ARCHIVES: This is legacy content from before Sustainable Cities Collective was relaunched as Smart Cities Dive in early 2017. Some information, such as publication dates or images, may not have migrated over. For the latest in smart city news, check out the new Smart Cities Dive site or sign up for our daily newsletter.

Don't Shop Online, You're Slowly Killing Your Local Community

Keep it local graphicThere is a very direct relationship between the health of your local community and how much shopping you do online. When stores close down and get boarded up, it's not a coincidence. If you value the integrity of your local high street, don't buy online. If you want boarded up, empty shops near you, do buy online. 

I was doing a bit of Christmas shopping in my local town (incidentally, we've all agreed to hardly give any presents this year) and the local traders were saying that sales are down between 5 and 10% on last year. The national overall economy has improved, so we know what's happening, don't we? Yes, people are shopping more online.

The way you spend your money, which might be the most powerful tool to effect social change that you have at your disposal, is crucial to the well-being of your community.

Here's how it works:

"Imagine the local economy as a bucket. If someone has £5 and spends it in the local grocers, the £5 stays in the bucket. But when they pay the electricity bill, it doesn't stay in the bucket. Spending on electricity is like a leak in the bucket: the fiver leaks out as the supplier is a business outside the area. But there are usually ways of stopping all of the five pounds from leaking out. Insulating the house will cut the electricity bill, for example. If there's a local company to do the work, there'll be even more in the bucket." - from the 2002 New Economics Foundation handbook of local economics, Plugging the Leaks.

Money that stays within the local economy gets spent again and increases well-being. This is called the local multiplier effect. It is used by regional and local authorities all over the place to show how spending in their area can boost jobs and opportunities.  This is an extract from Plugging the Leaks:

 the multiplier effect

Different calculations produce different results according to whether it's better to spend in a chain or franchise, or in an independent shop. In general, is much better to shop in the independent local shop by a factor of between three and five times.

spending locally has a multiplier effect in the local economy


Infographic on the local multiplier effect:

Infographic on the local multiplier effect

There is a tool called Local Multiplier 3 or LM3, developed by nef (the new economics foundation) as a simple and understandable way of measuring local economic impact.

It is designed to help people to think about local money flows and how their organisation can practically improve its local economic impact, as well as influence the public sector to consider the impact of its procurement decisions. It was designed to be quick and relatively easy, and to highlight where an organisation can improve its impact.

The measuring process starts with 1) a source of income (say total income into a social enterprise) and follows how it is 2) spent and then 3) re-spent within a defined geographic area (that is called the 'local economy'). These three steps are the '3' in LM3. 

Spending online

But spending online is even worse then spending in chainstores. It's easy to see that spending online is like paying the electricity bill in the example above. ALL of your money leaves your area.

Money spent online becomes concentrated into the pockets of big international companies like Amazon and its Chinese challenger, AliExpress, making them get richer and richer. These companies are hoovering up money from all over the world. This is how the rich get richer and the poor get poorer. It has a direct impact on your local neighbourhood.

These international companies most likely don't even pay tax in your country, if they pay tax at all. There is no way you can remotely benefit again from the money that you have spent.

Local currencies

It is a great idea to spend your money locally, but it is even better if you spend it with a local currency. If you haven't got one, what about setting one up?

Bristol has a very successful one. We've run a video interview with one of the people who set it up.

Over in The Netherlands, Limburg has an e-wallet currency scheme. This is a points-based currency scheme that is designed to facilitate sustainable, environmentally friendly behaviour. It is currently operating in 13 local areas within Limburg. Their objective is to roll out their project to the entire region of Limburg.

In south London, Brixton Pound has a Payroll Local project, where staff at the council could take some salary in the currency. They compared outcomes between people who signed up to take part, against those who showed an interest in taking part. They found that 40% of people who took B£s in their salary reported going out at lunchtime in Brixton more, compared to less than 2% of those who didn't.

The nef have produced a toolkit to help you set up a community currency.

So, if you got any more presents to buy, make sure you buy them locally for that extra feelgood feeling.