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The Economic Impact of Locally Owned Businesses vs. Chains: A Case Study in Midcoast Maine

Studies and Research  

by the Institute for Local Self-Reliance and Friends of Midcoast Maine, September 2003.

Three times as much money stays in the local economy when you buy goods and services from locally owned businesses instead of large chain stores, according to this analysis, which tracked the revenue and expenditures of eight locally owned businesses in Midcoast Maine. The survey found that the businesses, with had combined sales of $5.7 million in 2002, spent 44.6 percent of their revenue within the surrounding two counties. Another 8.7 percent was spent elsewhere in the state of Maine.

The four largest components of this local spending were: wages and benefits paid to local employees; goods and services purchased from other local businesses; profits that accrued to local owners; and taxes paid to local and state government. Using a variety of sources, the analysis estimates that a national big box retailer operating in Midcoast Maine returns just 14.1 percent of its revenue to the local economy, mostly in the form of payroll. The rest leaves the state, flowing to out-of-state suppliers or back to corporate headquarters. The survey also found that the local businesses contributed more to charity than national chains.

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Economic Impact Analysis: A Case Study

Studies and Research  

by Civic Economics, December 2002

This study examines the local economic impact of two locally owned businesses in Austin, Texas—Waterloo Records and Book People—and compares this with the economic return the community would receive from a Borders Books store. The study finds that spending $100 at Borders creates $13 worth of local economic activity, while spending $100 at the local stores generates $45 in local economic activity.

The difference is attributed to three factors: a higher local payroll at the independent stores (because, unlike Borders, none of their operations are carried out a an out-of-town headquarters office); the local stores purchased more goods and services locally; and the local stores retained a much larger share of their profits within the local economy.

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Fiscal Impact Analysis of Residential and Nonresidential Land Use Prototypes

Studies and Research  

by Tischler & Associates, July 2002

Sprawling shopping centers cost taxpayers in Barnstable, Massachusetts, more than they produce in revenue, according to this analysis. The study compares the tax revenue generated by different kinds of residential and commercial development with the actual cost of providing public services for each land use. The study found that big-box retail generates a net annual deficit of $468 per 1,000 square feet.

Shopping centers likewise produce an annual drain of $314 per 1,000 square feet. In contrast, the study found that “specialty retail,” a category that includes small-scale neighborhood and downtown businesses, has a positive impact on public revenue (i.e., it generates more tax revenue than it costs to service). Specialty retail produces a net annual return of $326 per 1,000 square feet.

The two main factors behind the higher costs for big box stores, shopping centers, and fast-food outlets, compared to traditional neighborhood and downtown retail stores, are higher road maintenance costs (due to a much greater number of car trips per 1,000 square feet) and greater demand for public safety services.

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