The economic impact of the COVID-19 pandemic has prompted many Canadians to shop locally; interest in supporting local businesses has surged in recent months. Whether it’s the Province of Quebec’s Le Panier Bleu initiative or small businesses in Saskatoon holding gift card giveaways for their favourite neighbourhood stores, there are countless approaches to promoting local options. But why does shopping locally matter in the first place?
Follow the Dollars: A Tale of Two Apples
When people shop, money spent on locally supplied purchases creates more local economic activity than if those people bought goods from non-local sources. Consider two apples: one grown in Saskatchewan and one grown in California, with both apples delivered to a Saskatchewan grocer and purchased by consumers. The money from the Saskatchewan apple would be used by the grocer to pay the distributor, who would pay the Saskatchewan farmer, who would pay local farm staff, who would spend their earnings at local businesses such as restaurants. A restaurant would then pay contractors for building renovations and so on. The money used to buy the Californian apple would leave Saskatchewan once the distributor was paid. When that money exits the local economy, Saskatchewan loses out on all of the ways that the money could have generated growth in the province.
Shop Here, Work Here
A major benefit to keeping money circulating in the local economy is the creation of local jobs. A Civic Economics study on the impact of local businesses in B.C. found that for a 10% increase in local purchasing, approximately 31,000 jobs would be created for B.C. workers, leading to $940 million in wages. Local businesses are also more likely to use local contractors such as accountants, information technology companies and banks in their operations, further bolstering local employment.
Local Suppliers Mean Local Output
The multiplier effect of local shopping is not limited to small-scale purchases like apples. A study by PwC found that in-province procurement by Saskatchewan resource companies delivered nearly four times more economic benefit to the province than procurement from non-local suppliers. For every $1 spent by a resource company on local suppliers, $1.51 in total economic output would be generated. That same $1 spent on out of province suppliers would generate $0.39 of output. Ultimately, local purchasing at any level helps support Saskatchewan.
Building Vibrant Communities
Buying local also strengthens the community. According to a 2013 Consumer Trends report by BDC, many Canadians want to know that companies are adopting high ethical and environmental standards through their value chain. Shopping locally helps build connections between consumers and suppliers, increasing transparency about how and where products are created. Not only does money then continue to circulate in the community to increase employment and economic growth, but improved knowledge and awareness about local businesses helps to build vibrant, engaged communities.
SREDA’s Local Link
SREDA is working with interested Saskatoon Region businesses to measure how locally they operate, from ownership to procurement. We’re also using the process to find ways of increasing local engagement in the Saskatoon Region economy for these businesses.