Portland, Maine study shows dramatic impact of buying local

I haven’t taken the time to look into the methodology of the study in any great detail, but, according to our friends at BALLE, the folks at the Maine Center for Economic Policy have completed a study showing that dollars spent at locally-owned businesses yield almost twice as much in the way of local economic impact as those spent with national chains in the same geographic region. The following clip comes from the BALLE release.

A new study produced by the Maine Center for Economic Policy (MECEP) has found that, on a dollar-for-dollar basis, the local economic impact of independently owned businesses in Portland is significantly greater than that of national chains. MECEP found that every $100 spent at locally owned businesses contributes an additional $58 to the local economy. By comparison, $100 spent at a representative national chain store in Portland yields just $33 in local economic impact.

“Jobs are the most pressing issue on everyone’s mind. Because locally owned businesses keep their profits in the community and are more likely to purchase goods and services from local sources, consumer spending at these businesses has a multiplier effect that increases local economic activity and creates jobs,” said Garrett Martin, Executive Director of MECEP and co-author of the study.

The study finds that changes in consumer spending choices can add up to sizeable economic benefits for the region. Based on 2007 retail sales figures, shifting just 10% of consumer spending in Cumberland County from national chains to locally owned businesses would result in an additional $127 million in economic activity, supporting 874 new jobs and generating over $35 million in wages.

MECEP relied on financial data provided by 28 independent businesses in Portland and information obtained from corporate filings for a representative national chain (Dollar Tree) to model local economic impact. Previous studies of the economic impacts of local businesses in other locales have produced similar findings.

The study was commissioned by the Portland Independent Business & Community Alliance (PIBCA), the nonprofit organization behind Portland’s “Buy Local” campaign. “Until now, we have had to rely on studies from other states to make the case that choosing locally owned, independent businesses generates significant benefits for our region’s economy. This study provides compelling data that is specific to Greater Portland,” said Susan Tran, president of PIBCA…

Speaking of “buy local” campaigns, I’m sure you all noticed that Linette and have taken the last few years off from our annual Buy Indie in Ypsi initiative. This year, we had as an excuse the fact that our son was due in early December. I suspect the reason we stopped doing it, however, had more to do with our burning out. It took a lot of work to pull it together and fund it each year, and, at the same time, it seemed to us that the idea of buying local had gone mainstream to the point where we weren’t really needed any more… I mean, American Express spent millions over the past two years on national “buy local” ad campaigns… Granted, they were just asking for people to patronize their locally owned stores for one measly day a year, but I think it still marks a huge shift from where we were in 2007, when the concept was still somewhat foreign. Anyway, we stopped distributing our “Shop Ypsi for the Holidays” materials a couple of years ago, and I’ve been meaning to bring it up for discussion here ever since. So, if you have thoughts on how useful the initiative was, whether it would make sense to revive it next year, or how we might be able to do an even better job of it, please leave a comment.

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  1. Posted December 28, 2011 at 6:07 pm | Permalink

    The graphic comes from BALLE too.

  2. Robert
    Posted December 28, 2011 at 6:13 pm | Permalink

    It would stand to reason.

  3. Dan from Austin
    Posted December 28, 2011 at 6:20 pm | Permalink

    This is good, but lower than the study done in Austin seveal years ago that showed a 3:1 benefit for shopping at a local compared to a chain. This is a link to the pdf of THAT study http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0CDoQFjAB&url=http%3A%2F%2Fwww.civiceconomics.com%2FLamar_Retail_Analysis.pdf&ei=CaT7TuquNqKssAKAqvDNAQ&usg=AFQjCNGTr48qQh8LWICLT5DKf94E7kJf2w&sig2=PHf7PKAsW5ZvHIG2bLaVmQ

  4. Posted December 28, 2011 at 6:59 pm | Permalink

    Thanks, Dan. I look forward to reading it… And, you’re right, Robert, it would stand to reason. I do, however, have some questions about methodology. If I read the BALLE article correctly, all of the “chain” data in the Portland study came from one business. It’s likely that the results would be the same with a larger sample size, but it could also skew things. For instance, if we just looked at a California-based dollar store chain here, we’d miss the fact that some chains (Borders, Dominos, Kmart) have local ownership. It might not account for much of a shift, but there could be some.

  5. donna
    Posted December 28, 2011 at 7:28 pm | Permalink

    Here’s a 2004 study from Chicago’s Andersonville neighborhood.
    They found that for each $100 spent in Andersonville $68 stays in the community at locally owned businesses vs. $43 at chains.
    It makes me want to slap the Starbuck’s cups out of everybody’s hands.

  6. Brent
    Posted December 28, 2011 at 9:01 pm | Permalink

    For what it’s worth, I picked up a Buy Indie in Ypsi holiday guide when we first moved here. As a Ypsi newbie, it was a great primer to the local merchants. I’m still supporting many of the merchants I was introduced to through the guide.

  7. Lynne
    Posted December 28, 2011 at 9:18 pm | Permalink

    All I know is that when I buy local, I dont have to wait in a long line to be checked out by a stressed out cashier. I only waited in one line this holiday season and it was short and moved quickly. Every other store there were no lines at all and none of the cashiers were anything but pleasant. Also, if you don’t have children and don’t really know what they want, The Rocket will turn you into that cool relative who buys really hip things that the kids didn’t even know they wanted until they got it. Seriously. I had a cousin go ga ga over some fairy bandaids and stuff.

  8. Posted December 29, 2011 at 1:34 am | Permalink

    That’s awesome, Brent. I’m so happy to hear it. Thanks for letting me know.

    As for studies like this, I wonder what it would take to interest faculty members at UM’s Business School in doing something similar.

  9. Posted December 29, 2011 at 12:48 pm | Permalink

    The problem with buying local is that some things can’t be bought local, which is unfortunate.

  10. Posted January 2, 2012 at 11:28 am | Permalink

    I really miss that aspect of Brian Cors “Downtown Ypsi” blog — a lot of people used it for locating things locally made, rather than just rushing out to Target. I wish there was a place where this could occur now. And I loved your beautiful “Buy Local” brochures.

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