Why consumers are supporting local businesses

Posted in Business and entrepreneurship.

The retail market is often dominated by big national and international chains. While their influence is far-reaching, some may find that they lack the kind of charm that a local business has. Why is this? Why do some people advocate for shopping locally while you would be hard-pressed to hear the same kind of encouragement towards multinational businesses?

Local businesses contribute more to the local economy

Locally owned businesses are more likely to recycle their revenue back into the local economy compared to chain stores. Studies show that owners of local businesses are more likely to make purchases from other locally businesses. This can be due to a sense of camaraderie between local business owners or a sense of trust between businesses.

Local businesses are often smaller, and the owners are easier to interact with. For many local businesses, the owners and/or the employees are part of the brand. The business and its brand become less abstract and building a personal relationship with it becomes easier. The “tangible” nature of these businesses and the common understanding shared between local business owners contributes to the camaraderie and trust.

The local economy is benefited through more than just the recycling of revenue into other local businesses. Local businesses provide more local jobs as they grow. Cash thus flows between local businesses and the local community. In some sectors, local businesses may even provide better pay and benefits to their employees.

Local businesses can fortify a community

Locally owned businesses build strong communities and vibrant town centres by linking people through an economic and social web. Buying from a local business helps the local community to keep food on the table and interactions with them are often more personal.

Local businesses do not often get as many customers as bigger businesses, but this allows them to build better relationships with their customers. Relationships with larger businesses are functionally one-sided. There is a customer’s relationship with the brand, which is a one-on-one relationship, but the same cannot be said for the reverse. Yes, a brand has a relationship with its customers, but this isn’t a one-on-one transaction. Local businesses have the ability to know who Jim is and build a relationship with Jim rather than nameless customers.

A local business that capitalises on their intimacy can strengthen a customer’s personal connection to the business. Local businesses are often niche, and this can create a sense of belonging to a little group. Since a local business’s best form of advertising is usually by word-of-mouth, customers may often want to let their friends and family know about their little “secret”. Through this, a local business can build a shared community. Eventually, a local business can become something of a local tourist spot.

Local businesses breed competition and innovation

A larger business that is established in many places is more hesitant to try new things. Their target market is much wider, and they often need to cater to the majority of their market. Additionally, if things are going well, the business may refrain from straying too far away from what made them popular in the first place.

Local businesses often serve a niche, and a local niche at that. In an increasingly homogenised world, communities that preserve their one-of-a-kind businesses with distinctive charms have a stronger economic advantage. While bigger companies often stick to a national sales plan, local businesses have more freedom to sell what they want to and put unique, personal spins on their products and services. Local businesses serve the interests of the owners as well as the needs of the local customer base. With more local businesses opening up, this creates a broader range of products and services for customers to choose from.

Local businesses are often competing with other local businesses rather than larger businesses. Due to the large number of local businesses, these businesses are forced to compete with each other which can be good for innovation in the long run. It can be often harder for local businesses to stay relevant if they do not add new innovations to keep customers from straying towards other local businesses.


In summary, supporting local businesses supports the local community and contributes to having heterogeneous town centres. Local businesses are closer to the community and often have the luxury of forming strong personal connections with their customers and other local businesses. Local businesses compete with each other much more than they do with larger businesses, but they also support each other, engaging in a wholesome circle of innovation. It is for these reasons that people opt to shop locally, and local businesses that leverage this fact may find themselves at an advantage.