A Growing Shop-Local Movement Urges Consumers to Keep Their Money Close to Home

Eric Nelson has some pretty strong ideas about where he will spend his money.

"I do not shop at Walmart," he says. "I do not shop at Sam's. I would not. I would do without something if I had to."

Fortunately, as Nelson knows, there is not much you really have to do without if you decide to shop as much as possible at independent local stores—shops like Gourmet's Market in Bearden, which Nelson happens to own.

Nelson makes several arguments in favor of choosing local businesses over chain stores or online retailers, arguments that are becoming part of a growing "Buy Local" movement:

— A greater percentage of their revenue stays in the local community, paid in wages, in contracts with other local businesses, and in sales taxes;

— They are integral to the life of a community, dependent on long-term personal relationships with customers, staff, and suppliers (and, not least, with local charities and nonprofits that they contribute to year after year);

— They are fundamental to the character of a neighborhood or city—while corporate franchises tend to make everywhere in America look the same, small businesses make each place different.

And while they must turn profits to stay afloat, Nelson says, they are rarely all about the money. "I'm one of those people who, if you work here, I don't lay you off," he says. "I'll find something for you to do. If you need 35 hours [a week] to survive, that's what you'll get. I probably do it wrong. But you have to live with yourself."

With the official holiday shopping season kicking off this week, local consumerism is getting its biggest push from an unlikely source: a giant corporation. American Express is underwriting a campaign called "Small Business Saturday," encouraging shoppers to spend the day after the traditional Black Friday patronizing their local independent retailers. Of course, American Express being American Express, the campaign is carefully worded so as not to disparage other forms of retail. But it represents the first national embodiment of a consumer ethic that has some parallels to the locavore movement, which encourages people to eat food grown and prepared locally.

The "Small Business Saturday" website prominently quotes a statistic: Of every $100 spent at small retailers, $68 of it stays in the surrounding community. That number, which is frequently quoted in the media, comes from a study done six years ago by an economic development and retail consulting outfit called Civic Economics. Matt Cunningham, one of the firm's partners, says the study was commissioned by the local chamber of commerce in the Andersonville neighborhood of Chicago. Cunningham and his team were given access to the complete books and records of 10 local businesses.

"We tried to track exactly where every dollar went," Cunningham says in a phone interview, "whether it went to employee salaries, to pay a lawyer, for raw materials" or other expenses.

The $68/$100 finding includes money paid in wages, spent with local contractors, and banked locally as profit. In contrast, the study estimated that only $43 of every $100 spent at chain retailers stays local, because their suppliers tend not to be local, many of their functions—accounting, payroll, customer service—are handled from a distance, and their profits flow to far-flung shareholders. And the local share of Internet shopping? "Online retailers would be by far the worst," Cunningham says, "because it's basically just your UPS guy who delivers the stuff."

Of course, even locally-owned retailers have to bring most of their merchandise in from out of town. But Scott Schimmel, who owns the Bliss and Bliss Home stores on Market Square and Kingston Pike with his wife, says he tries to at least buy goods and furniture made in the United States. And the Bliss stores serve as showcases for Knoxville talent.

"We try to as much as we can fill our walls with local artwork and our floor with local sculptures," Schimmel says.

(By way of disclosure, it is worth noting that Metro Pulse itself is heavily dependent on local businesses for its advertising. And along with Knoxville Magazine, Metro Pulse is currently promoting its own Shop Knox campaign.)

There is also the issue of taxes. In a state like Tennessee with no personal income tax, sales taxes are a major source of local and state government revenue. Online retailing presents a huge potential loss of dollars for schools and services. Under state law, Tennesseans are supposed to file a form to pay sales taxes on online purchases that are not otherwise taxed. In practice, of course, this rarely happens.

Steve Bacon, owner of the Bike Zoo in Western Plaza, says that's a hurdle when it comes to large purchases. "With a 10 percent sales tax off the top, it's pretty tough when you're looking at a multi-thousand-dollar bike," he says. "But most of our customers get it. They understand that a little bit of money spent here locally is a reinvestment in the future."

Cunningham says he has been impressed by the speed with which the buy-local movement has gained momentum. In the years since his initial study, campaigns and organizations have sprung up around the country, from Sustainable Connections in Bellingham, Wash., to Buy Local Atlanta.

"When we first started this, we had to convince people that this was the case, that more money was staying local," he says. "Now it seems like people get it."

Nelson, who's been part of Gourmet's Market since his family started it 31 years ago, says local businesses can use any boost they can get. The combination of the recession and fierce Internet competition has been brutal for small retailers.

"We'll all be lucky to survive," he says. "We'll be lucky if we're not all buying from two or three places at the end. And then they'll charge us whatever they want to."