How Communities Benefit When Consumers Shop Local

Ideas about shopping are never set in stone, and the pandemic illustrated just how quickly consumer trends and opinions can change. Many individuals are now reevaluating how they spend their hard-earned money, particularly since inflation has affected just how far a dollar can be stretched. When consumers think about which stores to patronize, locally owned businesses may be the smartest option for a number of reasons - not the least of which is the way such enterprises benefit the communities they call home.

More money kept in the community

Shopping locally means that more money will stay in the community. According to recent research from Civic Economics, local eateries return nearly 79 percent of revenue to the community, compared to just over 30 percent for chain restaurants. Overall, for every $100 spent at a local business, around $73 remains in the community, verus roughly $43 when shopping at a non-locally owned business.

Get a personal touch

Local business owners typically are inclined to go the extra mile for their customers and are personally invested in the services and products they are selling. As a result, shopping locally tends to be a personalized experience. Furthermore, a local business owner may be more amenable to ordering products for specific clientele. Such personalized service is typically not accessible when shopping big box stores or other shops where owners are off-site.

Lines are short

Waiting in long lines for checkout or to pick up merchandise ordered online can drain consumers' energy and contribute to stress. Local businesses tend to have short lines and small crowds, which can lead to a more pleasant shopping experience.

Generates tax revenue

Local businesses generate more tax revenue per sales dollar, according to Rubicon, a digital marketplace for waste and recycling businesses. Taxes paid by local small businesses go to support schools, parks, roads, and other programs that benefit the community as well.

Support nonprofits

Local businesses often support good work in the community, such as nonprofit groups. These can include schools and sports teams, among other groups. According to Dr. Sue Lynn Sasser, professor of economics at the University of Central Oklahoma, studies indicate nonprofits "receive 250 percent more support from small businesses than larger ones."

Support other local businesses

Local business support other local businesses by buying and selling among each other. A local, independently owned restaurant may source its ingredients from local farms, which means visitors to such eateries are supporting multiple local businesses each time they dine out.

Small businesses are a boon to the economy, particularly local economies. These enterprises help their communities in a multitude of ways.

Did You Know?

Local businesses contribute to greater wealth in their communities. According to data from Civic Economics, for every $100 spent at local businesses, around $73 remains in the local economy. By comparison, only $43 remains in the local economy when people shop at non-locally-owned businesses. Proceeds come from paying taxes that support the community, and local businesses buy supplies from other local businesses, further benefitting their economies. All of this keeps much more money within local communities.

How to Cut Back on Your Big Box Habit

Big box retailers are ubiquitous. The appeal of such stores' extensive inventory is undeniable, and consumers like the comfort of knowing they can stop into a big box store anywhere on the map and feel a sense of familiarity with their surroundings.

Despite that feeling of familiarity, consumers who shop exclusively at big box retailers are missing out on what small businesses have to offer. Though it may be impossible to avoid big box retailers entirely, now is a great time to see what small businesses have to offer. Here's a few ways consumers can reduce their reliance on big box retailers.

Start gradually

A gradual separation from big box retailers will likely prove easier than quitting cold turkey. Try replacing one big box trip each week with a visit to a locally owned small business. Brand loyalty to a local business can be built up from there.

Take steps to become a more active community consumer

Serving on a community's commerce commission or a similar agency helps consumers learn about the small businesses that are coming to town or already established. A greater awareness of shopping options could mean a greater propensity for stopping in and shopping these stores rather than the chain alternatives.

Increase in-person shopping

It's tempting to simply shop online and order something from one of the national chains that can afford to ship items straight to your home. However, small retailers tend to have more unique offerings and boast pleasant shopping experiences. Plus, in-person shopping allows consumers to get a real feel for a product, which can save them the time and effort it takes to return things that don't fit or aren't quite right. Many small businesses now offer their own e-commerce options, where a shopper can buy an item online and then pick it up in the store or curbside to save time.

Consumers have grown accustomed to shopping at big box retailers. But kicking that habit and patronizing small local businesses can benefit consumers and communities alike.

Did You Know?

Establishing an online presence is one of the more effective ways to reach new customers and offer better customer service. Eighty-one percent of consumers research a company before visiting it to make a purchase or engage in a service, says Blue Corona, a marketing solutions company. Ninety-seven percent of consumers go online to find local businesses or local services during their research. Lack of a website or social media presence could greatly hinder small businesses as they seek to grow. Although the numbers of small businesses with a website have grown, today roughly 70 percent have an online presence, says Zippia. It is estimated that, 95 percent of all purchases will be facilitated by e-commerce by 2040, so it is important for small businesses to recognize the significance of enabling customers to buy online.

