends and relatives in other parts of the US who were shivering under winter conditions. We were shopping local and it was our way of flaunting our sunny weather ;P
Many of these small shops have gone by the wayside pushed out by chain stores and ecommerce offering cheaper prices and convenience. Additionally, zoning laws have made it hard for small businesses to comply and high rents are a barrier as well. Small mom & pops get pushed out by landlords in favor of big chains with deep pockets.
But, I see the tides turning. More and more small businesses are finding a way. Landlords are seeing the value in supporting these businesses and I understand why; they attract people.
We long for connection, we crave the authentic and we are tired of being sold a bill of goods only to find out that what we have purchased is toxic, or flawed. We’re tired of supporting foreign governments with questionable human rights practices and we are discovering the amazing goodwill and benefits of empowering people to become entrepreneurs. The pride and passion of doing and making something you love is immeasurable.
So here’s the economic breakdown. These are all from studies that measured the economic impact of small locally owned businesses v.s. Large chains with their headquarters in other locations.
According to the article “Small Business is Good for Local Economies; Big Business is Not, Researchers Say” published in Business News Daily on February 26th, 2020 small businesses generated 44% of the U.S. economic activity from 1998 to 2014. That’s almost half of the GDP by small businesses versus Large Fortune 500 companies.
“Small, locally owned businesses and startups tend to generate higher incomes for people in a community than big, non-local firms….” said Stephen Goetz, Ph.D., professor of agriculture and regional economics at Penn State.
Money tends to stay in the communities where small businesses are based. Large companies with their headquarters in other locations funnel off money. Sure, they employ people and pay salaries but the bulk of the money goes back to their headquarters.
Small businesses create jobs and support other local businesses by in turn using their services. Additionally they improve innovation and productivity by encouraging the development of ideas and efficiencies.
According to Goetz, a better strategy to promote economic growth in communities is to help small businesses to grow and be successful.
That is our mission at Event Village. We want to help you achieve your dreams and goals.
If you would like to read this article in its entirety here is the link.