Shopping local benefits local economies
As Small Business Saturday approaches, the importance of shopping local benefits small retailers, local economy, jobs and more
NORTH COUNTY — The holiday season shifts into full gear this week and the region’s business associations are preparing for shoppers and Small Business Saturday.
From Mainstreet organizations in Carlsbad, Oceanside and Encinitas to others in Del Mar, Escondido and Vista, they are urging residents to shop local. The benefits are wide ranging, but from a local economic standpoint, shopping local provides tremendous upside in supporting job creation, growth and retention, along with providing more connected communities, said Erik Bruvold, chief executive officer of the San Diego North Economic Development Council.
Additionally, he said current trends suggest consumer confidence is high, and the region is poised for a solid retail and holiday shopping season.
Local importance
The economic benefits between shopping local compared to a national chain or online retailer are significant, Bruvold said. He said the latter can provide convenience and, sometimes, a better selection, shopping local directly benefits local jobs and government tax revenue, in some cases.
For every 100 direct jobs in local retail, the money spent creates, or supports, 48 secondary jobs. Conversely, shopping at a national chain creates just 14 secondary jobs, he said.
The reason is most small retailers tend to purchase their goods or services locally. For example, a business will hire a local bookkeeper or accountant, along with banking at a local bank or credit union or using a local real estate agent to find a location to rent or buy, among others, Bruvold said.
The major players, though, will bank through one of the major institutions, have a stable of accountants and some have their own real estate staff who travel the country to find suitable locations, Bruvold said.
According to a Capital One report, California has 68,478 retail employers and 357,684 sole proprietors. Also, $68 out of every $100 spent at local stores remains in the local economy.
“Those dollars all leave the region,” he added. “The bottom line is when you shop locally, those local retailers and store owners, the goods and services they need are more likely in our community. Those dollars stay here longer and circulate faster and more often.”
Tax revenue, meanwhile, sees fewer differences between an independent, local business owner and national chains for brick-and-mortar locations. The change, though, comes from online retailers, not the brick and mortars, Bruvold said.
Years ago, online retailers such as Amazon did not pay sales tax. However, states fought back, and part of the deal was states can collect tax revenue, but pool the money and distribute the tax to cities or counties based on population, he said.
“A problem for affluent cities like Del Mar, Carlsbad or Encinitas is that they likely have more purchasing power, but as a proportion of the population, they are probably seeing dollars … go to other areas of the county that have more population and proportionally less spending power,” Bruvold added. “The whole grand bargain was to throw it into a pool and apportion it out. Where that hurts is like Del Mar. They have 4,000 people and have more buying power than the average 4,000 people in the county.”
As for downtown areas or shopping districts, he said the benefits include stronger local businesses, the secondary effects and create vibrant communities. Shopping districts with character build community and are more likely to be found in local downtowns and retail districts rather than a big-box mall.
Bruvold said the expectations are consumers will spend, although the biggest challenge for small retailers is the pivot to “experience” spending, such as vacations or concerts instead of tangible goods, especially with an aging population.
National trends, data
The National Retail Federation’s October retail monitor shows core retail sales (minus restaurants) increased 0.83% month over month and is up 4.59% year over year. Consumer confidence also increased by 1.2% month over month.
As for the holiday sales season, NRF estimates growth between 2.5% to 3.5% compared to 2023 with total sales between $979.5 billion and $989 billion. Holiday spending in November and December 2023 totaled $955.6 billion.
The average consumer is projected to spend $902 for gifts, decorations, cards, food and candy, which $27 higher than last year.
Capital One reported the average person shops locally 213 times per year and spend up to $5.36 trillion (65% of retail sales) at local and independent retailers. Of those, 37% prefer to research online and purchase locally, while 50% of online searches result in a visit to a brick-and-mortar store.
Although convenience and availability are significant factors for online purchasing, 74% of consumers prefer to browse or buy locally, per Capital One.
As for California, independent retailers accounted for about $400 billion in sales in 2023 with an estimated $5.85 million in sales for the average retailer.
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