In some respects, local businesses can reap significant strategic opportunities from the recent economic downturn. Most healthy local businesses already do a good job at bottom-line marketing which emphasizes tight controls on operating expenses and maximizes gross profit margins. Most importantly, local businesses are solidly positioned at these times to continue offering exceptional customer service especially as consumers exercise far more rigorous, discriminatory judgment about the price-quality-value paradigm of the products and services they purchase. These elements can set the stage for local businesses strengthening their competitive advantages in their respective industries and markets during downturns.

And, buying local – especially during an economic downturn – seems to accentuate the economic multiplier effects. A recent Seattle study – a far-ranging examination of how the economic multiplier effect actually operates locally – suggests that dollars spent at local food economy restaurants and groceries have more than twice the usual impact of spending at restaurants and groceries on the income of backward-linking suppliers. For example, Dr. Viki Sonntag writes in the study commissioned by Sustainable Seattle:

“A shift of 20 percent of our food dollars into locally directed spending would result in a nearly half billion dollar annual income increase in King County alone and double that in the Central Puget Sound region.”

In Utah, organizations such as Local First Utah and Vest Pocket Coalition are positioning their messages appropriately for the forthcoming holiday retail season which kicks into full gear come Thanksgiving weekend. Buy Local First Week will be marked Nov. 29 through Dec. 6 as local businesses will be offering many holiday season promotions. Local First Utah also will collaborate with the Salt Lake City Downtown Alliance at the upcoming Old World Christmas Market. As well, Local First Utah will sponsor a free, public program with Citizens for Sustainability about what consumers can do to practice sustainable gift giving during this holiday season.

An uncertain economy means people will be budgeting their holiday expenses more prudently than perhaps in previous seasons, especially as consumers look frequently toward big-box retailers and discount outlets. However, this holiday season also will be an ideal time for consumers to look at their holiday expense budgets and allocate a modest percentage – say, 10 to 20 percent – toward local options, according to Alison Einerson, executive director of Local First Utah.

“The emphasis is not on buy local only but more importantly on buy local first,” she explains. “And the spending we make during this holiday season can help make a difference for what type of local economy we will have in the upcoming year.”

Food likely will have a particular appeal this holiday season. Einerson believes that food items, gift baskets, and gift certificates to local food stores, delis, and restaurants will be especially attractive this year. And, Einerson’s suggestion that even small proportions of consumer spending dedicated to local business have a positive economic impact is backed by solid evidence.

In a recent study of Grand Rapids, Michigan, and the surrounding Kent County metropolitan area in West Michigan, economists analyzed the impact of a 10 percent shift in retail expenditures from chains to locals:

“The results are rather significant. An additional 1600 jobs could be created in Kent County with wages of $53 million being added to local payrolls if such a swing in purchasing behavior could be achieved. The 1600 additional jobs created would have been enough to increase employment by one-half of one percent in 2007. Output for the county could be increased by $137 million as well and this benefit would be spread among many industries, not only the retail sector.

“The magnitude of these impacts is such that, under ordinary circumstances, economic development organizations and public agencies would rally to the cause, actively recruiting and incentivizing any firm promising such an impact. As it happens, consumers can themselves create these impacts with only a modest shift in their habits and behavior.”

The 2008 study, conducted by Civic Economics, showed results found in similar earlier studies in San Francisco and Austin, Texas. Economists also found similar dynamics in the Seattle research, which focused on the local food economy:

“As spending grows, the businesses grow in number and size, which provides for even more local choices. So even though it is just a small percentage of people who might buy locally to start with, this spending is critical to establishing viable local choices. Each local food business that is able to get a toe-hold in the economy leads to a greater connectedness – and, as we shall see, competitiveness – of the local food system as a whole.”

On the business end, Ellen Reddick of the Vest Pocket Coalition has been working with locally elected officials, business leaders, and economic development experts to strengthen the organization’s status as a clearinghouse for resources and information that offer counseling assistance and advice to small business owners and developers. “The idea is to be proactive rather than reactive,” Reddick says, especially as local owners look at their business models to see where their best opportunities emerge and to be careful to not spread themselves too thinly.