The reality of a failure to plan
In today’s rapidly evolving economic landscape, communities face unprecedented challenges. The gap between forward-thinking cities and those relying on outdated economic development models continues to widen, since the COVID pandemic, the numbers having accelerated these trends.
When looking at the numbers, it is apparent that Retail is undergoing dramatic restructuring. Recent data reveals a clear segmentation: Major national retailers like Walmart, Target, and Home Depot saw 8-22% revenue growth during 2020-2023, with continued expansion. Locally-owned businesses face an extinction-level threat, with over 200,000 permanent small business closures during the pandemic, representing nearly 34% of pre-pandemic small retailers according to data from the Small Business Administration. According to a 2023 Federal Reserve study, small and mid-sized communities are disproportionately affected, with retail vacancy rates averaging 17.8% compared to 11.3% in larger metropolitan areas.
Online shopping has acceleration of e-commerce adoption. Census Bureau data shows e-commerce now represents over 25% of total retail sales, up from 14.3% pre-pandemic. However, when the pendulum swings too far, economic devastation follows: Every $100 spent at a local business generates approximately $68 in local economic activity through wages, supply chain, and secondary spending. The same $100 spent at a national chain creates approximately $43 in local economic return. For online purchases from non-local entities, local economic return drops to just $3-5 per $100.
Forward-thinking communities understand the “Law of Local” - the mathematical reality that local dollar circulation determines economic health. Economic multiplier studies from the Federal Reserve show that: Local businesses return 52-68% of revenue to the local economy. National chains return 13-43% of revenue locally. Online retailers from outside the community return 0-3% locally. This isn’t merely opinion - it’s economic mathematics. A community with 20,000 households spending an average of $5,000 annually on retail and services could generate between $52-68 million in local economic activity if those dollars stay local, versus $13-43 million if spent at chains, a potential difference of $25+ million annually.
Communities that successfully navigate this transition share common characteristics: Resource Reallocation: Rather than offering tax incentives to attract big box stores (averaging $2.5-4.2 million per project), they invest in local entrepreneurship support (typically $150,000-500,000 annually). Infrastructure for Local Success: They create business incubators, offer microloans ($5,000-50,000), and provide technical assistance to local entrepreneurs. Experiential Focus: They invest in quality-of-life amenities that drive foot traffic, with data showing that walkable downtowns with mixed-use development generate 40% higher per-square-foot revenue than strip malls. Regulatory Reform: They streamline permitting and licensing processes, reducing small business startup time from national averages of 90+ days to under 30 days.
Marketing principles tell us that a message must be repeated 6-7 times before it begins to stick. The “shop local” message requires consistent, data-driven communication: Communities that maintain consistent local messaging for 24+ months see 9-11% increases in local spending. Successful “buy local” campaigns combine emotional appeals with economic education, showing residents the real impact of their choices. Transparency about local tax revenue and its connection to services resonates with residents.
Communities must recognize the unforgiving nature of today’s economic environment. Those that apply strategic thinking, backed by economic data, will thrive. Those that fail to adapt will continue to lose economic vitality at an accelerating pace. The future belongs to communities that recognize the mathematical reality of local economics and build systems that enable a vibrant ecosystem of local entrepreneurship, experience-based retail, and strategic community development.
John A. Newby is the author of the “Building Main Street, Not Wall Street” column dedicated to helping communities and local media companies combine synergies allowing them to thrive in a world where truly-local is being lost to Amazon and Wall Street chains. His email john@360MediaAlliance.net