OBVIOUS: shopping locally keeps twice as much money circulating in the community

by Caleb Reading

Via The Economist:

In 2002 the city of Austin planned to extend about $2m in incentives to a developer who wanted to build a new Borders bookstore on a prominent downtown corner. This was an unpleasant prospect for the owners of two local independent businesses, BookPeople and Waterloo Records. If the deal had gone through they would have faced a big competitor located directly across the street. Steve Bercu, the owner of BookPeople, says that he always assumed that local businesses were better for Austin for sound economic reasons. But in the circumstances, he wanted to test the proposition.

So BookPeople and Waterloo called in Civic Economics, a consultancy. They went through the books and found that for every $100 spent at the two locals, $45 stayed in Austin in wages to local staff, payments to other local merchants, and so on. When that sum went to a typical Borders store, only $13 went back into circulation locally.

[…] Dan Houston, a partner at Civic Economics, says that in recent studies he has found that locally-owned businesses put about twice as much money back into the community as the chains do, not three times, as the Austin study found.