The Virtuous Cycle of Buying From Locally-owned Businesses
When is $1 worth more than $1 for Dublin residents? When we spend that $1 at Dublin-based businesses. How can this be? It’s an economic principle called “The Multiplier Effect” which says that an increase in money spent locally creates a ripple effect as businesses and their employees in turn spend their earnings locally. This creates a virtuous cycle where a higher percentage of every dollar spent at locally-owned businesses gets redeployed back into the local community.
Studies conducted in Maine and Austin, TX found that locally-owned retailers tend to reinvest 45% of their revenue back into the local community (for a multiplier of 1.8), whereas national retailers only reinvest 15% of their revenue (for a multiplier of 1.2). If Dublin residents were to shift $100M of disposable income to Dublin-based businesses, the difference to Dublin’s economy would be $60M ((1.8-1.2) * $100M). This would equate to $600K in additional sales tax revenue (Dublin gets 1% of the 8.75%) that could be spent on local services (e.g., police, fire, street maintenance).
The difference in reinvestment rates is due to three main factors:
- Owner’s Profit – if the owner is a local resident, then they are more likely to spend their earnings on products and services (cars, retail, restaurants, etc.) in Dublin and other Tri-Valley cities.
- Local Vendors – a locally-based business is more likely to utilize other local businesses to provide services (e.g., accounting, legal, advertising/marketing, catering, and entertainment). These businesses will in turn reinvest a higher percentage of their revenues back into this area.
- Employee Wages – a locally-based business tends to hire a greater percentage of their employees from Dublin and other nearby cities than a business headquartered outside of this area. These employees will likely buy services from businesses in the Tri-Valley and then those businesses will in turn re-invest in this area, etc.
In essence, if residents spend more at locally-based businesses, then the Multiplier Effect will pump more money into our local economy and lead to:
- More companies doing business in the Dublin area;
- More jobs in Dublin;
- Higher demand for housing and commercial space in Dublin; and
- More funding for the City of Dublin and Dublin Unified School District that will translate into more services that can be provided for residents.
Please check out Yelp to see which of Dublin’s top-rated businesses you’d like to visit.
Illustration by Yes Magazine
10:18 PM on February 27th, 2009
Great post, John, for ours and other local communities. I’m sharing it with my Facebook and Twitter networks.
10:35 PM on February 27th, 2009
Thank you, Adriel. Buying local is more important than ever for Dublin.
Thx, JZ
12:20 PM on February 28th, 2009
I use Yelp for EVERYTHING, and poking around the tri-valley area for the best finds are no exception! Support Dublin businesses!
11:27 AM on March 3rd, 2009
At the top, what specific store closures are you referring to? I know Mervyn’s, Circuit City, and Home Expo are closed or closing. Have there been a lot of locally-owned business closures as well? I haven’t heard of any.
11:46 AM on March 3rd, 2009
Vin Pearl and Abba Gourmet closed in December 2008 and January 2009, respectively. My husband and I went to Abba Gourmet frequently, so we were sad to see them go. Of course, these two are nowhere near the scale of the closures John talked about, since those stores employ a lot of local people. I hope the City will be able to find new tenants soon.
Kate S.
5:58 PM on March 3rd, 2009
Yes we were also saddened to see Vin go out and then Abba. We frequent Abba a lot since it first opened.
10:46 PM on March 3rd, 2009
We’ve had some auto dealers close like Ford of Dublin, Pontiac, and Crown. Blue Tomatoes and Pick-Up Stix closed at Waterford (I think that the latter was related to a franchisee problem vs. the economy). There was one or two stores that closed in Dublin Corners (the shopping center w/ Tomatina and Woks Up). There are a few vacancies at the Almond Center next to Amakara. The strips along Village Parkway and western Dublin Blvd. haven’t had any vacancies that I can see. There are some vacancies in the Enea Plaza, too.
Thx, John Z.
6:50 PM on March 4th, 2009
add Scentual at Waterford that recently closed. Dublin has been hit harder than our neighbors due to our reliance on retail sales tax and impact fees for new construction.
1:30 PM on March 11th, 2009
Folks, the sad collapse of Dublin retail continues relentlessly. I just returned home from a futile cross-town trip to the Anderson’s HDTV store to look at their extensive collection of equipment cabinets. I was surprised and disappointed to discover that the Dublin Anderson’s has closed. Does anyone know when it closed? I guess I’m out of the loop, but I saw no mention of it in the Tri-Valley Herald.
Maybe I should be a professional prognosticator. Posted below is what I predicted on January 11 in an email to John Zukoski and Jimmy Huang. I think it is foreboding that less than two months later, Anderson’s lost its deadly game of chicken with Video Only. My suggestion of conducting a pool on Dublin Townhall was entirely tongue-in-cheek, as it would be too morbid to enjoy, but I fear that more of the businesses I named are soon to fail.
