Washblog

Austin, 2002
Economic Impact Analysis: Local Merchants vs Chain Retailers, Civic Economics, 12/02
Modest changes in consumer spending habits can generate substantial local economic impact.  For every $100 in consumer spending at Borders, the total local economic impact is only $13.  The same amount spent with a local merchant yields more than three times the local economic impact.  If each household in Travis County simply redirected just $100 of planned holiday spending from chain stores to locally owned merchants, the local economic impact would reach approximately $10 Million."

The launch is well-planned, with many businesses already signed up and a number of sponsors, including Classical King FM 98.1, PCC Natural Markets, The Russell Family Foundation, and Fisher Communications providing support. King FM, will be running 10-15 advertisement spots daily. Support also comes from other local organizations focused on sustainability -- most notably, Seattle Business Alliance for Local Living Economies (BALLE) and Bainbridge Graduate Institute, both of which provided input during the planning stages. Puget Sound Community Change also has active input from Dr. Viki Sonntag, the economist who headed Sustainable Seattle's Local Food Economy Study.

In conjunction with the Puget Sound launch, Interra has organized Green October, a wide-ranging collaboration of groups around the Puget Sound region that are producing community events focused on sustainability.  Information on the Interra program will be offered at many of these events, as well.  

The business information session held at Theo Chocolate in August was packed with attendees representing a diverse range of businesses. I'd guess about 50 businesses and business associations, including two chambers of commerce, two grocery stores, two companies that offer home-delivery of organic, locally-grown food (Small Potatoes Urban Delivery and Pioneer Organics), at least one restaurant, two book stores, a gym, a movement studio, several consultants, a public relations firm, an ad agency, a socially-responsible investment firm, a physical therapy clinic, and a number of other retailers and service providers were present. Some were present to support the program, having already signed on. Others were gathering information. There were also government representatives (Seattle Department of Neighborhoods) and non-profits, for example Sustainable Cascadia.

Photos from an informational gathering for Puget Sound Community Change held at Theo Chocolate in Fremont last month.  PCC is a community loyalty program launching in October.  Left to Right: Bill Burroff, Classical King FM 98.1; Brittany Jacobs,  Interra Project; Nathaniel Rosquist, Interra Project; Emilie Engelhard, A Fresh Squeeze. (second photo) Derek Hoshiko of Seattle Business Alliance for Local Living Economies (BALLE); Wanda Benvenutti of Seattle BALLE; Dr. Viki Sonntag of Ecopraxis.

"LOCAL" MEANS A WEB OF RELATIONSHIPS ROOTED IN PLACE
So what makes this program different from, say, the one run by Working Assets telephone company, which allows customers to vote on which nonprofits will receive donations?

Any retail sale is the culminating event of a chain of transactions between many players.  We can think about the sale of a loaf of bread at a supermarket or farmer's market, for example, as the last of numerous exchanges between growers, manufacturers, packagers, distributors, transporters, marketers, and so on.  When we hand over our cash, we're sending ripples throughout a complex economic network.

One of the ways that our purchase choices impact that chain of relationships and the local economy is described is through a measurement called the "local multiplier effect" (LME). LME describes the share of each dollar that recirculates locally (in a community, state, or region) during subsequent generations of transactions before moving out into the larger economy. The longer a dollar stays local -- and the faster it is re-spent locally, the more economic boost it confers. A dollar spent at a locally-owned business helps that business and community. But it also feeds the entire chain of local economic relationships that precede and follow the retail transaction. This economic impact is the subject of several recent research studies, as seen to the left. It's also the resource that the Interra project builds on.

Interra's program resembles one like Working Assets in the sense that it engages consumers in channeling funds to good causes. But it goes beyond that by building up the economy at the local level, throughout that chain of local economic relationships, where businesses have faced often overwhelming competition from big box retail and other centralized economic forces. It's a new kind of approach to meeting the challenges of big-box retail and other forces that fragment community -- not by fighting or excluding, but by helping to level the playing field and bringing people together.

In its most basic sense, it is a relationship-building program, bringing together stakeholders across the business and social and environmental activism divides, and linking local economic players.  It goes beyond "doing good" to actually moving markets in more functional directions by building them back up where they have been weakened.

Sera Swan at the tasting bar of Theo Chocolate in Fremont, Seattle, on August 20, 2007. Theo Chocolate: "Organic and Fair Trade Certified True Chocolate Makers"