New Civic Economics Study, Same Results: Local Merchants Give More Back

October 21, 2004

On Thursday, October 21, Civic Economics released a new, in-depth local economic impact study, "The Andersonville Study of Retail Economics," that once again clearly illustrates that local merchants contribute significantly more money to the local economy than do retail chains. Building on its 2002 Austin study -- which assessed the economic impact of a publicly subsidized Borders Books & Music store in comparison to BookPeople and Waterloo Records -- Civic Economics' new analysis is significant in that it has widened its scope to compare 10 local firms with 10 chain businesses, from restaurants to bookstores to salons.

While the parameters of the new study may have changed, perhaps more noteworthy is the fact that report findings did not. According to the Andersonville findings, local merchants generate a substantially greater economic impact than chain firms, and, as such, the report stresses that "great care must be taken to ensure that public policy decisions do not inadvertently disadvantage locally owned businesses. Indeed, it may be in the best interests of communities to institute policies that directly protect them."

ABA COO Oren Teicher said of the study, which can be downloaded from the Civic Economics Web site at www.civiceconomics.com/Andersonville/AndersonvilleStudy.pdf, "While every community is different, ABA encourages stores to use this report in making the case in their communities about the greater economic impact of locally owned businesses."

Ann Christophersen, co-owner of Women & Children First, one of the retail establishments selected for participation in the study, said that the Andersonville findings leap off the page. "This cuts against the argument that by virtue of being bigger that a chain store is better," she said. "It can address a question looming in the minds of policy makers who may [wonder whether bigger is better]."

To create the study, the Andersonville Development Corporation (ADC), with the support of the Andersonville Chamber of Commerce and funding by Special Service Area District No. 22, retained Civic Economics to evaluate the economic impact of the neighborhood's locally owned businesses and to compare these results with the impact of competitive chains. The economic impact of 10 local firms and 10 chains were then determined. The study notes that to account for differences in revenue and size, the economic impacts were adjusted to two measures: impact per $100 revenue and impact per square foot.

Using either measure, the results showed that local firms generated 70 percent greater local economic impact than chains:

• For every $100 in consumer spending with a local firm, $73 remains in the Chicago economy.
  
• For every $100 in consumer spending with a chain firm, $43 remains in the Chicago economy.
  
• For every square foot occupied by a local firm, local economic impact is $179.
  
• For every square foot occupied by a chain firm, local economic impact is $105.
  

Christophersen said that she was pleased to see Civic Economics remove the "size issue" from the equation. "This takes it out of the realm of 'Wal-Mart would generate x amount of revenue.' It enables a person to make comparisons that aren't larger against smaller," she explained. "It makes the argument much clearer and pretty darn compelling. Rather than [city policy makers] wondering how to attract one national anchor, they should be asking how to attract 10 locally owned businesses…. There's more to be gained if what you're interested in is creating a viable, sustainable business and shopping district. It helps the whole economic underpinning."

To read more about Main Street Alliances and the 2002 Austin Study, click here. --David Grogan

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