Wednesday, 09 September 2009 15:46

Local Shops, Local Money

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This article is based on a piece on Transition Network website:

Transition Matlock is looking at  different ways to raise awareness of the importance of Shopping Locally,  and of encouraging people to source local goods and services.   We need to boost our local economy and encourage people to make a conscious decision to spend as much of their hard-earned cash as possible in their own town on locally produced or grown products.

Shops and services in our town centres and villages create local employment and self- employment.  Small shops tend to employ proportionately more people in relation to the size of the business.  Small independent shops are especially valuable to local economies.  Buying locally-produced goods or spending money in local shops keeps wealth circulating in our communities, helping Matlock to become more resilient, at a time when local businesses need our support more than ever. Before heading for out-of-town developments, or the big cities we’d like everyone  to consider: “Can I source this locally instead?”

Evidence shows that for every £10 spent in an independent local shop or service £25 is generated for the local economy compared to only £14  being generated for every £10 spent in a supermarket.

Giving your custom to locally owned shops and businesses supports the local economy and makes for a more vibrant and resilient community.

"As a practical illustration, we recently compared the multiplier effects of shopping for fruit and vegetables in a supermarket and from a local organic 'box scheme' (for the uninitiated, it's a fixed-price box of fruit and vegetables delivered to subscribers' doorsteps each week). The results showed that every £10 spent with the box scheme was worth £25 for the local area, compared with just £14 when the same amount was spent in a supermarket. “
New Economics Foundation "Plugging the leaks' p 20

We have within Matlock some fantastic independent shops and services.  We need to support local businesses and by doing so support the local economy and local jobs. Work undertaken by the New Economics Foundation on the Local Multiplier Effect means that money spent locally is worth  even more when traced through 3 or 4 local spending rounds,  therefore it is vital that a Shop Local Campaign encourages residents, businesses and local authorities  to consider “Can I source this good or service locally?” It is estimated that every pound spent in the town centre will be spent at least another five times before leaving our community.

The table produced by the NEF makes very interesting reading, showing what percentage of spending chain stores respend locally.

Sainsburys spends 9% locally,
Iceland spends 13.5% locally
JD Wetherspoons  19.2%   
Source: New Economics Foundation “The Money Trail” p116

It's when you look at this financial impacts of local shops vs national chains that you really see the impact on the local economy.

Here is an example of how powerful our shopping decisions are. Consider a supermarket where 80% of the money spent at the till leaves the local economy and enters the global market of manufacturers, distributors, transporters and investors, and only 20% is left locally as wages, rates and services. (This is a generous assumption as the figures above show that Sainsburys only spends 9% locally not 20%.)  If £100.00 is traded four times it leaches out of the local economy fast:


Trades Value of transactions Leaves the local economy Stays in the local economy
Trade 1 £100 £80 £20
Trade 2 £20 £16 £4
Trade 3 £4 £3.20 £0.80
Trade 4 £0.80 £0.64 £0.16


Within four trades £100 is down to 16p left in the local economy.
If, however a local grower or producer sells to you and 80% of the money stays in the local economy and 20% leaves then:


Trades Value of transactions Leaves the local economy Stays in the local economy
Trade 1 £100 £20 £80
Trade 2 £80 £16 £64
Trade 3 £64 £12.80 £51.20
Trade 4 £51.20 £10.24 £40.96


£40.96 is 256 times the amount left in the local economy compared with 16p. This is why our towns are drained of resources - every time we trade with non-local trading entities, our hard earned local money leaches out of the region to shareholders and city institutions.

It’s our economy, our money we spend in our town, lets get it back in our hands….

What can we do?

Immediate Action:

Shop Locally in independent shops.

  • Use the Farmers Market,  the veg box schemes,  farm shops.
  • Ask retailers (particularly food retailers) to stock local produce.
  • Medium term:
  • Look at starting a Local Food Co-op or  Hub.

Longer term:
Look at setting up a Local Currency    - the Matlock Crown?
See links below to the latest Transition Town currency to be launched on September 5th.      Totnes and Lewes, already have launched Local Currencies with Stroud and Bixton about to do so in the Autumn.

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