Modest Changes in Shopping Habits would Produce Big Economic Benefits, Study Finds

Shifting even a modest amount of consumer spending from chains to locally owned businesses would have a major impact on the West Michigan economy, according to a new study.

Local Works: Examining the Impact of Local Business on the West Michigan Economy, which was conducted by Civic Economics, found that, if the 600,000 residents of Grand Rapids and surrounding Kent County were to redirect just 10 percent of their total spending from chains to local businesses, it would create nearly $140 million in new economic activity for the region and 1,600 new jobs.

The study was commissioned by Local First, a coalition of 425 independent businesses in the Grand Rapids region working to educate people about the implications of their spending choices.

Although Local First has long touted studies from other cities that show that shopping at an independent business delivers a much bigger benefit to the local economy than shopping at a chain, many people discounted those studies because they were not specific to Grand Rapids.

"When we would point to the other studies, people would say, 'That's San Francisco. That's Chicago. We're not like those places,'" explained Elissa Sangalli Hillary, executive director of Local First.

Having local data has made all the difference, particularly with journalists and city officials. The study's findings have been featured in stories on four television stations, two radio shows, and four newspapers. Several government officials have set up meetings with Local First to talk about the study and potential policy implications.

In addition to analyzing the economic impact of independent businesses overall, the study also took a close look at four sectors: pharmacies, grocery stores, restaurants, and banks. In each category, the study found that a much larger share of the dollars spent at locally owned businesses stayed in the region, supporting other businesses and jobs.

Civic Economics also analyzed the economic benefit of local vs. chain businesses on a per-square-foot-basis, concluding: "In a largely built-out city like Grand Rapids, policy dictates seeking the highest and best use of available properties, and this analysis strongly supports the idea that local firms should be the preferred tenants for city sites."

Launched five years ago, Local First has been growing rapidly, more than doubling its membership in the last year. The group's primary activities include publishing a directory of local businesses and organizing several annual events, including the Local First Street Party, which showcases local food, music, and beer, and draws over 10,000 people.

With the national economy contracting, Hillary hopes that the study's findings will persuade local residents that choosing locally owned businesses more often is one of the best strategies for protecting the region's economy and creating new jobs.

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Stacy Mitchell is a senior researcher with the New Rules Project and author of Big-Box Swindle: The True Cost of Mega-Retailers and the Fight for America's Independent Businesses.

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