The recent study Home Sweet Home: Locals vs. Amazon demonstrates the significant economic benefit that supporting independent businesses has on local communities. The study, conducted by Civic Economics and commissioned by the North American Retail Hardware Association (NRHA), the Paint and Decorating Retailers Association, and Independent We Stand, specifically compares the impact of conducting business with independent hardware stores versus the sales of hardware and building materials through Amazon.
This study is the third in a series: the 2015 edition of the study, Home Sweet Home: The Economic Impact of Independent Hardware Merchants and Contractors, examined the impact of a homeowner shopping at locally owned businesses when conducting a home improvement project, and the 2017 edition, Home Sweet Home: Pros’ Edition, expanded that analysis to the scale of a home constructed by a professional building contractor. The new study incorporates data from Prime Numbers: Amazon and American Communities, a report published in partnership between Civic Economics and the American Booksellers Association in April, in order to expand upon the previous Home Sweet Home studies to include e-commerce through Amazon.
The report quantifies the “Local Advantage” by examining four activities — labor, profit, procurement, and charity — through which “firms create impact by recirculating revenues in the local economy.” Civic Economics calculated the percentage of revenue that recirculates in the local economy via these activities for independent hardware stores, national chain retailers, and Amazon.
The findings demonstrate a vast disparity between the local economic benefit of shopping at an independent retailer versus shopping at a chain store or on Amazon: local recirculation represents 30.4 percent of independent retailers’ revenue, and only 13.2 percent and 3.9 percent of the chains’ and Amazon’s revenue, respectively, with the Local Advantage over Amazon calculated at 676 percent. As the report concludes, “These striking numbers highlight what many Americans already know: their helpful local hardware and paint stores are an important part of the local economy.”
The study additionally breaks down the Local Advantage of independent stores over Amazon by state. It also points out that since Amazon does not collect and remit sales tax on sales conducted through its third-party Marketplace, sales conducted through Amazon constitute an additional loss of investment in cities and states in the form of uncollected sales tax.
The conclusions drawn from Home Sweet Home: Locals vs. Amazon make clear that to support local businesses is to support the local community: “Where local business thrives, the community benefits. Owners and employees invest in local homes in a way that chain stores can rarely do; their profits feed Little Leagues and collection plates all over town; and the enhanced tax revenue they drive ensures that the community can provide the services those businesses and their customers require.”