by Cory Koch

Every small town used to have locally-owned retail stores, symbols of prosperity, stocked high with quality and pride. Their very presence seemed to assure the unchanging nature of small-town life. But the last ten years have seen economic changes that have forced local businesses to struggle to stay afloat. Large retailers have swept small towns into their embrace, offering to rescue them with new jobs and tax revenues.

But now, with retail-industry giants multiplying nationwide, a small but growing number of communities are saying “no” to new outlet construction. Instead, they’ve focused on rebuilding their Main Streets and local businesses.

Part of what’s motivating this change is a growing understanding of how important locally-owned businesses are to small-town economies. Most small towns cannot sustain both a vibrant downtown and a superstore. Economic studies and years of experience have confirmed the folk wisdom that the arrival of a giant usually forces dozens of local businesses to downsize or even close. The resulting job and tax losses often equal, and sometimes even exceed, the gains from the new development.

Studies show that trading locally-owned businesses for giant superstores sends a ripple effect through the rest of the town’s economy. Local stores complement a variety of other local businesses. They bank with the local bank. They advertise with local media. They create opportunity for service-providers such as accountants, lawyers and printers. A map of a healthy small-town economy reveals a web of interconnected associations. The grocer deposits his receipts in the local bank, which lends money to the farmer, who in turn sells her produce to the grocer.

National chains recycle a much smaller share of their revenue back into the local economy. They bank with big national banks. They bypass local advertising in favor of national media. They have no need for local service-providers. With these giants dominating a small town economy, the diagram changes noticeably. More money flows in only one direction: out!

Locally-owned businesses also lend a strong communal structure to their citizens. Local stores can form the heart of downtowns. Their survival ensures that a community’s historic buildings and traditions continue to be touchstones of everyday life. Unlike the giants, downtowns support many different uses, from retail stores to post offices and parks. They create a colorful center that can draw all members of the community together. They promote walking, congregating, and joyful encounters with neighbors, which many think are essential to maintaining the quality of life and sense of community in small towns.

But it’s not just the structure and balance of Main Street that matters. There are deeper community values to doing business with our neighbors. Their kids go to school with our kids. Their taxes support local services. They are often actively involved in local and educational organizations. Unlike distant corporations, their decisions, whether to sell produce from local farms, pay a living wage, or contribute to a local charity, are more often than not informed by both the need to make profit and the desires of their small town community.

Often I fail to recognize the value of something until it’s nearly gone. This has certainly been true of locally-owned businesses, which have undergone a decline over the last two decades. Thankfully, many towns across the country, such as our little city of Holland, are beginning to realize what’s at stake here.

Many towns are just starting to focus on adopting new planning policies that favor small, centrally-located stores and prohibit retail giants from developing on the outskirts of town. Others are revising their economic development programs to strengthen homegrown entrepreneurship rather than attract distant corporations. Some towns are focusing on Main Street improvements and launching economic education campaigns, encouraging residents to be more active in their communities.

These steps can help ensure that locally-owned businesses continue to be a vital and thriving part of our small-town communities.