Economic Studies that Support Local First
reproduced with permission from BALLE
Andersonville
Study of Retail Economics (Chicago, IL)
Corporate
Subsidies
Supercenters
and the Transformation of the Bay Area Grocery Industry
Santa
Fe Independent Business Report (Santa Fe, NM)
Research
for Big Box Retail/Superstore Ordinance (Los Angeles, CA)
Independent
Pharmacies
The
Economic Impact of Locally Owned Businesses vs. Chains (Midcoast
Maine)
Charitable
Contributions Comparison
Economic
Impact Analysis: Local Merchants vs. Chain Retailers (Austin, TX)
Fiscal
Impact Analysis of Residential and Nonresidential Land Use (Barnstable,
MA)
The
Impact of 'Big-Box' Building Materials Stores (Iowa)
NEF
Community Tools for Measuring the Local Multiplier
Chicago, Illinois
Andersonville
Study of Retail Economics - October 2004
By Civic Economics
Civic Economics, the Andersonville Development Corporation, and the
Andersonville Chamber of Commerce collaborated on this study, designed to
evaluate the economic role played by the independent businesses of this
dynamic district on Chicago's North Side.
Key findings:
-
For every $100 in consumer spending with a local firm, $68 remains in the Chicago economy vs. $43 for spending at a chain store.
-
For every square foot occupied by a local firm, local economic impact is $179 vs. $105 for a chain store
Corporate Subsidies
Shopping for
Subsidies:
How Wal-Mart Uses Taxpayer Money to Finance Its Never-Ending Growth -
May 2004
By Good Jobs First
Key findings:
- Walmart has received more than $1 billion in economic development subsidies from state and local governments across the country. Taxpayers have helped finance not only Wal-Mart stores, but also the company’s huge network of distribution centers, more than 90% of which have gotten subsidies. The report also includes policy proposals
Good Jobs First also offers a Grassroots Guide to Investigating Development Subsidies, a comprehensive guide to researching state and local subsidies, economic development agencies, and companies.
Bay Area Grocery Industry
Supercenters and the Transformation of the Bay Area Grocery
Industry: Issues, Trends, and Impacts - January 2004
By the Bay Area Economic Forum
Key findings:
- This study examines the potential impact of supercenter development in the 12-county region around San Francisco. It concludes that consumers would see a reduction in the price of groceries, at least initially, but these savings to the region would be offset by declining wages among supermarket workers. Unionized supermarket workers, according to the study, receive on average $11.68 an hour more in wages and benefits than supercenter employees. Wal-Mart's arrival would likely lead to both job losses and wage concessions at unionized supermarkets.
- Although many cities assume superstores will provide tax benefits, the study examined 116 cities in the twelve county area and found that the presence of one or more big-box stores did not in fact correlate with higher per capita sales tax revenue, except in very small towns. The study also discusses the impact of supercenters on rural versus urban markets, traffic, tourism, and retail vacancy. (excerpted from ILSR)
Santa Fe, New Mexico
Santa Fe
Independent Business Report - November 2003
By Angelou Economics
Key Findings:
- Small businesses account for 90% of all businesses in Santa Fe and employ 30% of all private sector workers.
- The impact of dollars spent at independent businesses deliver two times the economic impact of spending at national chains.
- However, national chains in Santa Fe are growing faster than independents - 2.5 times faster - and bring new competition and pressure to the small business community.
Los Angeles, California
Research for Big Box Retail/Superstore Ordinance - October
2003
Prepared for the Los Angeles City Council by Rodino Associates
Key findings:
- Study concludes that big box stores would harm low-income neighborhoods in Los Angeles by reducing competition, creating blight, lowering wages, and forcing new costs onto taxpayers. By pricing groceries as "loss leaders" and using higher margin non-grocery items to make up the difference, supercenters often force existing supermarkets out of business. Because grocery stores anchor many neighborhood business districts and shopping centers, their closure would harm other retailers and lead to vacancies in areas that are only now beginning to recover from years of economic decline. The report also finds that supercenters would negatively impact job opportunities by replacing union-wage supermarket jobs with a smaller number of lower-paying jobs. Fewer workers would have health care benefits, further burdening public hospitals and health care programs. (excerpted from ILSR)
Independent Pharmacies
Time to Switch Drugstores? - October 2003
By Consumer Reports
Based on a year-long survey of more than 32,000 readers about their
drugstore experiences.
