Maine Study Confirms Value of Shopping Locally

The results of a recent survey of 28 locally owned businesses in Greater Portland, Maine, reveals that every $100 spent at a local business contributes an additional $58 to the local economy, while the same amount spent at a representative national chain store yields just $33 in local economic impact. In addition, the study, conducted by the Maine Center for Economic Policy (MECEP) [1], found that money spent at locally owned businesses generates 76 percent more economic activity in the Greater Portland area than money spent at national chains.

The study, which was sponsored by the Portland Independent Business and Community Alliance [2] and funded in part by a grant from the New England Independent Booksellers Association [3], confirms the findings of previous economic impact studies conducted in other parts of the country by Civic Economics [4] — that changes in consumer spending choices can add up to sizeable economic benefits for a region.

Using 2007 retail sales figures, the MECEP study found that a shift of just 10 percent of consumer spending from national chains to locally owned businesses would result in an additional $127 million in economic activity with 874 new jobs generating over $35.5 million in wages.

The 28 locally owned businesses in the Maine study currently account for more than $57 million in revenues in the Greater Portland area and pay 65 percent of their expenses to producers of local goods and services.

Business Expenditures by Locally Owned Businesses in Greater Portland

Paid to individual or business located in...

Source: MECEP analysis of business surveys. Note percentages may not equal 100% due to rounding.

The typical chain, however, remits its profits out of state and relies more heavily on professional services from out-of-state producers, resulting in fewer dollars returned to Maine’s economy.

Because locally owned businesses keep their profits in the local community and are more likely to purchase goods and services from local sources, their local spending has a multiplier effect on the local economy. MECEP’s analysis indicates that on a dollar-for-dollar basis the local economic impact of national chain retailers is significantly less than that of locally owned businesses.

The complete study is available on the MECEP website [5].