On Friday, August 3rd, Stocktonians filed in to Whirlow’s Tossed and Grilled on Pacific Avenue to show their appreciation and support for the Miracle Mile restaurant. Today, August 16th, a similar phenomenon is taking place at Capital Donuts in the College Square shopping center. Both of these events are not random, and represent a new social media trend– with an altruistic twist– known as the cash mob.
The cash mob concept was born in the fall of 2011 in the equally distressed city of Buffalo, where local businesses struggle to survive amidst chain stores and a falling population. Residents there, concerned with the loss of local businesses, came up with a simple yet powerful idea: get a lot of people to spend some money at a local business– all at the same time. In addition to giving local merchants a one time boost, planners also hoped to introduce small businesses to residents who may have never gone to the store otherwise in hopes of creating repeat customers. Since the cash mob concept came to fruition, the trend has spread to many other cities and neighborhoods, and as of this month, Stockton is now one of them.
Stockton Cash Mob, created by Stockton resident Lauren Sage, has so far hosted two such events, according to the group’s facebook page. The goal is to target two local businesses per month in an effort to provide these stores with a much needed boost in revenue as well as providing some extra exposure. The thought is that by supporting local businesses, we can help keep our friends and neighbors who own these businesses afloat.
But beyond being a nice gesture, what are the benefits of supporting a local store? For many in Stockton, it is much easier to shop at Wal-Mart or cheaper to dine at the Olive Garden. Why should we support local businesses, outside of the fact that the people who run them are our neighbors?
As it turns out, there is a very strong economic case for doing more of your shopping at small businesses, and it has nothing to do with being nice.
In a nutshell, spending your dollars at a locally owned business helps the local economy much more than shopping at a chain store. The money you spend at Manny’s California Fresh is staying within the community, while revenue collected at the Jack in the Box across the street does not.
In a report released this month, researchers from Civic Economics examining businesses in Salt Lake City discovered that local restaurants returned 79% of their revenue back into the local economy. National restaurant chains, such as McDonald’s and PF Chang’s, on the other hand, recirculated just 30% of their revenue. This research in Salt Lake City is just the latest in a plethora of studies done on shopping locally, and reaffirms the findings of reports done in other cities. For example, last year in Portland, Maine, The Maine Center for Economic Policy found that for every $100 spent at a locally owned business, an additional $58 is contributed to the local economy. By contrast, $100 spent at a chain store generated just $33 in economic impact. In New Orleans, only 16% of the money spent at the local SuperTarget stayed in the local economy, while 32% of revenue generated by small businesses went back into the local economy. In Michigan, another analysis of restaurants yielded the same results: chain restaurants put 37% of their revenue back into the economies of Grand Rapids and the surrounding Kent County, while local eateries cycled 56% back. You get the picture.
How is this possible? Big stores, small stores, they all pay taxes, right? Correct, but it’s what they do with their revenue where the real distinction is made. Local businesses generate more for the local economy because they generally purchase goods and services from local vendors, whereas chains generally do not. Chili’s relies on a huge national network of vendors, while an independent restaurant joint is probably using local suppliers.
The most striking takeaway from these studies is not about how much more money gets put back into the community through shopping locally, but how greatly local economies can benefit even from small changes in consumer habits. In Portland, researchers found that if residents there simply shifted 10% of their purchases to local merchants, it would generate $127 million in new economic activity as well as create 874 more jobs. In New Orleans, the same shift of 10% from chains to mom and pop shops would generate $235 million extra in economic gains.
These findings illustrate the ease with which consumers in Stockton can help change the trajectory of economic activity in the city: Just small adjustments in the way we shop can help keep enormous amounts of our money here, instead of some corporate headquarters in another state. The best part is that we don’t really need to abandon our regular shopping habits to make a big difference.
On a more qualitative note, small businesses are what give cities and neighborhoods a sense of place. If we allow the businesses of our neighbors to go under in favor of chain stores, we lose the uniqueness of our city, and any unique ties that come with it. This article is not meant to demonize chain stores; they can provide us with affordable products local businesses simply cannot offer, provide employment opportunities and often times contribute generously to local charities. However, a place that is devoid of small businesses and solely dependent on chain stores is in danger of losing its identity. So when you are grabbing your desert today at Capital Donut as part of the cash mob, consider making a stop to your neighborhood store or restaurant more often than just once or twice a month. In a city so engrossed in socioeconomic issues, making a trip or two to a local business is a simple step that almost every resident can take to help our neighbors stay afloat and help our city retain its character.