A few weeks ago, Jody Colley, publisher of the Berkeley, California–based East Bay Express, decided to tap into the consumer market and boost her local economy. She placed an ad in the Express asking readers to pledge to spend $100 of their shopping money at locally owned stores. In exchange, readers are entered to win $1000 in gift certificates to area merchants and restaurants.
"This is the scariest holiday season that many of us probably remember," Colley says. "We're facing the perfect storm for a really bad holiday season."
Colley got the idea for her promotion after reading the Andersonville Study of Retail Economics, a 2004 report prepared by the Civic Economics consulting group and the Andersonville Chamber of Commerce, which represents a revitalized neighborhood on Chicago's North Side. That survey concluded that if a Chicago resident spent $100 at locally owned businesses, $68 stayed in the city's economy. That's as opposed to $43 for every $100 spent at a chain-store outlet.
When Colley crunched those figures against the Express's weekly circulation, she found that if all her readers honored the pledge, they'd keep an additional estimated $3.7 million in the Berkeley area. Colley pushed her agenda on other newspapers across the country and, as of press time, 79 publications, including the three editions of the Phoenix, agreed to run the ad. If everyone counted in the BostonPhoenix readership made and kept the pledge, an estimated $3.9 million that otherwise would have gone off to some remote corporate headquarters would stay in Metro Boston.
"Dealing with your local merchant is incredibly important to building a local economy," says Ryan. "If you're circulating your money within your community, there's no more leakage." Ah, leakage, the unfortunate economic term for money that leaves a community when local shoppers buy non-local goods or services.
Of course, within the larger economy, the local buck has to stop somewhere. Leakage is inevitable. Your local coffee shop can't buy domestic coffee beans. Nor is the neighborhood indie hardware store able to sell only locally made tools. And at some point, somebody's going to spend some of those surplus "local" dollars at a national chain retailer. So the grand estimates of how much cash could "stay in the community" should be understood in the context of "but not forever." Any growing economy requires an influx of new money, and there's the rub.
Still, raising the bottom line of a local retailer or manufacturer, even briefly, is a positive step. Chain-store money that gets banked off to a corporate headquarters in Michigan certainly isn't as likely to be invested in the community it came from as are dollars filtered through a middle-man who actually lives down the street.
"The number-one reason to buy from a locally owned business is you get twice as much bang for your buck. Profits go right back into the community," says Laury Hammel, owner of the Massachusetts-based Longfellow Clubs spas and a member of the Sustainable Business Network of Greater Boston.
"I live in Cambridge," he explains. "Say I take my $100 and go and spend it at the Harvard Book Store. Then, the owner decides he's going to go over to Curious George & Friends to buy a present for his kid. Then that guy goes for dinner over at Harvest and they then go to the local hardware store to replace some bulbs. If you do that five times, you're taking that $100 and making $300."
