The Price of a Brand
Before You Get Excited About the Latest Chain Store, Consider Its Local Impact
Originally posted on January 20, 2011
I just heard about another couple of chains coming to my hometown. When I hear people getting excited about this news, I cringe, because I have come to realize the potentially negative impact of chain stores and restaurants on the local economy.
With Chains, Less Money Stays Local
For every $100 spent in locally owned, independent stores, $68 returns to the community through taxes, payroll and other expenditures. If $100 is spent in a national chain, only $43 stays local.* Why? Because national chains usually get their supplies from suppliers chosen at the national level, not locally. Also, national chains’ profit returns to the corporate office, and, if public, stock-holders all over the world.
It’s Highly Likely They Received Tax Abatements
Most large companies looking to locate in a new place persuade the local governments to give them tax abatements. That means they aren’t paying property taxes, even though the businesses owned by your neighbors get no such benefit. So, not only are they not paying into taxes for whatever length of time has been agreed upon, they have an unfair advantage over the locally-owned business who do.
Small Business Creates More Jobs
Over the last 15 years, small businesses have generated 64 percent of net new jobs.** Local small business owners are more motivated to keep their workforce employed, since they are their friends, neighbors and customers. Companies that make decisions at the corporate level, don’t have the peer pressure to keep their workers in tough times. Instead, the peer pressure is often to create a profit at all costs. When we spend our dollars at the chains instead of locally owned stores and restaurants, we make it harder for the locals to stay in business.
You might get more than you bargained for when you switch your allegiance to Chain Store ice cream, and away from the local ice cream shop. Think carefully before you do so.
* souce: 3/50 Project: http://www.the350project.net/home.html
** source: US Small Business Administration: http://www.sba.gov/advocacy/7495/8420
