Local Shopping Statistics: Facts on Buying Local

1. Small businesses generate $68 of local economic return for every $100 spent with them. 
2. Over $9.3 billion would be directly returned to our economy if every US family spent just $10 a month at a local business. 
3. Businesses with fewer than 500 employees account for 99.7% of all US employers.
4. 108 million shoppers spent $12.9 billion on Small Business Saturday. 
5. Small businesses donate 250% more than large businesses to community causes. 
6. Small businesses employ 58.9 million people.
7. Local business generates 70% more local economic activity per square foot than big box retail.
8. Shipping produces 1 billion metric tons of C02 a year.
9. More than a quarter of small business owners are immigrants.
10. 48% of overall growth of US business ownership is attributed to immigrant business owners.
11. 25% of local businesses closed because of low sales or limited cash flow.
12. 65% of Americans’ shopping budgets is still spent in-store.
13. 73% of searchers trust a local business more because of positive reviews.
14. 65 million local businesses have a Facebook page.
15. But only 4 million are taking advantage of Facebook advertising products.
16. 61% shop at local businesses because of their unique product selection.
17. 56% of workers at locally owned businesses have high commitment scores.
18. Minnesota is the best large state for local businesses.
19. And South Dakota is the best small state for local businesses.
20. Pittsburgh is the best metropolitan area for local businesses.

Local shopping statistics tend to paint a picture contrary to the age-old dichotomy of the main street retailer vs.  gigantic, faceless Wall Street financial firms. Local shopping statistics indicate that, competitively, main street business’s true foils are actually big-box stores including Costco, online retailers like Amazon, and large brick-and-mortar retailers like Walmart and Target. 

Local consumers flock to these corporate competitors because of low prices and the large selection of products available—sometimes at the expense of local businesses.

Local businesses are at the heart of US communities, and with the rise of mega-retailers, many towns have organized to back their local stores. With “buy local” or “local first” campaigns,  towns like Tucson, Arizona encourage residents to keep locally owned and independent businesses thriving at the expense of deals at larger retailers. [17]

As the following local shopping statistics make clear, local businesses provide a slew of community benefits. They generate greater investment back into their local area, higher commitment from their workers, and even more sustainable environment practices. As a consumer in your own community and even as a local business owner yourself, you should  absolutely know these 20 actionable and surprising local shopping statistics:

Maybe you’re running a local business and trying to keep up with a big-name competitor. Or perhaps you’re a consumer who’s simply trying to understand the facts behind shop small campaigns. Maybe you’re both. Regardless of where you stand, it’s difficult to fully extract yourself as a consumer from monolith chains. Low prices and convenience are among the many reasons why even the most conscientious of shoppers continue to patronize huge, national businesses. 

However practical these reasons might be, there are even more practical arguments for whittling down your non-local shopping habits. Here are 20 reasons to shift your consumer habits to be more local shopping-centric.

Local business shopping generates $68 of economic contribution for every $100 spent. Meanwhile, spending the same amount at a non-local business like a national chain only generates $43. Wages, local taxes, and donations stay in the local economy with both types of businesses. Local economies do miss out on the purchasing of local services like accounting or marketing services and the purchasing of local supplies with non-local businesses. [1]

To put that number into perspective, Huff Post crunched the numbers a bit. They found that if every US family spent just $10 a month at a local business, then over $9.3 billion dollars would directly funnel back into the economy. [2]

Though the definition of a small business will fluctuate based on industry, generally speaking, the SBA defines small businesses as businesses with fewer than 500 employees. According to that standard, small businesses make up a whopping 99.7% of all US employers.

Even as you look at businesses with fewer and fewer employees, the numbers are still surprising. Businesses with fewer than 100 employees still make up 98.2% of US employers, and businesses with fewer than 20 employees make up 89% of US employers. [3]

Small Business Saturday is an American Express-sponsored holiday that encourages consumers to shop at local businesses in droves.  This holiday has attracted 108 million shoppers to spend $12.9 billion at small, independently owned businesses in one day. 

Small Business Saturday statistics show that 70% of US consumers reported that they were aware of Small Business Saturday and that 43% of American adults participated. [4]

Small businesses donate 250% more than larger businesses to local nonprofits and community causes. [16] Additionally, a solid majority of polled small businesses—exactly 52%—were planning on donating to charity. [5] So, when you shop with local businesses, you’re putting money back into your community’s economy, but not simply in a nondescript, economical way. This high rate of small business giving means that your money is more likely to go directly towards local charitable causes, as well.

Across the country, small businesses employ 58.9 million people, which makes up 47.5% of the country’s total employee workforce. [6] Considering that small businesses are measured by the number of employees they have, this proportion is pretty remarkable. Even though small businesses, by definition, employ fewer people per business, they still keep almost half of the country’s workforce employed. Local shopping means, however indirectly or directly, that you’re keeping community businesses open and community members employed.

