Adding up the bottom-line benefits of buying local products

Galen Weston, head of Loblaw, the biggest food retailer in Canada, claims that putting a “local” label on a food product increases its sales by 40%

At a time of year when the bottom line gets nicely blurred by the sentiment of the giving season, it’s good to be reminded of a completely practical way of giving back to the community that works year-round.

For the consumer, it’s a way of “giving” that rewards people around them who are struggling to make a living. It requires little or no personal sacrifice. It’s a proven way to enrich the community. It creates jobs. Governments already spending on economic development have no excuse for not doing it. Customers like businesses that do it. Tourists in search of authenticity crave it. It’s called buying local.

Survey after survey shows that customers get it. They want to buy local to support the local economy.

“A majority of Canadians now make an effort to buy local or Canadian-made products and some are willing to pay a premium,” says a recent Business Development Bank of Canada report, citing the buy-local movement as the most important trend in consumer behaviour in the past five years. Its research shows that two in five Canadians consider local production an important factor in buying decisions: 97% do it to support the local economy. The older the consumer, the more likely he or she is to buy local.

Galen Weston, head of Loblaw, the biggest food retailer in Canada, claims that putting a “local” label on a food product increases its sales by 40%. That would be why Save-On Foods, the biggest buyer of local foods in B.C., has invested in its “buy local” advertising campaign. London Drugs and Rona are two other companies committed to stocking local goods: Rona says it sources 85% of its products from Canadian suppliers.

Buying local has a huge impact on the local economy. Vancity claims a 1% increase in spending at local businesses would create 3,100 jobs and $94 million in annual wages for B.C. workers. An Ontario study estimated that if every household in Ontario spent $10 a week more on local food, in one year that would add $2.4 billion to the provincial economy and create 10,000 new jobs.

LOCO BC, a group working to shift vending toward local businesses, makes a powerful point that any government spending money on economic development should be buying locally.

A study LOCO BC did in partnership with the Columbia Institute and the ISIS Research Centre at the UBC Sauder School of Business calculated that local governments and school districts could inject more than $1 billion into B.C.’s economy by purchasing goods and services from local suppliers rather than multinational companies, creating twice as many local jobs.

They looked at the economic impact of the City of Vancouver switching its stationery business from locally owned Mills Basics to Staples. For every dollar spent at Staples, $0.17 to $0.19 cents recirculates in the local economy. The same dollar spent at Mills Basics puts $0.33 into the provincial economy.

Compare that lost opportunity with the city’s annual $2.7 million investment in economic development doing things like sending the mayor to Asia to attract jobs.

“The move away from local suppliers by institutions and governments buying based on price alone doesn’t make sense when they are also spending dollars on economic development,” said LOCO BC’s Amy Robinson.

The provincial government is also onto this, targeting 20% of its procurement to small and medium enterprises, which are mostly local. One reason smaller companies aren’t getting contracts is not price but because the government’s purchasing terms are geared for bigger companies.

Local buying is a powerful way for consumers, businesses and governments to enrich the local economy without donating or spending more, just spending smarter. Everybody wins.