A study commissioned by Vital Communities finds that, for every dollar they earn, local retailers and restaurants return a share to the local community that’s up to four times as big as that of chain businesses.
“This study really spells out just how important it is to support our local businesses that are rooted in and support our communities, said Nancy LaRowe, director of Vital Communities’ Vital Economy initiative. “Many local businesses are struggling to stay afloat right now. We need to be there for them now by buying locally, so they will be here for us in the future to create stable jobs, enhance community character, and invest in our communities.”
Vital Communities will use this data as the basis for “buy local” education and campaigns, and as a baseline measure as we work to increase local control and investment in the Upper Valley with projects to increase community resilience.
This is in addition to ongoing ways Vital Communities supports the local economy, including marketing technical support; community crowdfunding; encouraging business networking, collaboration, and resource sharing; and innovative projects like Upper Valley Everyone Eats.
The study was conducted by Civic Economics, a renowned consultant group that has done similar “Indie Impact” studies in other regions of northern New England, as well as for Austin, Chicago, San Francisco, Phoenix, Grand Rapids, and New Orleans. Civic Economics has offices in Chicago and Tulsa, OK. The study was funded through a USDA Rural Development Rural Business Development Grant.
To aid the study, Vital Communities collected surveys from 20 independent, locally owned retailers and restaurants in Upper Valley communities on both sides of the Connecticut River. Each business was asked to answer detailed questions about its business practices. The survey questions focused on how much of each business’s revenue recirculates in the regional economy through profits paid out to local owners; wages paid to local workers; goods and services used by the business; local goods resold by the business; and charitable giving within the community.
Collectively, the 20 retailers and restaurants return a total of 55.5% and 68.4% of their revenues, respectively, to the local economy. By comparison, Civic Economics found that four major national retail chain stores (Barnes & Noble, Home Depot, Office Depot, and Target) recirculate only an average of 13.6% of all revenue within the local markets that host its stores, while three major national restaurant chains (Brinker International, which owns Chili’s and others; Darden, which owns Olive Garden and others; and McDonald’s) return an average of 30.4% of all revenue to the local economy. Civic Economics derived those percentages by aggregating data made public in annual reports.
This means that local retailers were found to return to the local economy a percentage of their revenue that’s more than four times higher than that of the chain retailers, while local restaurants return a percentage that’s more than two times higher than that of chains.
With the mammoth online retailer Amazon and its Whole Foods grocery chain, the outcomes are even more dramatic. Civic Economics estimates that the region generated more than $165 million of sales in 2019 for Amazon; as there are no Amazon warehouses or Whole Foods outlets in the region, virtually all $165 million dollars left the Upper Valley instead of being reinvested in our people, communities, and economy.
The pandemic ratcheted up the “Amazon Effect,” LaRowe said. “Online retail sales increased more than $100 billion due to the pandemic at the expense of our local businesses and our communities. It’s more critical than ever to have data that shows how that trend is truly hurting our local economy. Each time we buy local, we are making a choice to invest in our community, instead of sending our dollars to remote entities.”
A Closer Look
Of the 55.5% of revenues that local retailers recirculate in the local economy, 28.2 percent is in profit and wages, 17.9 percent for local items for resale, 5.3 percent for local goods and services used by the business, and 4.1 percent is charitable giving. Of the 68.4 percent that local restaurants recirculate in the local economy, 40.7 percent is profit and labor, 13.8 percent is for local items for resale, 10.8 percent is for goods and services used by the business, and 3.1 percent is charitable giving.
Analyzed by the square footage of the businesses footprints, chain employee 12.1 people per square foot while “indys” employ 16.1; and chains keep $199 local per square foot while indys keep $489.
Broken down by state, the study found the Vermont retailers return 56.3% of their revenue to the local economy and New Hampshire retailers return 51.0%; and the Vermont restaurants return 66.5% while those New Hampshire return 69.7%.
Participating Upper Valley Businesses
Claremont Spice & Dry Goods
Co-op Food Stores
Dan & Whit’s General Store
Enfield House of Pizza
King Arthur Baking Company
Kit ‘N Kaboodle Thrift
Left Bank Books
Long River Gallery
Peyton Place Restaurant at The Historic Mann Tavern
Cloudland Farm, LLC
Poor Thom’s Tavern
Post Pond Lodge LLC
Prince and the Pauper Restaurant
Taverne on the Square, LLC
Time-Out Americana Grill
Trail Break Taps + Tacos
This project was funded by a USDA Vermont Rural Development Rural Business Development Grant.