Austin and Chicago
In 2002 a study was commissioned in Austin, Texas, to compare the comparative economic benefit to the community of Bookpeople, an Austin independent bookstore, and Waterloo Records, a local music store, with a proposed Borders store that threatened to drive both out of business. The study looked at the local economic impact - i.e. the degree to which money from each business flows back into the local economy. The study concluded that for every $100 of money spent at Borders $13 flowed back into the community in wages, expenditures, taxes, etc. With the independents, however, the comparable figure was $45. In other words, the two independent stores yielded more than three times the local economic impact.
In 2004, a larger study was conducted in the Andersonville district of Chicago, one of the city’s livelier neighborhoods. In that study, ten local businesses were analyzed, including four restaurants, three service businesses, and three retailers (one of which is a book store), and they were compared against ten chain store competitors. The economists looked at both the direct effects of local spending by the businesses, such as wages, local procurement, charitable contributions, etc., as well as indirect effects of the continuing expenditure of the money in the community using the standard IMPLAN method of calculation.
The results were similar to what was found in Austin. In Chicago they found that the locally owned businesses produced about a 70% percent advantage for the overall local economy:
Locally-owned businesses generate a 70% Local Premium in enhanced economic impact.
For every $100 in consumer spending with a local firm, $73 remains in the Chicago economy.
For every $100 in consumer spending with a chain firm, $43 remains in the Chicago economy.
For every square foot occupied by a local firm, local economic impact is $179.
For every square foot occupied by a chain firm, local economic impact is $105.
The complete study can be found at
www.andersonvillestudy.com
From the Chicago study:
"Across the board, locally-owned businesses substantially exceed their chain competitors . . . For example, local firms spent an average of 28 percent of revenue on labor compared to 23 percent for chains. Additionally, eight of the ten local firms are owned by Chicago residents, so profits largely remain in the city. Local firms procure local goods and services at more than twice the rate of chains. Finally, locally-owned firms in the study contribute more to local charities and fundraisers than do their national counterparts and, although this provides the smallest local advantage of the four categories, this difference is important to the community."
