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Definition Of Buy Local
Most people often associate the word "local" with the "distance" from where they live.  There are national chains with outlets in our local area and there are independently owned stores within the same area.  While the owner of the local franchise for a national chain is your neighbor and friend, his is not a local business owner and it is certainly not independent.  A local business is one in which the headquarters of the business is local (probably in the local shop) and the owner lives and works in your local community. 

Aren’t they the same?  NO! It all has to do with where the revenue generated by the local franchise is going and where the franchisee is purchasing the products and services used at the franchise.  In brief, follow the money.  The franchise owner contacts headquarters to purchase the goods and services their store offers.  Advertising is generally handled at the national level as is the purchase of operational supplies. 

10 Reasons to Support Locally Owned, Independent Businesses
1.  When you buy from an independent, locally-owned store, rather than chain retailer, significantly more of your money is used to make purchases from other local businesses and service providers.
2.  Non-profit organizations receive an average 250% more support from independent business owners than they do from large businesses.
3.  One-of-a-kind businesses are a fundamental part of the distinctive character of your home.  Tourism businesses also benefit.  “When people go on vacation they generally seek out destinations that offer them the sense of being someplace, not just anyplace.”  (Richard Moe, President, National Historic Preservation Trust)
4.  Locally owned businesses make more local purchases requiring less transportation and generally set up shop in town or city centers as opposed to developing on the fringe.
5.  Small local businesses are the largest employer nationally and in our community, provide the most jobs to residents.
6.  Local businesses often hire people with a better understanding of the products they are selling and take more time to get to know customers.  Generally, independent stores offer more customer service and great customer satisfaction.
7.  Local businesses are owned by people who live in this community and are more invested in the community’s future.  They also want good local schools, well-trained, well-equipped firefighters and police.
8.  Local businesses generally require fewer infrastructures and make more efficient use of public services.
9.  Small businesses, each selecting products based on their own interests and the needs of their local customers, guarantees a much broader range of product choices.  If your customer wants the unique, it cannot be found at a chain store.
10. Entrepreneurs and skilled workers are more likely to invest and settle in communities that preserve their one-of-a-kind businesses and distinctive character.

The Facts
In the 2002 Economic Impact Study of Chain versus Local Merchants, three facts emerged.

Local business owners generate substantially greater economic impact than chain retailers. 

  1. Local shop owners spend a much more on local labor to run their store and sell their merchandise.
  2. Local shop owners keep their modest profits in the local economy. Local shop owners provide greater support for other local businesses, creating further local economic impact.

In the study comparing the now defunct Borders Books with two locally-owned, independent book stores, the chain retailer had a local impact equal to about one-quarter of the average of the true local book stores.  Note that the total return to the community includes activity beyond retail sales and sales tax collections. The economic health of the city is impacted as well by wages paid to local residents, by services and supplies purchased locally, and by the reinvestment of profits in the business and in the community. These factors are the building blocks of economic impact.

Development of urban sites with directly competitive chain merchants will reduce the overall vigor of the local economy.
I found this very interesting.  The study found that every dollar drawn away from a locally owned business by a chain store results in a net loss for the local economy. Activity generated by new sales does not replace the activity lost in that diversion of sales.  The study indicated that chain retailers have less unique choices.  The customer who shops exclusively with chain retailers may remain unaware of unique choices available in the independently-owned stores.

Modest changes in consumer spending habits can generate substantial local economic impact. 
The study revealed that from a $100 purchase from a chain retailers, only about $13 remained in the local economy with the greatest portion going to pay wages.  The remainder is transferred out of the city almost immediately, in the form of wholesale expenses, administrative costs incurred elsewhere, and profits.  The same $100 purchase from a locally-owned store keeps approximately $45 for the local economy.  Again, much of this is kept local in the form of employee salaries, but with local merchants administrative expenses and profits are also directly placed with other local merchants.

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