5 Advantages Local Businesses Have Over the Competition

Small businesses on Main Street and big box chains have been competing for consumers' attention for decades. Historians say that big box stores were born in the early 1960s when Wal-Mart, Target and Kmart entered the retail landscape. It's been more than 60 years since these chains arrived and they certainly have garnered their share of devotees. Big box businesses have size, inventory and often price on their side. However, when consumers look beyond those factors, it's easy to see all of the benefits small businesses offer that behemoths cannot.

1. Passionate owners and operators

Walk into a big box store or other business and you may find a handful of dedicated employees, but not quite at the level of small businesses. Small business owners prioritize the customer experience because they know they need to work hard to retain customers. This translates into knowing the products well, and sharing as much knowledge as possible with customers. Big box businesses vulnerable to heavy staff turnover often do not have a vested interest in the brand.

2. Work the local niche

What makes big box retailers so familiar to shoppers is one can stop in a store in the middle of Nebraska and likely find the same items as a store in Hawaii, with only a few subtle differences between the locations. Big box companies work with the same suppliers and ship the same products all over the world. Customers seeking personalized items and services for their particular regions are better off utilizing local small businesses that can bring in regional vendors more readily.

3. Better shopping experience

Big box stores draw customers during peak times when they're home from school or off from work. That often translates to long lines both at checkout and at customer service or return counters. By contrast, there may be no apparent rhyme or reason to when shoppers visit small businesses, meaning there likely will not be crowds. It's much more pleasant to browse wares without having to contend with shopping cart traffic and people blocking aisles.

4. Advanced technology

Big box companies have invested millions of dollars into their point-of-service systems and other technologies, which means it can be a very slow transition to new options as times change. Small businesses generally can shift to newer, better technology more readily because they do not have to do so on the same scale as their larger competitors.

5. General agility

Changing technology on a dime is not the only ways small businesses excel. They can experiment in other ways, such as a home contractor offering a special price deal for a certain period of time, or a clothing store experimenting with new in-store decor. Big chains cannot pivot that quickly, and any changes must be approved by corporate and implemented across all centers.

Although small businesses may have a tough time beating big box retailers on overall price, there are many other advantages such enterprises have over the competition.

Did You Know?

The cost of starting a new business is contingent on a host of variables unique to each startup, but prospective entrepreneurs can expect to spend a substantial sum to get a business off the ground. However, that sum may not be as considerable as first-time entrepreneurs anticipate. Utilizing data from the U.S. Census Bureau, researchers at LendingTree estimate that 21 percent of business owners launch their venture with less than $5,000. Those costs vary widely by industry. For example, LendingTree researchers note that the average new construction firm needs just under $68,000 to get started, and 50 percent of such firms began with less than $12,390. Starting a firm that specializes in the management of companies and enterprises, which includes firms that hold securities or equity interests of another enterprise, required considerably more funding at startup. LendingTree researchers estimated that the average business in that industry required roughly $441,000 in startup funding. Such disparities highlight the significance of determining startup costs prior to beginning a venture. The Small Business Administration notes that startup costs can cover a range of expenses, including office space, equipment and supplies, utilities, insurance, advertising, and marketing.

Facts & Figures About Small Businesses in the U.S. & Canada

Though they might be characterized as "small," businesses with fewer than 500 employees have a big impact on the economy. According to the World Bank, small and medium enterprises represent roughly 90 percent of businesses and more than 50 percent of employment worldwide. A weakened small business sector could put the local, national and even global economy in jeopardy, which further underscores how vital small firms are to global economic stability.

Statistics don't tell the whole story about small businesses, but they can offer valuable insight into just how vital firms with 500 employees or fewer are. The similarity of figures in the United States and Canada supports that notion, as data from both countries reveals how integral each nation's small business sector is to its economic vitality.

· Data from the Small Business Administration indicates there were 33.2 million small businesses in operation in the United States as of 2022. Numbers are equally high in Canada, where the Government of Canada reports that, among the 1.21 million employer firms, 1.19 million are small businesses.

· The U.S. Bureau of Labor Statistics reports that small businesses created 12.9 million net new jobs between 1996 and 2021. The Government of Canada reports that, between 2020 and 2021, small businesses were responsible for 69 percent of the net employment change between 2020 and 2021.

· Despite their importance to local, national and global economies, a high percentage of small businesses close within their first year of opening. The BLS reports that around 20 percent of small businesses in the United States close within a year of opening. Figures are similar in Canada, with estimates suggesting 21.5 percent of small businesses fold before the end of their first year.

· Statistics Canada reports that small businesses employed 63.8 percent of the Canadian workforce in 2021. That percentage is lower in the United States, where the SBA reports that 61.7 million Americans, which equates to 46.4 percent of private sector employees, are employed by small businesses.

