January 31, 2011 - Buying Locally Actually Works

For the fourth year in a row, the Institute for Local Self-Reliance, a nonprofit research organization, found that independent businesses in cities with an active "buy local" campaign fared significantly better than those in cities without a push for localism.

The survey, which was conducted over an 8-day period in January, gathered data from 2,768 independent businesses, including retailers, service providers, restaurants and others.  It found that those in places with a "buy local" initiative reported revenue growth of 5.6% on average in 2010, compared to 2.1% for those elsewhere.

Among independent retailers, which accounted for nearly half the respondents, there was a similar gap in holiday sales performance, with those in "buy local" communities seeing a 5.2% increase in holiday sales, while those elsewhere reported an average gain of 0.8%.  

Independent business alliances and Local First groups currently run "buy local" initiatives in about 140 American cities. And besides new customers, the campaigns have been shown to increase media attention and customer loyalty.

What all this amounts to is something called the "local multiplier effect." That is, spending your money at independent businesses begins a cycle in which those businesses then spend their money at local shops, and so on. Big chains, on the other hand, take local money and send it to corporate headquarters for redistribution, sapping communities of valuable resources and making life hard for small businesses.