Local Purchasing and the Local Economy
July 25, 2016
What is Local Purchasing?
Purchasing policies typically consider one economic aspect – how spending affects a business’ bottom line. But how that spending affects the business’ community or society at large – this ‘community economic impact’ can also benefit that business and its community in a very real way. Local purchasing aims to maximize this community economic impact, and offer businesses and consumers a way to consider who owns the businesses with whom they undertake transactions.
Local purchasing includes buying from locally owned businesses. It also includes buying locally grown and locally made products.
- Locally owned businesses circulate profits in the community, creating jobs, reinvesting in the community and contributing to the local economic base. This results in the recirculation of money spent with them to other local suppliers.
- Locally grown products support B.C. agricultural producers (farmers, foresters, wineries, etc.).
- Locally made products support B.C. manufacturing jobs and cottage industries.
As with other aspects of sustainable purchasing, local purchasing considers both the supplies and the supplier. Sometimes the supplies are local, sometimes the supplier is local; ideally, but not always, both.
Why do it?
It keeps 23 times the money in the economy
Local owned businesses often use local owned service providers (e.g., web, accounting, banking) and sometimes stock locally grown and made products. This creates an economic multiplier effect as money is circulated many times in the community, multiplying local jobs and wages, and generating community resilience.
Shifting purchasing creates big economic impacts
Not many companies are able to do all their purchasing locally. However, if everyone in BC shifted just 1% of purchasing to BCbased businesses, it would create 3100 jobs and $94M in wages to BC workers.
Strong relationships create business advantage
LOCO BC is a local business alliance working to strengthen communities and grow the local economy. LOCO’s business members cite close, collaborative relationships as one of the biggest benefits of working with local owned suppliers.
Reduced environmental footprint
It’s well known that local grown food creates less environmental impact by reducing the greenhouse gas burden of imports, which can travel up to 2,400 km to your plate. Perhaps less well known is that local owned businesses also reduce the environmental impact associated with globalized supply chains, because their shipping and distribution networks are smaller.
Branding and marketing
The Business Development Bank of Canada (BDC) has identified local purchasing as one of five key consumer trends. To benefit from the “Made in Canada” advantage , the BDC encourages businesses to market the local aspects of their business – from local ownership, local designed products and local manufacturing, to the use of local ingredients. Buying local is about more than farmers markets and craft fairs, and it’s of interest to more than consumers – it’s also a growing as a trend in business. There are over 20,000+ independent businesses in networks across North America who are working together to increase local purchasing.
Who’s Doing it?
Businesses of all sizes in all sectors are committed to shifting their spending towards local businesses. LOCO BC’s new Local Impact Assessment has begun to measure the impact of local purchasing. Here’s just a few examples of our findings find these and more stories at BCBuyLocal.com.
As the only local owned car share group in Vancouver, Modo is committed to supporting other locals when they can. Here’s a summary of their local purchasing:
- 90% of Modo’s vehicle servicing suppliers are local owned
- 100% of Modo’s service suppliers are local owned
- 100% of Modo’s marketing merchandise is local made
- 20% of Modo’s inventory and consumables suppliers local owned
Saul Good Gift Co.
Saul Good Gift Co. started his business to reduce the reams of plastic and poor quality imported items found in many gift baskets. Saul Good Gift boxes contain gourmet artisanal products sourced mainly from BC producers. Here’s a summary of the company’s local purchasing:
- 73% of significant suppliers are local owned
- 47% of significant suppliers are local made
- 14% of significant suppliers are local grown
- 25% of spending is with local social enterprises
Foodee has set out to revolutionize corporate catering, providing meals from the best local restaurants to offices in Vancouver and now Toronto. Here’s a summary of their local purchasing:
- 100% of noninventory purchases are from local owned suppliers
- 100% of inventory purchases are from local owned suppliers
“What is Local” is a first hurdle; so defining local is the natural place to start. LOCO has defined Local Owned, Local Grown and Local Made to help businesses answer that question.
The next steps are finding local businesses and assessing their local impact. Local businesses can be found in local directories, including those of Business Improvement Associations (the City of Vancouver’s BIAs are listed here) , Chambers of Commerce, Boards of Trade and other business groups. LOCO has a directory with over 200 members.
LOCO’s Local Impact Assessments are beginning to measure the impact of local businesses. We’ve worked with dozens of companies whose assessment stories can be found on the homepage at BCBuyLocal.com. We’ll expand the number of assessments in partnership with the Vancouver Economic Commission in 2015.
To start shifting some of your purchasing, review your purchases and take a look at some of the local suppliers that can provide those products and services. Talk to other businesses to find out what great local suppliers they can recommend.