Fail to plan, plan to fail
Albert Einstein once observed that “Logic will take you from A to B, imagination will take you everywhere.” This distinction captures the fundamental challenge facing American communities today: the difference between reactive governance and transformative leadership.
Some say that COVID didn’t create the economic transformation reshaping American communities—it only accelerated it. What economists previously projected would unfold over many years was compressed into months. Communities that believed they had time to adapt now face immediate choices that determine their economic survival. The retail sector exemplifies this acceleration. According to the Census Bureau, e-commerce sales increased 32.4% in 2020, representing 14% of total retail sales—a jump that would have taken five years under normal circumstances.
Today’s retail environment operates on a barbell distribution. On one end, major national retailers like Target, Home Depot, Walmart, and others report strong growth and expanding market share. These companies leverage economies of scale, sophisticated supply chains, and digital integration to thrive in the new economy. On the opposite end, locally-owned businesses face unprecedented challenges. The FED reported 200,000 excess businesses closed in 2020 beyond typical rates, with small businesses accounting for most. These closures disproportionately impact smaller and mid-sized communities where local businesses form the economic backbone. The middle ground—regional chains and medium-sized retailers—continues to shrink, communities have fewer options between global giants and local entrepreneurs.
Forward-thinking communities understand what is known as the local multiplier effect. Research demonstrates that local businesses recirculate approximately 68% of revenue within the local economy, compared to just 43% for national chains. This 25-percentage-point difference compounds over time, creates substantial economic impact. For a community of 25,000 residents, redirecting just 10% of retail spending from national to local businesses can generate an additional $1.6 million in local economic activity annually.
Small and mid-sized communities face unique vulnerabilities in this transformation. Unlike major metropolitan areas with diverse economic bases, these communities often depend heavily on retail and service sectors for employment and tax revenue. When local businesses fail, the ripple effects include reduced property tax revenue as real estate values decline, higher unemployment rates, decreased foot traffic that affects remaining businesses, loss of community gathering spaces and social cohesion. The International Economic Development Council reports that communities under 50,000 population have seen 23% higher rates of business closure during the pandemic compared to larger metropolitan areas.
Many communities continue pursuing national chain recruitment as economic development strategy, unaware of the long-term consequences. While chains may provide initial job creation and tax revenue, they often undermine local entrepreneurship by competing directly with existing local businesses using superior capital resources, extracting profits from the local economy rather than reinvesting them, creating low-wage employment with limited advancement opportunities, and reducing community economic diversity and resilience
Successful communities implement what can be termed “The Law of Local”—a
comprehensive approach prioritizing local economic development. This strategy includes creating business incubators, reducing regulatory barriers, and providing access to capital for local startups. The SBA reports communities with robust entrepreneurship programs see 15% higher business formation rates.
Municipal governments directing purchasing power toward local suppliers. Studies show that every $100 spent on local procurement generates an additional $45 in secondary economic activity. Investing in quality-of-life amenities, cultural attractions, and experiential retail that cannot be easily replicated online. The Experience Economy, valued at $8 trillion globally, represents a growth sector resistant to e-commerce disruption. Helping local businesses develop online presence and omnichannel capabilities to compete effectively in the digital marketplace. Effective marketing research shows that messages require 6-7 exposures before achieving retention. Communities must apply this principle consistently, continuously reinforcing the “shop local” message through multiple channels and touchpoints. This isn’t just about promotional campaigns—it requires sustained community education about economic interdependence.
The economic dynamics reshaping American communities are not temporary disruptions but permanent structural changes. Communities face a binary choice: adapt proactively to these new realities or accept gradual economic decline.
Success requires moving beyond traditional economic development approaches focused on recruitment and incentives. Instead, communities must cultivate local entrepreneurship, strengthen economic interdependence, and build resilience against external economic shocks. The transformation is accelerating, and the window for strategic response continues to narrow. Communities that embrace imagination over mere logic—that plan for transformation rather than simply reacting to it—will position themselves to thrive in the new economy. Those that fail to plan are, quite literally, planning to fail.
John A. Newby is the author of the “Building Main Street, Not Wall Street” column dedicated to helping local communities, government and business combine synergies allowing them to thrive in a world where truly-local is being lost to Amazon and Wall Street chains. His email is john@truly-local.org