New Report Demonstrates Benefits to Local Economies When Consumers Unchain Their Hearts

October 23, 2003

On November 15, the Austin Independent Business Alliance (AIBA) will ask central Texas residents to celebrate their independence by foregoing chain-store shopping for one day in favor of local merchants. Local Austin businesses organized the event, Austin Unchained, in an effort to prove that even one day of shopping at locally owned businesses would have a significant economic impact on the city of Austin.

In conjunction with the event, AIBA commissioned "An Analysis of the Potential Economic Impact of Austin Unchained," a study, conducted by Civics Economics, that indicates AIBA's expectations are correct. "We can say with confidence," the study reported, "that the economic impact of a successful Austin Unchained event will be measured in the millions of dollars. This is the equivalent of dozens of new jobs in our community from a single day of changed consumer behavior."

Steve Bercu, owner of Austin's BookPeople

Steve Bercu, owner of Austin's BookPeople and president of AIBA told BTW, "There is a $15 million difference [in terms of local economic impact] if everyone shops at [only] locally owned businesses. That's $15 million into the local economy, and that's a substantial number…. Obviously, if you focus attention on locally owned businesses for Christmas, there would be a dramatic economic impact in your community."

This is the second study conducted by Civic Economics on the economic impact of locally owned businesses in Austin. In December 2002, Liveable City, a local Austin nonprofit group, and AIBA, BookPeople, and Waterloo Records commissioned the well-publicized study "Economic Impact Analysis: A Case Study, Local Merchants vs. Chain Retailers." The study indicated that for every $100 in consumer spending at Borders, the total local economic impact (LEI) is only $13. Conversely, the same amount spent at BookPeople, for example, yields $45 in LEI, more than three times as much.

Furthermore, the results of a recently released study conducted by the Institute for Local Self-Reliance (ILSR), which tracked the revenue and expenditures of eight locally owned businesses in three Maine towns, were remarkably consistent with the Liveable City study. (To read an article on this topic, click here.)

For the new study, Civic Economics was asked to evaluate the potential LEI of Austin Unchained. To do this, it forecast total sales for November 15, 2003, by studying sales for November 16, 2002, the Saturday that fell two weeks prior to Thanksgiving last year. Using data from the state comptroller's office, the study determined that "total taxable sales for [the month of] November 2002 in Austin totaled approximately $1.2 billion." Then, to help gauge what percentage of sales might occur on a Saturday -- typically the busiest day of the week -- AIBA members provided Civic Economics with a report of their day's sales for Saturday, November 16, 2002. From this data, it was estimated that "total taxable sales in the Austin on November 15, 2003, will total approximately $45 million."

Importantly, the study stresses that the underlying assumption is that central Texans will make no purchases in chain stores on that date and they will not defer purchases to another day. Since a creditable estimate of chain store market share across a variety of goods and services could not be gauged, Civic Economics calculated outcomes based on two hypothetical scenarios: that all sales were either in locally owned businesses or in chains, or that there was an equal distribution of market share.

In the first scenario, if all sales are conducted by locally owned businesses, it is estimated that $20.3 million could be returned to the local economy, as compared to $5.9 million for chains -- a $14.4 million impact differential. In the second scenario, if half the sales are made in local businesses, there is a potential LEI of $10.1 million, as compared to a potential impact of $2.9 million for chain stores -- a $7.2 million impact differential.

"In this time of economic uncertainty and challenges in Austin's core technology sectors, these millions of dollars are not inconsequential," the study notes. "Moreover, we have made no attempt, here or in previous studies, to quantify the economic benefit of maintaining Austin's unique character as personified by the diversity of its local business people. This we believe to be of greater importance to the long-term health of our community."

To read the complete report "An Analysis of the Potential Economic Impact of Austin Unchained," click here. --David Grogan

Topics: Main Street / Shop Local, News - Bookselling,