The Economic Impact of Locally Owned Businesses vs. Chains: A Case Study in Midcoast Maine

The Midcoast region of Maine stretches from Bath to Belfast and has a population of about 145,000 people. Like many areas of the country, the Midcoast region has experienced a growing influx of national retailers and big box stores in recent years.

These stores have been controversial. Some argue they benefit the region by providing consumers with low prices and convenience. Others contend they are harming the region's downtowns and locally owned businesses, and contributing to sprawl by building on undeveloped land on the outskirts of town centers.

With growth pressures likely to continue, Midcoast communities face a momentous decision: should they support the construction of additional big box stores or limit such development and focus instead on expanding locally owned retail?

In an effort to bring additional information to bear on the discussion, the Institute for Local Self-Reliance worked with Friends of Midcoast Maine, a regional grassroots organization supporting smart growth, to examine the economic impact of locally owned businesses in the Midcoast region and to compare this with the economic contributions of a typical big box retailer.

We wanted to find out, if a local store makes a $100 sale, what happens to that $100? How much goes to pay local employees and local suppliers, thereby creating additional economic activity in the region? How much goes to out-of-state suppliers, thereby leaving the Maine economy? If that $100 is spent instead at a big box retailer, does more or less of it stay in the local economy?