Put geographically, small businesses are still better for the local economy. Huff Post found that local businesses generate 70% more local economic activity per square foot than big box retail stores. [2] Your town only has so much space for businesses—dedicating that space to local businesses instead of huge warehouses or giant chains will mean your city using that commercial space 70% more efficiently.

Local businesses are more environmentally efficient, as well. Huff Post reported that shipping produces a staggering 1 billion metric tons of CO2 per year and produces approximately 25% of most countries’ carbon emissions. 

Because shopping at local businesses entails a fraction of the shipping that chains and online shopping entails—if any at all—local business shopping is car more environmentally friendly. Plus, 59.3% of local, independent makers say they occasionally or usually use recycled materials and industrial sources carse 50% of pollution in the US. [2] By purchasing what you need locally, you can reduce pollution, processing, packaging, and the generation of transportation waste.

28% of local small business owners are immigrants—and this is an especially impressive local business statistic when you look at the proportion of immigrant entrepreneurs and workers in general. Immigrants only make up 16% of the labor force and 18% of overall business ownership. 

And many immigrants run businesses that are crucial for the success of a town. For instance, 53% of grocery stores, 45% of nail salons, 43% of liquor stores, 38% of restaurants, and 32% of both jewelry and clothing stores are owned by immigrants. [7] Immigrant business owners are running small, community-focused businesses in disproportionately large numbers, and, as a result, we have even more local businesses to shop at and support our communities’ economies.

And the proportion of small business owners who are immigrants is getting bigger and bigger every year. In fact, 48% of overall growth in US business ownership is attributed to immigrant business owners. [7] 

Again, this statistic is even more surprising when you consider it relative to the number of immigrants in the workforce. Immigrants are starting small businesses in droves, and they’re helping grow their local economies in the process.

Local shopping statistics aren’t all inspiring, though. In fact, a quarter of former business owners said their primary reason for closing their firm was low sales or cash flow. That’s 25% of all small businesses closing due to lack of business. [8] Clearly, we all need to do some more local shopping if we want this disheartening statistic to change. The more local business shopping you do, the fewer local businesses that will shut down due to low sales—it’s that simple.

Despite the fact that many small businesses shut down due to low sales, 65% of Americans’ shopping budgets are still spent in-store. This shopping statistic indicates that online shopping isn’t as huge of a threat to local businesses as large retail chains are. Consumers are doing a majority of their shopping in person, so why are small businesses not reaping the rewards of this in-store consumer preference?

Indeed, consumers still majorly hesitate in making online purchases. The primary reasons that consumers still hesitate to shop online are shipping costs, the inability to try the product in advance of the purchase, difficult return processes, and concerns about privacy. [9] Though local businesses can offer solutions for these pain points, they are still having a tough time competing against brick-and-mortar chains.

97% of consumers search online for a local business, and 73% of searchers trust a local business more because of positive reviews. Even more, 68% of consumers left a local business review when asked. [10] Clearly, online reviews are high stakes for local businesses. If you don’t have the brand awareness of a huge corporation behind you, consumers will want to do their research first. 

If you’re a loyal customer, this is a great way to support your favorite local business. A glowing review will help encourage other shoppers to opt for you favorite small business over any chain they might habitually shop at.  And if you’re a local business owner, don’t be afraid to ask for an honest review. Your patrons will likely be happy to oblige, and the numbers prove it.

65 million local businesses have a Facebook page. Compare that to the mere 5 million local businesses that have set up Instagram accounts, and you’ll realize just how important Facebook is for local businesses. Small businesses are establishing themselves on social media mostly through free Facebook features, which offer an affordable and straightforward way to communicate with customers and market. [11]

All that said, much fewer businesses are actively running ads on Facebook. In fact, only 4 million local businesses are using any Facebook advertising products. That’s a scant 6% of all local businesses on Facebook. Small businesses value the platform itself for the communication and free marketing it allows, but for the most part, they’re not interested in paying for formalized marketing campaigns through the platform. However, the number of local businesses running paid ads through Facebook far outperforms how many are paying for Instagram ads. Only 500,000 small businesses are investing in paid Instagram ads. [11]

According to a consumer poll, 61% of consumers shop at local businesses because they want to access a unique product selection. And this is the most cited reason for choosing a small business over a large chain. However, because polled shoppers were allowed to choose multiple answers, other reasons weren’t far behind. 

