Keeping Canadian consumer spend in the country by promoting shop local

Helping consumers understand the value in shopping with local small businesses to benefit the overall health of the Canadian economy

// By Ryan Mallough, Vice-President, Legislative Affairs, Ontario and VicePresident, Communications, Canadian Federation of Independent Business

There’s no better way to spend a fall afternoon than walking down main street and checking out the local shops. The window displays, the great products and – if you’re like me – the sweet treats often leave my wallet feeling a little bit lighter than when I started.

I’m always happy to support a great local business when I’m able.

But I never really think about what happens to my dollar after I spend it.

Turns out most Canadians are the same

When it comes to shopping, Canadian consumers really don’t understand how our money is recirculated after we make a purchase.

A recent Angus Reid Group public opinion poll conducted on behalf of CFIB showed that Canadians wildly overestimate how much of each dollar they spend at multinational companies with bricks-and-mortar locations, like the Walmart around the corner, is reinvested locally. At the same time, they underestimate small businesses’ contributions.

When asked to guess how much money stays local when shopping at a large retailer with a physical location, on average Canadians said 37 cents. Respondents also guessed that 38 cents on average stays in the community when buying from a small business.

This means Canadians think that large multinationals and small businesses contribute almost equally to local economies.

Not only is that not true, it’s not even close

Our research shows that when consumers buy from a local small business, 66 cents out of every dollar spent stays local. On the other hand, only 11 cents of every dollar spent stays within the community when customers shop at a large multinational business.

The difference is staggering

It means 55 cents of every dollar spent gets pulled out from your community when consumers shop at large retailers.

Or thinking about it the other way: six times more money goes back to your community when customers choose to shop local.

These results prove again how essential small businesses are to our local economies. Their employees are local. Their profits and charitable donations are local. The goods and services they source are local. They support the whole local ecosystem in a way the retail giants just don’t. Shopping at a small business helps keep our communities thriving.

We all benefit from it, we just need to be more aware of it.

Governments also have a role to play to help:

• Firstly, ensure fairness in the digital economy so small businesses can innovate, thrive and compete fairly with online giants.

• Reduce the tax burden on small firms so they can pay their pandemic debt, reinvest in their business or increase employee compensation.

• Red tape is another big headache for small businesses, so policymakers should prioritize cutting unnecessary regulations and letting entrepreneurs do what they do best: run their business.

A near-unanimous 95 per cent of small business owners wish their customers knew how much further their dollar went when it’s spent at local independent small business. Call it the next conscious consumerism. We all need to realize how much our choices can affect the economy, both locally and on a wider scale.

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Ryan Mallough is the Vice-President of Legislative Affairs (Ontario) at CFIB, Canada’s largest association of small and medium-sized businesses with 97,000 members across every industry and region, 22,000 of whom are operating in retail.