Shop small: Consumers have choice on future of local economy

By : 
Reflections from my Notebook

It may seem like wishful thinking that making a few purchases on Small Business Saturday, Nov. 24, will make a difference as we watch the retail sector of our small towns continue to shrink, a trend that started decades ago. The economy today is tilted toward market concentration as the big companies get bigger, squeezing out others that are forced into bankruptcy or just go out of business.

Take Amazon, for example. The giant, online retailer, which was worth more than a trillion dollars at one point this year, is led by CEO Jeff Bezos, the richest person in the world with a net worth estimated at $166 billion. Yet, earlier this year, this massive, wealthy company announced a competition for its second headquarters outside Seattle, seeking financial concessions from cities across the country.

Amazon captures 49 cents of every e-commerce dollar in the United States, generating $178 million in annual revenue. It has been credited with disrupting retail, creating what is referred to as a retail apocalypse, forcing many cities to find uses for empty storefronts, even entire malls. Yet, hundreds of city and state officials participated in the spectacle of “helping” Amazon choose its second headquarters by offering tax breaks, free land and other incentives.

Recently, Amazon announced that it has decided to split its second headquarters into two compounds in the New York City and Washington, D.C., metropolitan areas. Many analysts felt that Amazon would have done this even without the contest, which provided valuable economic data and insight into how far cities and states are willing to go to lure jobs.

New York is already the nation’s financial center and D.C. the governmental center, so the decision by Amazon strengthens the already dominant position of the East Coast, further widening the gap between the haves and have-nots.

Although these trends are concerning, individuals still have a choice that can make an impact on the future of their local economy.

Spend your money on retail firms such as Amazon and your dollars will siphon out of the community, never to be seen again. Spend your money at a local business and two-thirds of that amount will stay in the local community, according to a small business economic impact study from American Express, which created Small Business Saturday in 2010 to help get more shoppers though the doors of small businesses.

Of that 67 cents per dollar that stays local, 44 cents goes to wages and benefits of the local business owner and employees, who then spend a portion of that at other local businesses, while 23 cents gets directly reinvested in other local businesses, such as local venders and suppliers, making the entire community stronger.

Now in its ninth year, 97 percent of consumers who plan to take part in Small Business Saturday said the day has a positive impact on their community, according to a 2018 Small Business Saturday consumer insights survey.

Another study released recently by the National Federation of Independent Businesses and American Express found that:

• Nearly all consumers (94 percent) value the contributions small businesses make in the community.

• A total of 83 percent of consumers plan to do at least a portion of their holiday shopping at a small, independently-owned retailer or restaurant — either in person or online.

• Among those who prefer online shopping, nearly two-thirds said they are likely to seek out small, independently-owned retailers when shopping online.

• And, 96 percent of consumers who plan to shop on Small Business Saturday said the event inspires them to go to small, independently-owned retailers or restaurants that they have not been to before, or would not have otherwise tried.

 “When shoppers spend locally at small businesses, communities win,” stated NFIB CEO and President Juanita D. Duggan in a press release on the event.

Those individual decisions to shop locally may not seem like they would have much impact, but in aggregate, they can make a world of difference. Since Small Business Saturday started, U.S. customers have reported spending an estimated $85 billion at independent retailers and restaurants over those eight days alone.

And, those independent businesses can be quite a force on their own. The economic impact study found that if all small businesses in the United States were a country, the gross domestic product would be $4.8 trillion, equivalent to the GDP of Japan, the third largest economy in the world.

Amazon may consider much of the country as flyover land, unworthy of its most important jobs, while raking in the money from those same residents, but consumers don’t have be a captive audience. Individuals can show their true loyalty with intentional choices on Small Business Saturday by walking into local stores and supporting businesses that have a stake in the community.

Those small, local businesses may not be seeking massive incentives paid by your tax dollars, but your appearance will be enough incentive to make them feel proud to be part of a supportive community. And, if those face-to-face incentives continue, local businesses may just stick around for the long haul to make the community strong and vital in the years to come.