Changing our spending philosophy
Our economy is at a turning point and we each have a role to play in what happens next.
When it comes to our spending habits, most of us default to what's easiest and cheapest. We click "buy now" without a second thought and prioritize convenience above all else. But what if this everyday decision-making is quietly undermining the places we call home? By shifting our consumption philosophy from one focused solely on affordability and convenience to one that prioritizes place and people, we can create extraordinary positive ripple effects throughout our local economies. The power to transform our communities isn't just in the hands of policymakers or business leaders—it's in the choices you make every day.
The power of consumer choice
Our economy is at a turning point. Many small businesses are struggling, and we're still experiencing the fallout of the pandemic. Altered behaviors like remote work, isolation, online shopping, and food delivery continue to have a foothold, hurting local establishments—the businesses and institutions that make it worth living somewhere.
Economic uncertainty seems to be the new normal, but it doesn't have to be. The power to strengthen our communities lies in our everyday choices. By reframing how, what, and why we spend our money, we have the opportunity to build resilience into our local economies.
What you buy and where you buy it has a profound impact. Most of us prioritize affordability and convenience in our spending decisions. While this approach makes sense on the surface, it unfortunately has negative consequences for the places we call home.
The hidden costs of convenience and low prices
Big box stores offer convenience and competitive prices, but they come with hidden costs that affect our local economies, reduce the financial productivity of our communities, and rely on vulnerable supply chains that often cause global damage.
Consider research conducted by Charles Marohn, author of "Escaping the Housing Trap," in Kansas City. His findings revealed that city investments in retailers like Costco and Home Depot actually reduced the financial productivity of the area.
When cities invest in big box developments, they displace land that was—or could be—used for living units or neighborhood-scale commercial space. This physically and financially crowds out small businesses, reducing opportunities for local entrepreneurs and jobs.
As Marohn explains in an article from strongtowns.org, "When one notes that big box stores are cheaply-built structures that aren't expected to last a generation, that's a substantial amount of long-term public investment supporting a pretty fragile and unproductive private investment."
These large retailers also generate less tax revenue for cities. A single-story big box store can occupy the same footprint as a multi-level building while generating significantly less property tax.
Amazon’s impact on local communities
E-commerce giants like Amazon present their own set of challenges. Beyond environmental impacts and labor concerns, Amazon's entry into local markets harms communities economically.
Multiple analyses have found that when an Amazon warehouse enters a community, retail worker pay drops by 2.4%—affecting wages up to 100 miles away from the facility. The local retail sector also loses jobs, which aren't fully replaced by positions within the warehouse itself.
The post-pandemic spending shift
Since the pandemic, when e-commerce grew by 29% in the United States, online shopping has become the default for many of us. A 2022 study found that consumers continue to prefer e-commerce post-pandemic due to convenience and efficiency. This shift has significantly harmed small businesses.
Nearly 43% of small businesses closed during the pandemic, struggling with uncertainty about lockdown durations. Despite the passage of time, small businesses continue to grapple with these effects, facing challenges due to limited resources and competition from dominant online marketplaces.
In Boulder, we've seen a 70% increase in sales tax revenue from online sales while local business revenue has remained stagnant or decreased. This stress on small businesses hollows out local economies and damages the very communities we call home.
The multiplier effect of local spending
What if you took on a community-centered approach to shopping? Instead of defaulting to online retailers or big box stores, you can buy your food, clothes, and home goods locally. For every $100 you spend at a locally-owned business, roughly $68 to $73 stays in your community.
Local businesses are more likely to hire employees from the community, purchase goods and services from other local businesses, and reinvest profits within the area. By contrast, only about $43 remains local when you spend at a national chain because a large portion of the revenue flows to corporate headquarters and shareholders.
The additional cash from local consumption results in more sales tax revenue for your city to spend on amenities, infrastructure, and services. It also represents more jobs and stronger ties between residents and the institutions that exist in their communities. The result is not just more financial capital, but more social capital.
Rebuilding social connections through local engagement
Robert Putnam, author of "Bowling Alone" and "The Upswing," defines social capital as the
"connections among individuals—social networks and the norms of reciprocity and trustworthiness that arise from them." This social capital is a key component of a thriving community, economy, and democracy.
Our habits have changed since the pandemic—we don't go out as much. According to The Atlantic, "The share of U.S. adults having dinner or drinks with friends on any given night has declined by more than 30% in the past 20 years."
The National Restaurant Association reports that 74% of restaurant traffic in 2023 came from "off-premises" customers (takeout and delivery), up from 61% before COVID.
These statistics illustrate the impact of decreased social activity on our economy. The less we gather together, the less we go out, and the less money local businesses make. This results in strained budgets for cities and weaker infrastructure for everyone.
What you can do
Each of us is responsible for the health of the places where we live. Creating that health means getting out in the community, developing relationships, and spending our money intentionally.
We all have a part to play in creating a resilient economy. To do that, we need to direct our spending closer to the source and connect with the producers and creators who make the things we need.
Here's how you can make a difference:
Connect with local food sources: Get to know your farmers and invest in community-supported agriculture programs.
Bank locally: Move your money to a local bank or credit union, which is typically less risky and more community-oriented.
Build neighborhood relationships: Get to know your neighbors and explore opportunities to share resources.
Shop at independent retailers: Make a conscious effort to shop at locally-owned stores for gifts, clothing, and household needs.
Dine at local restaurants: Choose independent eateries over chains and eat in-person rather than ordering delivery when possible.
Where you spend your money makes a difference. Think about the kind of place you want to live in and how you can work together with your neighbors to create thriving communities that strengthen both the social fabric and local economy of the place you call home.
Notes
The pursuit of perfection can undermine progress. It’s nearly impossible not to buy things at big corporate stores or Amazon. Any shift, no matter how small, makes a difference. Choose one thing you buy at Amazon and find it at a local store. Instead of ordering delivery on DoorDash, go out to dinner. Do what you can with the time and resources you have.
If you want to experiment with breaking up with Amazon, here is a great resource that offers a whole bevy of alternatives to shopping with Amazon.