Shoppers provided the following reasons when they were asked why they prefer small and local retailers over larger retailers:

• 61% – Local businesses offer a unique product
• 49% – I couldn’t find what I needed from bigger businesses
• 40% – I want to support the community or small businesses
• 29% – I like to try new retailers
• 26% – Local businesses feature a broader assortment
• 24% – Local businesses provide an innovative shopping experience

By providing unique products or services, local businesses can set themselves apart from larger competition, as shown by the top two shares of respondents. While trying to sway shoppers into choosing your local business over a chain competitor, be sure to emphasize that your business offers a unique, specific-to-the-community product that huge companies can’t provide. [12]

Not only do consumers really love shopping at local businesses; employees really love working for local businesses, too. 56% of workers at locally owned firms have high commitment scores. Meanwhile, only 38.7% of workers at non-locally owned firms had similar scores.High commitment includes a sense of loyalty and the demonstration of commitment to the organization. 

On top of sharing these local business statistics, the authors of this study write that small, local businesses are “linchpins of community attachment and sustainability.” Moreover, they add that “locally owned businesses are associated with an improved quality of life and a more robust civil society.” [13] Working for a local business means that your employer likely lives in the same community as you, and you’re more likely to work face-to-face with all of your fellow employees. You’re also more likely to have community ties outside of work with your coworkers if you’re employed by a local business. Altogether, working for a local business tends to make for a more personable employee experience, leasing to considerably more commitment to employers.

According to a study run by Kauffman, Minnesota has a remarkably good economy for small businesses. In the study, researchers divided the US into the 25 biggest states and the 25 smallest states, so as not to compare apples to oranges. After measuring multiple metrics for each state that indicate a hospitable economy for small businesses, researchers found that Minnesota is the best large state for local business entrepreneurship. 

The Land of 10,000 Lakes, Minnesota, ranked first for these factors:

• 50.76% of Minnesota businesses remained in operation through their first five years.
• 7.75% of Minnesota’s population owns a business as their primary job.
• Per 1,000 firms, 687.2 Minnesota businesses are small businesses. [14]

After measuring the same metrics for the smaller 25 US states, Kauffman researchers found that South Dakota offered the best environment for local small business entrepreneurship.

South Dakota ranked first of all small US states because:

• 53.47% South Dakota businesses remained in operation through their first five years.
• 10.75% of South Dakota’s population owns a business as their primary job.
• Per 1,000 firms, 681.8 South Dakota Businesses are small businesses. [14]

Kauffman researchers also looked into metropolitan areas to see which city in the US offers the most promising economy for local businesses. By measuring the same metrics they applied to their states index, Kauffman researchers found that Pittsburgh is the best metropolitan are for local business entrepreneurs to start a small business.

According to the study, Pittsburgh ranked first of all major metropolitan areas because:

• 53.78% of Pittsburgh businesses remained in operation through their first five years.
• 5.25% of Pittsburgh’s population owns a business as their primary job.
• Per 1,000 firms, 694.2 Pittsburgh businesses are small businesses. [14]

Although few consumers can shift their spending to local business shopping exclusively, buying a cup of coffee at the local coffee shop instead of Starbucks, or visiting a trusted garage instead of Pep Boys can be a boon to your local economy and even the environment. As the statistic on online search showed, even a positive Google or Yelp review can lead to more local business for your home community.

A great local business shopping culture can’t be developed overnight—but a community can work toward it through running local purchasing campaigns and encouraging conscious patronage by residents. Wielding these convincing local business shopping statistics should certainly help.

References:

1. https://www.amiba.net/resources/multiplier-effect/
2. https://www.huffpost.com/entry/why-buying-local-is-worth_b_4310520
3. https://sbecouncil.org/about-us/facts-and-data/
4. https://www.cnbc.com/2017/11/27/small-business-saturday-sales-down-for-2017.html
5. https://smallbiztrends.com/2016/12/small-business-donations.html
6. https://www.fundera.com/blog/small-business-employment-and-growth-statistics
7. http://www.as-coa.org/articles/bringing-vitality-main-street-how-immigrant-small-businesses-help-local-economies-grow
8. https://www.sba.gov/sites/default/files/Small_Biz_Facts_Why_Do_Businesses_Close_May_2018_0.pdf
9. https://smallbiztrends.com/2017/09/small-business-retailers-need-know-online-consumer-behaviors-right-now.html
10. https://www.brightlocal.com/learn/local-consumer-review-survey/
11. https://geomarketing.com/facebook-starts-2017-with-65-million-local-business-pages
12. https://smallbusiness.com/selling/small-and-local-retailers-preferred-by-shoppers/
13. https://www.researchgate.net/publication/267506705_Small_local_and_loyal_How_firm_attributes_affect_workers’_organizational_commitment
14. https://www.kauffman.org/kauffman-index/reporting//-/media/kauffman_org/microsites/kauffman_index/main_street_2016/kauffman_index_main_street_state_trends_2016.pdf
15. https://www.kauffman.org/kauffman-index/reporting//-/media/kauffman_org/microsites/kauffman_index/main_street_2016/kauffman_index_main_street_metro_trends_2016.pdf
16. https://www.score.org/resource/infographic-small-business-charitable-giving-big-impact-local-communities
17. https://www.visittucson.org/business/local-first-arizona

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