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Independent Business / Chain Studies

 

Powerful proof of the benefits of independent businesses to their communities. Great tools for community members and organizers to use with planning boards, city councils and others! We expect this list to grow substantially in the next few years. See the Institute for Local Self-Reliance for the most current and comprehensive collection of related studies.

Studies on the Economic Impact of Local Independent Business

If you're looking for an overview of the multiplier effect and language you can use in outreach materials, we suggest starting here.

  • Albuquerque, NM 2013 Study (pdf)
    Keep It Querque is the latest organization to commission an economic impact study to quantify how much more money local independent businesses return to their local economy compared to chain outlets. Major findings of the study, conducted by Civic Economics include, nearly three times more money recirculates locally when spent at local independent retailers compared to chains and more than 2.5 times more money is re-spent locally when people choose a local independent restaurant over a chain.
  • Ten New Studies of the "Local Economic Premium"
    Las Vegas First, Local First Utah, Shop Local Raleigh and the Louisville IBA are among the local groups that commissioned studes by Civic Economics (2012) in partnership with the American Booksellers Association. Averaged across 10 communities in the retail studies, spending at indie retailers generates 3.7 time smore direct local economic benefit than spending at chains. Additionally, five of the studies evaluated restaurant spending and found indie restaurants generated an average of 2.15 times more direct local economics return.
    See also:  August 2012 Study in Utah Show Indies are Critical to Local Economic Vitality
  • Thinking Outside the Box: A Report on Independent Merchants and the New Orleans Economy 
    This 2009 study compares local independents and leading chain competitors and finds the independent New Orleans retailers generate twice the annual sales, recirculate revenues within the local economy at twice the rate, and have four times the economic impact per square foot while consuming a fraction of the land. In addition, a mere shift of 10% of shopping dollars currently spent with national retailers to local retailers would mean an additional $235 million into the regional economy annually and create hundreds of new jobs. Conversely, a 10% shift in the opposite direction, from independents to chains, would contract the economy to the same magnitude.
  • Local Works: Examining the Impact of Local Business on the West Michigan Economy
    This 2008 study demonstrates the major economic impact of even a 10% shift in total per capita spending from chains to locally owned independent businesses -- creation of almost $140 million in new economic activity and 1,600 new jobs for the region.  The included examination of the economic impact of independent and chain businesses per-square-foot points to independent businesses as the recommended tenants for available commercial properties.
  • Procurement Matters: The Economic Impact of Local Suppliers
     
  • San Francisco Retail Diversity Study
    This three-part study, released in May 2007, calculates the market share of independents and chains in several categories: book, sporting goods, and toy stores, and casual dining restaurants. The study's second section analyzes the impact on San Francisco's economy of shopping at locally owned businesses versus chains. The final -- and perhaps most important -- part examines the impact on the city's economy of a mere 10% shift in resident spending between chains and local businesses and vice versa, quantified in terms of added revenue and jobs to the community. While the numbers are specific to the San Francisco area, a reasonable "translation" can be inferred.
  • Andersonville Study of Retail Economics
    This report, released on October 20, 2004, extends the study done in Austin, Texas in 2003.  
    The study compares 10 independent businesses and 10 chains in retail, restaurant and service sectors.  The results further corroborate the local economic benefit of independent businesses, demonstrating that independents generate about 3 times the local economic activity as chains.  Further, the researchers make the case for community governments to create policy to protect their independent businesses.
  • The Economic Impact of Locally Owned Businesses vs. Chains: A Case Study in Midcoast Maine [PDF]
    by the Institute for Local Self-Reliance and Friends of Midcoast Maine, September 2003.  Findings of this study indicate that three times as much money stays in the local economy when you buy goods and services from locally owned businesses as with chains. This study tracked the revenue and expenditures of eight locally owned businesses in Midcoast Maine.
  • Economic Impact study [PDF] in Austin, Texas (2002) substantiating the economic multiplier--of over three times--of two independent businesses, Waterloo Records and Book People, as compared to a Borders Books & Music Corp. store (planned for inclusion in a nearby--and publicly subsidized--development).
  • Fiscal impact analysis [PDF] in Barnstable, Massachusetts (2002) that compares the tax revenue generated by different kinds of residential and commercial development with the actual cost of providing public services for each land use. Revenue gainers: community-based businesses; revenue losers: big boxes, fast food chains and strip malls.
  • Released in October 2003, 10 Reasons Why Vermont's Homegrown Economy Matters: And 50 Proven Ways to Revive It is the result of two years of collaborative research by Stacy Mitchell of the New Rules Project and the Preservation Trust of Vermont on specific reasons why locally owned businesses matter and practical ways to plan for a homegrown economy, foster revitalization and unite independent businesses--no matter where you live.

 

Studies on the Impact of Big Box Development

  • Rolling Back Property Tax Payments (Oct. 2007)
    Wal-Mart makes a common practice of downplaying its property values to minimize its property taxes in communities in which they locate. Public records seraches indicate the corporation has afiled assessment challenges on over a third of their retial and distribution operations.
  • Wal-Mart and County-Wide Poverty [PDF]
    A study from Pennsylvania State University from October 18, 2004 that indicates counties with one or more Wal-Mart stores experience smaller decreases in family poverty than counties without.  Possible causes include the decrease in civic capacity due to local entrepreneurs being driven out of business--people who also tend to be community leaders.
  • "Is it fair to give taxpayers' money to big corporations that will then use it to help put existing firms out of business?" question Dr. Kenneth Stone and Georgeanne Artz in their study of big box home improvement centers and their effect on host towns and surrounding communities [PDF]. Published in 2001. Findings: sales of hardware and building supplies grow in the host communities, but at the expense of sales in smaller towns nearby. Moreover, after a few years, many host communities experienced a sharp decline in hardware and building supplies sales, often dropping below their initial levels, as more big box stores opened in the surrounding region and saturated the market.
  • The Shils Report (1997), entitled "Measuring the Economic and Sociological Impact of the Mega-Retail Discount Chains on Small Enterprise in Urban, Suburban and Rural Communities," was groundbreaking research by Edward B. Shils, Director Emeritus of the Wharton Entrepreneurial Center at the University of Pennsylvania. The report details the effect of chains and big boxes on small businesses due to economies of scale and governmental failure to enforce antitrust laws. Other studies have built on Shils' work. Follow the link to the 250-page downloadable report.
  • Dr. Kenneth Stone's (Iowa State University, 1977) landmark study on Wal-Mart's effect on Iowa's rural communities 10 years after the corporation's arrival, Impact of the Wal-Mart Phenomenon on Rural Communities [PDF], provides strong evidence of how this big box displaces locally owned independent businesses in the community and the surrounding area. It also provides Dr. Stone's advice to locals on competing with chains.

 

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