Survey Confirms Benefits of “Buy Local First” Campaigns, Finds Challenges Ahead

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    The 2013 post-holiday Independent Business Survey, conducted by the Institute for Local Self-Reliance (ILSR) in partnership with the American Booksellers Association and other indie business organizations, has found that independent businesses experienced solid revenue growth in 2012, buoyed in part by “buy local first” initiatives and growing public interest in supporting locally owned businesses. This is the fifth year in a row that the survey has shown the strong positive influence of the shop local/local first movement.

    However, the survey also documented significant challenges facing independent businesses, most notably an increase in “showrooming” and competition from online retailers, tax and subsidy policies that favor their big competitors, difficulty obtaining loans, and a customer base still feeling the effects of the recession.

    The 2013 survey gathered data from 2,377 independent businesses, including ABA member bookstores, across 50 states and the District of Columbia.

    Among the ILSR study’s findings:

    • Survey respondents reported revenue growth of 6.8 percent on average. More than two-thirds experienced revenue growth in 2012 — a larger share than in the 2011 and 2010 post-holiday surveys.
       
    • Independent businesses in communities with an active “buy local first” initiative run by a local business organization reported average revenue growth of 8.6 percent in 2012, compared to 3.4 percent for those in areas without such an initiative.
       
    • Among survey respondents in cities with a “buy local first” initiative, 75 percent reported that the initiative had had a positive impact on their business.
       
    • “Showrooming” (customers examining products and seeking information in local stores and then buying online) was identified by independent retailers as one of their biggest challenges. More than 80 percent said showrooming was affecting their business, with 47 percent describing the impact as “moderate” or “significant.”
       
    • Lack of financing was also a challenge, with 23 percent businesses surveyed reporting that they had been unable to secure a needed bank loan for their business in the last two years.

    “Independent businesses are making huge strides when it comes to communicating their value and building community support,” said Stacy Mitchell, senior researcher with the Institute for Local Self-Reliance, “but they are still struggling in an environment in which public policy often gives major advantages to their big competitors.”

    ABA CEO Oren Teicher said, “This study — and the outstanding results of the Small Business Saturday last November — make clear that we have reached an important tipping point, as shoppers are showing through both their purchases and their direct feedback to indie businesses that they value the diversity, creativity, and unique services of their hometown businesses. For indie businesses in communities that don’t yet have a local business alliance, the time to realize the potential of working together is now.”

    “As this survey shows, public awareness of the benefits of independent businesses is growing, but there are new challenges,” said Kathleen McHugh, president of the American Specialty Toy Retailing Association.  “Showrooming is the number one issue facing toy stores today.  If consumers value that store visit and the investment local retailers make in their community, they should also want to keep those brick-and-mortar stores in business by making their purchases with them.”

    Alissa Barron-Menza, managing director of the Business Alliance for Local Living Economies, noted, “These findings show the value of collaboration among local businesses, from improving sales and community support to fostering creativity and shared action in addressing the challenges facing independent entrepreneurs.”

    “This data supports what we are hearing from our local groups — that their work is influencing people’s choices and driving more business to local independents,” said Jeff Milchen, co-director of the American Independent Business Alliance.

    The 2013 Independent Business Survey can be downloaded here; the findings of previous surveys conducted over the last five years are available here.