Santa Fe Buy Into It! – Response to SF Reporter
Posted by santafechamber on July 22, 2009
Regarding “Local-Washing” in the Santa Fe Reporter.
The idea that the Santa Fe Chamber has co-opted the term “shop local” is beyond absurd. Part of the mission of the Chamber is to “grow the local economy.”
The organizers of the Santa Fe – Buy Into It! campaign did not “decree that any business located in Santa Fe was “local” but rather that all business activity in Santa Fe benefits the local economy through job- and tax-revenue creation.
EVERY single local business creates tax revenue, allowing local government to exist. Every business pays rent, payroll, taxes and utilities locally. Where a business is headquartered is irrelevant to their contribution to the local tax base.
Whether a business is a local “mom & pop shop” or part of a larger, national company has no bearing on the overall economic impact that the business has on our community.
A business named The Santa Fe Shop can be owned out of state. The Santa Fe Reporter is headquartered in Portland, Oregon. Similarly, a nationally known brand can be franchised by local Santa Feans. Many local people own shares and derive income from national companies. These kinds of divisions serve little or no purpose.
Santa Feans depend on national companies for tax generation, needed products and most importantly, jobs. Jobs create incomes which are then spent locally regardless of the ownership of the company. This spending generates further jobs and incomes. Thus the economic multiplier.
It is true that some of a national chains profits go out of town, but often this is as little as 5% of revenues. Payroll, rent and utilities frequently equal 90% of revenue which stays in the community.
Shopping in Santa Fe helps support public safety, education, roads and sewers.
Suggesting that a national business “strip mines the local economy” serves only to divide the business community and place ideology over economic reality.
To deride Santa Fe businesses that may have out of state ownership or be a part of a larger, national company, perpetuates Santa Fe’s perceived anti-business sentiment.
The Santa Fe Chamber of Commerce is proud to represent all local business and to partner with the City of Santa Fe and the media partners who have generously stepped up to support the Buy Into it campaign.
Santa Fe – Buy Into It!
Santa Fe Chamber of Commerce Blog 
Ray Kurshals said
Truly buying local is supporting truly local businesses, independents, that also buy locally to supply their stores…ie) retaurants that buy food from local farmers, but it is all good as far as taxes collected. I wish the radio ads for the chamber were written with proper grammar to suit and attract a more intelligent audience.
Stacy Mitchell said
You write that whether a business is locally owned or part of a larger, national company “has no bearing on the overall economic impact that the business has on our community.”
This is not actually true. There have been many economic studies that have found that a dollar spent at a locally owned business generates a much bigger impact on the local economy than a dollar spent at a national chain.
You acknowledge that profits for national chains go out of town, but argue that this is the only difference in how local and non-local businesses deploy their revenue. In fact there are several significant differences.
One is that locally owned firms spend a larger share of their revenue on local payroll. While chains have people elsewhere carrying out management and marketing functions for their stores, and in some cases even out-source these functions to India, locally owned businesses are run entirely on-site. Every dime they spend on payroll goes into the pockets of employees who live in the area.
Another significant difference is that locally owned businesses rely much more heavily on other local businesses for the goods and services they need. They bank at the local bank, get their printing done at the local print shop, advertise in local media, and hire local professionals like accountants and graphic designers. National chains have very little need for these local goods and services.
The result is that $100 spent at locally owned businesses ends up supporting a much larger number of jobs in Santa Fe than spending that same $100 at national chains.
How big is the difference? One study in Austin, Texas, found that spending $100 at a chain generates only $13 in local economic impact, while spending $100 at a locally owned businesses created $45 in local economic impact.
(You can find this study and others here:
http://www.newrules.org/retail/key-studies-walmart-and-bigbox-retail#1)
That’s a big difference. That extra economic activity not only translates into more jobs in Santa Fe, but ultimately more state and local tax revenue as business transactions, incomes, and spending all increase.
Pointing out this difference and encouraging people to give it some consideration when they decide where to shop is a worthwhile and important endeavor. It’s not being “divisive” or “ideological.”
What is divisive is when big business groups attempt to muddle and confuse the issue. Companies like Target and Wal-Mart have billion-dollar marketing budgets. They ought to be able to make a case for themselves without appropriating, and ultimately rendering meaningless, a message developed by independent businesses.
Zane Fischer, SFR staff said
Certainly the economic landscape of a community like Santa Fe is comprised of many elements and cannot be limited to, as you say “mom and pop shops.” However, let’s define what we are talking about.
Dialogue is healthy, but let’s not be disingenuous: The only two non-local businesses listed in our “Local-Washing” article were Target and Walmart. These are hardly businesses that can be franchised by local Santa Feans or businesses that leave 90% of revenue in here. Are those the businesses you mean to defend against derision?
Our expert local True Value hardware franchises, like Big J and Ace are great businesses that are part of a larger, national company. But Home Depot is a different story. Big Box category killers pay low wages, drain social services and worm out of their full tax responsibility through legislative loopholes. They take advantage of the community’s economy rather that supporting it.
santafechamber said
Stacy,
Thank you for your comments.
To clarify – this is not an “either or” argument. The Chamber is 100% committed to support locally-owned businesses.
My point is that:
EVERY single local business creates tax revenue, allowing local government to exist. Every business pays rent, payroll, taxes and utilities locally. Jobs create incomes which are then spent locally regardless of the ownership of the company. This spending generates further jobs and incomes. Thus the economic multiplier. This is indisputable.
To use your own Austin example – a chain generates $13 in local spending. That is $13 that would not spent locally without the business in the community.
Thank you
Simon Brackley
Shannon Murphy said
Simon, to say that a chain generates $13 in local spending that would not be spent locally without the business in the community is flat-out incorrect. Again using the Austin study figures, if I spent $100 on products at a chain that I could otherwise get at a local business (for example, buying groceries and household products at Wal-Mart instead of at Kaune), it would result in a $32 loss to the community ($45 minus $13). Only in cases where items are purchased at a chain that cannot be purchased at any locally owned business does your statement hold true.
The primary value of buy-local campaigns is that they educate citizens about that $32 gap, and encourage them to, when they have a choice (i.e. when buying items available at both chains and locally owned businesses), to choose the option that keeps the most money in the community. This, unfortunately, is where the Buy Into It campaign fell short of really serving
Santa Fe.