Santa Fe Study Highlights Benefits of Shopping Local Independents

The small, unique shops and galleries of Santa Fe, New Mexico, are losing ground to the national chains, according to a recent study of independent businesses conducted by the consulting firm of Angelou Economics. Commissioned by the Santa Fe Independent Business & Community Alliance (SFIBCA), among others, the study found that "independent businesses comprise a higher share of Santa Fe's economy than the national average." To read the study click here: www.santafealliance.com.

These businesses have contributed to Santa Fe's reputation as an artist's haven with a distinctive, some might say eccentric, character. And, as one businessperson quoted in the report stated, "[Tourists] travel here to enjoy something unique -- products, art, architecture, etc." Tourism, the study states, "is a significant boost to the local economy, supporting retailers and contributing to tax revenues."

Small and independent businesses also help to preserve the cultures of Latino and Native American residents, enabling these minority groups to enjoy the pride and economic momentum of entrepreneurial efforts.

The study concluded that in Santa Fe, small businesses account for 90 percent of all businesses and employ 30 percent of all private sector workers. However, national chains, which are growing 2.5 times faster than the independents, pose a threat to the economy and result in a large outflow of money from the city to corporate headquarters in other places. Between 1998 and 2003 the number of non-local retail businesses in Santa Fe grew by 38 percent and employment at non-local retailers increased by 25 percent. Over the same period, the number of local retailers expanded by 17 percent, with employment at local retailers growing by just nine percent.

The Angelou study relied on an economic model developed by the New Economics Foundation (NEF) named the "Local Multiplier-3" or LM-3. In this calculation, researchers first look at the number of dollars spent at a retail store -- this is termed Round 1.

In Round 2, the store and its workers spend their money locally. For national chains, that is the end of the line.

An analysis of the multiplier effect then moves to Round 3, where, the study notes, the impact of dollars spent at independent businesses deliver two times the economic impact of dollars spent at national chains. This is because the local store distributes profits, higher owner salaries, and local vendor purchases to the local economy. Generally, the study found, national chains do not have a similar impact. Of course, the study continues, in all cases, some economic impact is distributed to vendors outside the local economy. However, "dollar for dollar, money spent in locally owned shops has a larger impact on the community than money spent in shops headquartered outside of the region."

The study has been well received among the Santa Fe community: Five of eight city councilors attended the press conference announcing the results. Local daily newspapers ran front-page stories. The Santa Fe New Mexican wrote, "The success of Santa Fe's economy is in large part tied to the success of the many men and women who run small businesses. Those businesses need -- and deserve -- our support."

Angelou Economics has been hired by the city to draft Santa Fe's new economic development plan. The ongoing analysis has given the nascent SFIBCA a strong push into the public arena. The all-volunteer group, founded about a year ago, includes 400 business members and 300 resident members, and it has already published a guide to locally owned independent businesses.

Co-founder and board member David Kaseman told BTW that the association, which is affiliated with the American Independent Business Alliance (AMIBA), is planning further studies and a "buy local" campaign. SFIBCA will participate in AMIBA's planned Independents Week, from July 1 - July 7. (For more information on AMIBA, visit www.amiba.net. Look for a preview of AMIBA's Independents Week in an upcoming issue of BTW).

Kaseman said that the group owes much to similar organizations in Austin and Boulder, but SFIBCA has a single focus in Santa Fe. "We are a grassroots organization," said the retired entrepreneur. "We are not political. Our sole aim is to show the difference that spending locally can make." --Nomi Schwartz