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Michael Amsler
NORTH BAY BOHEMIAN | DECEMBER 5-11, 2012 | BOHEMIAN.COM
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PROVING RESULTS Steve Maass and Tom Scott of Oliver’s Market, which participated in a report on shopping locally.
Reinvestment 101 Studies show shopping locally triggers mutually beneficial ‘multiplier effect’ BY LEILANI CLARK
W
alk through any Sonoma County smallbusiness shopping district and you’ll see Go Local signs in many shop windows. Still in its infancy, the movement that exhorts people to shop locally has gained widespread recognition in a relatively short period of time.
But while buying local might make people feel good about themselves and their progressive life choices, the question remains: What does it really mean economically when one purchases something sold, and possibly manufactured, locally rather than the same product sold at a Walmart and manufactured in a fire-prone Bangladeshi factory? “It does have an effect,” says Dr. Robert Eyler, economics
department chair at Sonoma State University. “In nonlocal businesses, the revenue goes away from the local area and any residual left remains outside.” According to “The Economics of Local: Oliver’s Market as Case Study,” a 2011 report by SSU’s School of Business and Economics, for every purchase of local goods at a local store, there is at least a 32 percent larger economic impact on the county.
The bottom line is that the choice of a locally owned store over a big-box can mean a thriving interdependent local economy instead of one where sales taxes are among the only economic benefits that don’t “leak” out of state, into the coffers of whichever corporation is at the helm. “They’re like miners, coming here and taking the gold out of our city,” says Terry Garrett of Go Local, likening corporate chains to “wealth-extraction units.” Keeping the value chain—from supplier/producer, to distribution, to retail sales, to local buyers— contained completely within a local area is key to a strong economy, according to the SSU report. When any part of the chain is broken, “leakage” occurs, meaning money that could have been funneled back into the local economy instead exits the area completely, never to return. “If the local economy buys goods only from nonlocal businesses, none of the business revenue beyond the local expenses remains local,” says Eyler. “It is, however, important to recognize that local economies are best off when exporting the maximum amount of goods and services, but we need flows in and out to provide choice and breadth of goods and services, which means leakages can never be zero. Minimizing leakages where possible is the best economicdevelopment strategy.” The “economic multiplier process” should not be underestimated, says Garrett. When someone makes the choice to buy from a local retailer, the recirculation into the community ends up being around 35 cents for every dollar, he says. This can translate into millions of dollars in business revenue for the county; additionally, recirculation often comes in the form of jobs. “The hiring of accountants, lawyers, graphic designers, public relations people, ad agencies, printers, even cleaning supplies— that’s where the multiplier effect really starts to kick in,” adds Garrett. Tom Scott, vice president and general manager of Oliver’s Market, headquartered in Rohnert Park, says that his company uses