economy, business, shopping

How we buy matters

By Mark Odegard

How we buy the goods and services we consume matters as much as what we buy. How we buy things – purchasing from locally owned businesses, chain stores, or online – impacts the environment and our local economies.

Every decision has a set of trade-offs, and buying things is no different. There are aspects of cost, convenience, urgency (how quickly do we need or want something), and environmental and economic impacts that we may consider for each purchase. The important thing is understanding those impacts and giving them appropriate weight.

Buying from locally owned, independent businesses is the most effective way of supporting local communities and, in many cases, to reduce environmental impacts. Independent businesses return more than three times as much money (per dollar of sales) to the local economy when compared with chain-store competitors. Keeping money within the community and generating additional spending improves the overall health of local economies. According to the American Independent Business Alliance (amiba), a purchase of $100 translates to an average $48 of additional economic activity when made with a locally owned business, whereas the same purchase at a chain store equates to just $14 returned to the local economy.

Online shopping effectively adds no economic value to local economies. Independent businesses return nearly fifty times as much to local economies when compared with online retailers. In the same $100 purchase noted above, online purchases return only $1 to the local economy and even then, that is only if the delivery driver lives locally. And the benefit doesn’t necessarily improve if the online retailer has a distribution center in the local community. While they do provide some local jobs, large distribution centers create public costs such as noise pollution, road wear, accidents, and emissions that the local community isn’t able to directly recover.

Making purchases locally is the most effective way to support local economies and increase the economic vitality of the communities we live in. As consumers, we can prioritize buying from locally owned stores and eating at locally owned restaurants. As businesses, we can prioritize buying from locally owned suppliers and businesses. Doing so creates jobs, increases the standard of living of our friends and neighbors and everyone in the community, and generates more disposable income that can be spent in the community thereby creating a positive feedback loop that supports economic growth that has an opportunity to benefit everyone.

Other benefits of buying from local businesses are better land use and increased tax revenue (here and here). Local businesses tend to have smaller space requirements and frequently use existing buildings and infrastructure (e.g., roads, water, sewer, electricity) for their offices and stores. They take advantage of existing density. When a local business moves or leaves, the space they leave behind is generally small- and suitable-enough for another local business to take over. The use of existing buildings and retail space means less tax revenue is required for infrastructure maintenance, better use of resources over time, and reduced environmental impacts.

Larger chains, particularly big box stores, require significantly more space in terms of building size and landscape. This requires redevelopment of existing neighborhoods, which can disrupt traffic flows and change the dynamic of the neighborhood. Or it requires building in under-developed locations on the edges of cities. This development requires expanding infrastructure that local government and taxpayers need to maintain indefinitely. And when chain stores leave, the buildings are typically only suitable for another chain store to occupy and the land is difficult to retrofit for other purposes. The buildings may sit empty for years waiting for another tenant, in the meantime further altering the character of the surrounding neighborhood and resulting in negative economic returns on the land that sits idle.

None of this is to say that we should only buy from local businesses or that we should boycott chain stores or online retailers. In some cases, the product we want or need can only be obtained online or from a chain store. Or maybe we need something urgently and online is the fastest option. Or perhaps we are buying a gift to send to someone in another city and buying online saves time. In those cases, purchasing online or from a non-local business may be the best or only option available.

Also, this is not to say we should become an insular economy and withdraw from regional, national, and global economies. There are huge benefits of the global economy, including improving the quality of living for people all over the world and improving connections between countries that help reduce the likelihood of future conflicts, not to mention introducing consumers to new products they could not access locally.

This IS to say that we should think about the consequences of our choices and purchasing decisions. We should think about where our money ends up and who that money supports. If we want vibrant communities with high standards of living, strong neighborhoods, beautiful parks, quality schools, low crime rates, low incidences of homelessness, and strong economies then we should choose to spend more of our money supporting locally owned and operated businesses. We should spend more of our money supporting ourlocal economy and our local community.

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