On Sun, Jan 11, 2009 at 12:22 AM, Tim Hall [tiger650@comcast.net] wrote:
I predict that Video Only or Anderson’s will go soon. Then Thomasville or Hillsdale Furniture. Then Sleep Train, Mattress Discounters or Mancini’s. Then the Floor Store or Carpeteria. Then Petsmart or Petco. Then Corwood Carwash, Dublin Auto Wash or Dent Extractors Hand Car Wash. Then Horizon or Ewing Irrigation. Then Livermore Cyclery, Dublin Cyclery or Performance Bicycle. They’re all playing big games of chicken with each other right now. The first one in each group to flinch is dead. Maybe we should get a pool going on Townhall.
8:09 PM on March 11th, 2009
Hi Tim – it looks like the Wikipedia article on Dublin needs to be updated under the “Building Dublin” section:
http://en.wikipedia.org/wiki/Dublin,_Ca
Your email was very prophetic. The businesses along Village Parkway and the western/established portion of Dublin Blvd. that have been open for awhile should be okay because they have rock-bottom rents. The businesses in the rest of Downtown may have a tough go of things until the economy turns around because their rents are much, much higher.
Thx, John Z.
8:19 AM on March 13th, 2009
Actually about a month ago I noticed Village parkway had its fair share of vacanicies. The red wing shoes store has moved and some Carpet place shut their doors and the Mandarin Village restaurant closed it doors. I know this isnt the nicest storefronts in town, which may also be adding to the vacancy.
9:11 AM on March 13th, 2009
Hi Chris – that’s a good point about the businesses in that building where Red Wings was…I believe that somebody bought the building a few years ago and then jacked the rents up to the average market rate. They had been at a discount for many, many years…
I hadn’t noticed that Mandarin Village closed…that’s too bad. I hadn’t eaten there before, but had wanted to at some point.
Thx, John Z.
9:34 AM on March 13th, 2009
I was just at Ulferts Center recently and noticed the lights are out at Macau Bistro. The sign says that a new restaurant is coming. Does anyone know what will be going in there?
12:36 PM on March 13th, 2009
With this difficult time, we need to look at this as glass half empty and glass half full. Yes losing retailers in the numbers that Dublin has experienced is alarming. At the same time with some of the less attractive storefronts, it could be primed for redevelopment once confidence and financing is flowing again. Having empty commercial space could entice the owners to look at modernizing or remodeling to attract future tenants. I wouldn’t mind seeing Dublin Car Wash and Corwood Car Wash go as I consider them as blight in highly visible areas of town. Same with most of the store fronts along Village and Dublin Blvd. just west of Tralee.
7:17 PM on March 15th, 2009
What is Video Only? We’ve always thought it was a Porn Video Store. With Dark Tinted Windows up front with a little peeping gap at the top of the windows and parking in the REAR, hmmmm? Sound like an adult store, place it right next to Hooters and one could only imagine.
7:19 PM on March 15th, 2009
Hey if Video Only and Hillsdale Furniture goes out, another opportunity to someday redeveloped a main gateway to Dublin’s downtown. Redevelop it along with the Corrie Center, Hooters, The Radisson, Sleeptrain and the Bowling Alley into an Office and Entertainment complex.
11:23 AM on June 25th, 2010
The facade may not look attractive (unfortunately) – but they do have good deals- better than the big stores.
8:46 PM on June 29th, 2011
What good does shopping locally do if nothing we buy is made in dublin?
8:08 AM on August 21st, 2011
If everyone buy products made in their country, then the world economy collapse.
If everyone buy products made in their town, then the national economy collapse.
If everyone make products for themsalves, then we back to pre-stone age.
3:33 PM on August 26th, 2011
“If everyone buy products made in their country, then the world economy collapse.
If everyone buy products made in their town, then the national economy collapse.
If everyone make products for themsalves, then we back to pre-stone age.”
It’s never that simple. We are never going to have the extreme situation that you are suggesting. Besides, what we’re talking about here is bringing back some of the business lost to online shopping and mega-retailers.
6:12 AM on August 27th, 2011
I agree back in the day the TRI-Valley had it’s own economy. Yes we were smaller, greener and bay side communities sort of laughed at us.
Back then we were their Sunday family drive. I’m a small business owner and I can spent all most all my business expenses here in the tri valley. I am really concern with all the out of county food marts moving. I have no idea were this food or how, if there are standard for quality for these foods to go to market here in America. Ranch 99 has cheap prices, but why to I want to support a foreign corporation when Pleasanton is the home to Safeway employing Americans?
10:27 AM on September 5th, 2011
What the heck you are talking about? Ranch 99 is a California based market that only exist in the states. It has nothing to do with been a foreign corporation. The only difference is that Safeway offers mostly European style food that serve the white population, and Ranch 99 offers mostly Asian style food that serve the Asian population. Hello, you are not the only one in town. I found your common to be pretty offensive.
11:40 AM on September 29th, 2011
Wherever you live, you should always buy local. Support your community.