Key findings:
- Independent drugstores outranked all other pharmacies - including
drugstore chains, supermarkets, mass merchandisers ( e.g., Wal-Mart), and
internet companies - in terms of providing personal attention, offering
health services such as in-store screenings, filling prescriptions quickly,
supplying hard-to-find drugs, and obtaining out-of-stock medications within
24 hours. Prices at independent pharmacies were lower than at chain
pharmacies, but higher than at mass merchandisers and internet
companies. (excerpted from ILSR)
Midcoast Maine
The
Economic Impact of Locally Owned Businesses vs. Chains: A Case Study in
Midcoast Maine - September 2003
By Institute for Local Self-Reliance
This study tracked the revenue and expenditures of eight locally owned
businesses in Midcoast Maine, as compared to big box stores.
Key findings:
- Locally owned businesses spent 44.6 percent of their revenue within the surrounding two counties, and another 8.7 percent elsewhere in Maine, largely on wages and benefits paid to local employees; goods and services purchased from other local businesses; profits that accrued to local owners; and taxes paid to local and state government.
- Big box retailers return an estimated 14.1 percent of its revenue to
the local economy, mostly as payroll. The rest leaves the state, flowing to
out-of-state suppliers and back to corporate headquarters.
NFIB Small Business Policy Guide
Charitable
Contributions Comparison - January 2003
Documents small business contributions to the economy and comparisons of
charitable contributions from small, medium and large businesses.
Key finding:
- Small firms give an average of more than two and a half times the amount per employee than do medium or large firms (small firms give $789 per employee, medium sized firms $172, and large firms $334).
Austin, Texas
Economic Impact
Analysis: Local Merchants vs.
Chain Retailers - December 2002
By Civic Economics, Austin IBA
Key Finding:
- For every $100 in consumer spending at a national chain bookstore in Austin, Texas the local economic impact was $13. The same amount spent at locally based bookstores yielded $45, or more than three times the local economic impact.
Barnstable, Massachusetts
Fiscal Impact Analysis of Residential and Nonresidential Land Use
Prototypes - July 2002
By Tischler & Associates
Key findings:
- Big box retail, shopping centers, and fast-food restaurants cost taxpayers in Barnstable, Massachusetts, more than they produce in revenue. The study compares the tax revenue generated by different kinds of residential and commercial development with the actual cost of providing public services for each land use.
- Big box retail generates a net annual deficit of $468 per 1,000 square
feet, shopping centers a deficit of $314, and fast-food restaurants a
deficit of $5,168 per 1,000 square feet. In contrast, the study found that
specialty retail, which includes small-scale businesses, has a positive
impact on pubic revenue ( i.e., it generates more tax revenue than it costs
to service). Specialty retail produces a net annual return of $326 per
1,000 square feet. (excerpted from ILSR)
Iowa
The
Impact of 'Big-Box' Building Materials Stores on Host Towns and
Surrounding Counties in a Midwestern State - 2001
By Economics Professor Kenneth E. Stone and Extension Program Specialist
Georgeanne M. Artz, Iowa State University
This study examines several Iowa communities where big box building supply
stores, such as Menards and Home Depot, have opened in the last decade.
Key findings:
- Sales of hardware and building supplies grow in the host communities, but at the expense of sales in smaller towns nearby. Moreover, after a few years, many of the host communities experienced a reversal of fortune: sales of hardware and building supplies declined sharply, often dropping below their initial levels, as more big box stores opened in the surrounding region and saturated the market.(excerpted from ILSR)
NEF Community Tools for Measuring the Local Multiplier
The New Economics Foundation (NEF) has published handbooks on Plugging the Leaks in a community, and on Measuring the Local Multiplier.
Plugging the Leaks is a community-led economic development strategy tool that enables a community to identify the economic resources in their local economy and determine ways to use them more effectively.
Local Multiplier 3 is an impact measurement tool that measures how income is spent and re-spent in the local economy. The purpose of tracking and measuring this spending is to identify opportunities to strengthen linkages in the local economy so that efforts can be made to keep money circulating locally.
For additional studies, we recommend the Institute for Local Self Reliance's website on New Rules.
