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Shoppers Warming Up to Buying Local

small business owner . / Credit: Local Business Image via Shutterstock

Public campaigns designed to boost consumer interest in shopping at small and independent businesses appear to be paying off, new research shows.

Independent businesses in communities with an active "buy local first" initiative reported average revenue growth of 8.6 percent in 2012, compared to 3.4 percent for those in areas without such programs, according to a study by the Institute for Local Self-Reliance and several business associations.

In addition, 75 percent of companies in cities with a local shopping initiative believe the campaign helped their businesses.

Michael Morris, vice president of marketing for TriMega Purchasing Association, said he is very encouraged by the growing impact of buy local first initiatives.

"We believe that ongoing education to consumers on the benefits of supporting local businesses, such as keeping dollars in the community, is gaining traction and driving positive sales results in today’s economy," Morris said.

The research shows that, on average, revenue grew by 6.8 percent for all independent businesses. Overall, more than two-thirds experienced revenue growth in 2012, up from the previous two years.

"Independent businesses are making huge strides when it comes to communicating their value and building community support, but they are still struggling in an environment in which public policy often gives major advantages to their big competitors," said Stacy Mitchell, a senior researcher with the Institute for Local Self-Reliance.

One of the major challenges facing small and independent business comes from customers who check out products in local stores, but then return home to buy those items online. More than 80 percent of the businesses surveyed said such "showrooming" practices negatively affected their business, with 47 percent describing the effect as moderate or significant.

Kathleen McHugh, president of the American Specialty Toy Retailing Association, said showrooming is the number one issue facing toy stores today.

"If consumers value that store visit and the investment local retailers make in their community, they should also want to keep those brick-and-mortar stores in business by making their purchases with them," McHugh said.

The study discovered that lack of financing was another top challenge, with 23 percent businesses unable to secure a needed bank loan at some point in the last two years.

The research was based on surveys of more than 2,300 independent businesses across all 50 states and the District of Columbia.

Follow Chad Brooks on Twitter @cbrooks76 or BusinessNewsDaily @BNDarticles. We're also on Facebook & Google+.

Chad Brooks

Chad Brooks is a Chicago-based freelance writer who has nearly 15 years experience in the media business. A graduate of Indiana University, he spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including, local and state government, crime, the legal system and education. Following his years at the newspaper Chad worked in public relations, helping promote small businesses throughout the U.S. Follow him on Twitter.