· BLS data indicates that just under 35 percent of small businesses that opened in 2012 remained in operation upon their tenth anniversary in 2022. The Business Development Bank of Canada reports that nearly 68 percent of new businesses in Canada remain in operation after five years, though the organization Made in Canada reports that figure drops to around 33 percent after a decade.

Data supports the notion that small businesses are the lifeblood not only of local and national economies, but even the global economy. Such figures underscore the importance of shopping small businesses and the significance of ensuring such firms thrive for years to come.

Did You Know?

Conscientious consumers who want to help local entrepreneurs thrive may not need any extra incentive to support small businesses in their communities. However, that doesn't mean it isn't worth noting the tax benefits of buying local compared to buying online or in other towns or cities. Small businesses pay sales taxes to the city and county where the business is located, which means a significant amount of the money spent at local businesses is ultimately going to the community at large. In addition, local businesses tend to hire local residents, who pay taxes on their incomes. Those taxes also benefit the towns and cities where workers live and work. This ripple effect of supporting local businesses is one reason why the Small Business Adminstration estimates that, for every $100 consumers spend at a small business, $48 remains in the community.

Easy Way to Support Small Businesses

It's easy to overlook how integral small businesses are to local, national and even global economies. The Small Business Administration and the U.S Census Bureau indicate small businesses account for 99.7 percent of all American businesses, employing 56.8 million people. Similarly, according to Statistics Canada, local businesses classified as micro or small businesses made up 98.1 percent of all the employers in Canada in 2021.

Since mall businesses are the economic engine of many neighborhoods and communities, it's in everyone's best interest to pitch in and ensure such firms' success. Thankfully, it's easy for anyone to support the small businesses that make their communities unique.

· Shop locally and online from small businesses as much as possible. If you cannot shop right away, consider purchasing gift cards to the retailer or service provider and share them as gifts to others.

· Before you immediately go with a well-known chain or e-commerce giant, find out if a local retailer offers the same items you need and shop there.

· Actively discover new brands, check them out, and then spread the word about your findings to others.

· Share posts from small businesses on social media. It's good exposure for them and can help to widen their customer base.

· Attend special events or promotions hosted by local businesses. Well-attended events may spark others' curiosity.

· Share a quick photo of something you bought at a small business or of a service they provided. For example, if a local landscaping company did a wonderful job putting in a new patio or pavers, share the before and after with those you know.

Communities can embrace various strategies to support the small businesses that make Main Street unique.

How Communities Can Work Together to Revitalize Main Street

No community stays the same forever. Despite the sense of familiarity individuals may feel when visiting their hometown, those communities have undoubtedly undergone significant changes over the years.

Over the first two decades of the 21st century, small towns have been forced to confront an assortment of changes and challenges, including the COVID-19 pandemic. Main Street is what makes most towns unique, and many communities recognize how vital a thriving local business scene is to the survival of their towns and cities. As public health advocates and politicians increasingly declare that the pandemic is nearing its end, communities can work together and take these steps to revitalize Main Street.

· Recognize there's no magic formula. When attempting to revitalize a community business district, it's important that elected officials, business owners and residents recognize that what worked for one town or city will not necessarily work for their town. This is an important recognition, as it underscores the benefits of listening to everyone's ideas and considering new approaches, even if they don't have a proven track record.

· Identify what makes your community unique. Each community has its own unique assets, and case studies conducted the U.S. Environmental Protection Agency have found that identifying these assets offer the best opportunities for growth. For example, a community with a rich history can make that history a focal point of their revitalization efforts. If a community is located on a lake or another body of water, revitalization efforts can be focused on capitalizing on the allure of waterfront dining and entertainment.

· Make it easy for investors; Revitalization efforts require investment. Towns and cities that have seen better days may not generate the level of tax revenue necessary to finance revitalization efforts, necessitating outside investment. It may require walking a tightrope, but local officials can explain strategies to encourage outside investors to residents and current business owners in their communities. These strategies may involve offering new incentives to investors, but residents and business owners may be more likely to support such measures if they're kept informed as those strategies are developed and implemented.

· Emphasize the need for cooperation. The EPA case studies found that cooperation within the community enabled towns and cities that successfully revitalized to leverage the assets that each party brought to the table and make the most of local resources. By emphasizing the many benefits of a collective effort, local officials can reassure residents and business owners that they aren't just paying lip service but putting a community's willingness to work together to use in service of everyone.

Successful efforts to revitalize Main Street have often been found in communities that have worked together to identify their assets and sought input from residents, business owners and even outside investors.