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Fred Clements: Improve the economy—buy local

Published October 28, 2013
A blog by NBDA executive director Fred Clements


Editor's note: This blog post was written by Fred Clements, executive director of the National Bicycle Dealers Association. Clements' previous blog posts can be read on


Many believe that buying from local independent businesses is a good thing, but is there credible research to back that up?

Yes, and one of the latest is from research firm Civic Economics. The company’s researchers took an in-depth look at the Salt Lake City retail marketplace. They found that a group of locally owned stores generated almost four times as much economic impact than the average chain store.

Civic Economics analyzed hard data from 22 independent retailers and restaurants, and compared their impact with four chain retail stores (Barnes & Noble, Home Depot, Office Max and Target) and three national restaurant chains (Darden, McDonald’s and P.F. Chang's).

The local retailers returned an average of 52 percent of their revenue to the local economy, compared with 14 percent for the chain retailers. The local restaurants recirculated an average of 79 percent of their revenue locally, compared with 30 percent for the chain restaurants.

The study methodology required independent businesses to open their books for review to measure the proportion of revenue expended in five categories:

  1. Profits paid out to local owners
  2. Wages paid to local workers
  3. Procurement of goods services for internal use
  4. Procurement of local goods for resale
  5. Charitable giving within the community

Civic Economics aggregated the value for chain stores from public records. The difference between these two numbers captured the enhanced impact of one or the other category of business.

The study suggests that buying local represents a huge opportunity for building healthier local economies. In Salt Lake City’s case, numbers can be extrapolated to illustrate the potential.

According to the 2007 Economic Census, the Salt Lake City metropolitan area produces annual retail store sales across all lines of goods (excluding motor vehicles and gas stations) of roughly $9.5 billion.

Assuming this survey provides a representative sample of area independent retailers, a market shift of just 10 percent from chains to independents would retain an additional $362 million in the regional economy every year.

Similarly, a market shift of 10 percent from chains to local restaurants would retain an additional $125 million in the regional economy.

Civic Economics has conducted numerous studies in the past with a similar conclusion: Independents bring substantial benefits to their local economies when compared with chain stores.

The authors conclude that “independents are creating a virtuous cycle of local spending. The extra dollars in the local economy produce more jobs for residents, extra tax revenues for local governments, more investment in commercial and residential districts, and enhanced support for local nonprofits. In short, these businesses create better places.”

The message for the bicycle world? Support your local bike shop. It’s good for you as a cyclist, as well as for the community at large.


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