Get the facts: Why you should buy your groceries from local businesses

19 Nov, 2020

Most people would agree that buying local is better. But have you ever stopped to think about why? To really break it down?

Obviously buying your sausages at the local butchers helps keep their doors open, but there’s a lot more to it than that.

Read on for some facts that validate your choice to support local businesses.

Buying from small businesses affects a lot of locals

According to the Australian Bureau of Statistics, small grocery retail businesses – local butchers, fruit & veg shops, bakers, and so on – employ around 226,400 Australians (including part-time and casual employees). That equates to nearly 57% of all people employed in the supermarket and grocery sector.

That’s only just short of the number of people the mining industry employs (247,300), even with all its resources and tax breaks!

And remember, small business jobs are local. (And the profits don’t go overseas. But more on that later…)

The big boys (Woolworths, Coles, etc.) employ a lot of people too, there’s no denying. But there’s a big difference: they’re rapidly downsizing their workforce, despite massive profits:

“In spite of increasing its revenue by 75 per cent since 2001, Woolworths has cut its workforce by 27% or 35,592 people. Retail rival Coles has also slashed its workforce over the past five years, down from 160,000 in 2001 to 94,000…” (ACNielsen Grocery Report 2006, p. 12.)

And obviously there are a lot of other problems with buying from Woolworths and Coles. More on that later too…

Buying from small businesses affects them a lot

When you spend $100 at Woolworths, they don’t even notice. It represents a mere 0.00001% of their weekly turnover!

But when you spend $100 at your local butchers, it’s a big deal. It provides about 1% of their income for the week.

And remember, 25% of small businesses experience serious cash flow problems that nearly put them out of business. So when you buy, they definitely notice.

Small business owners are regular people, just like you

The owner and staff of Penny’s Quality Butchers, for example, are locals, just like you.

The same applies to pretty much all the other little, privately owned shops in your neighborhood – the bakeries, butcher shops, green grocers, nut shops, delis, health food shops and so on.

Most are family owned and operated, so when you buy from them, you’re putting food on the table for those families.

The people who benefit most when you buy from Woolworths and Coles are their wealthy shareholders. According to PricewaterhouseCoopers, they:

“…typically distribute over 60% of earnings as dividends to institutional and retail shareholders who are largely on the eastern seaboard of Australia.”

Take Woolworths, for example. Their top 10 shareholders are all huge corporations. 7 are foreign corporations, 2 are subsidiaries of foreign corporations, and 1 is Australia’s biggest listed investment company, whose major shareholders are banks.

Small business owners work hard

More than a quarter of small business owners work 50+ hours per week. More than half work 6-7 days a week. And more than a third don’t take a break over Christmas.

Small businesses spend locally

Small businesses tend to buy from other small businesses and 73% give back to the community through sponsorships for local community programs and donations to local charities.

In fact, according to a study by Civic Economics, when you spend $100 at a local retailer, $68 remains in the local economy. When you buy at a big chain store, only $43 remains in the local economy.

PricewaterhouseCoopers reports that big retailers like Woolworths and Coles “… are comparatively less likely to reinvest at a local community level…” and that they’re “…gradually sourcing a higher proportion of produce from international, rather than Australian, suppliers. This trend could potentially affect the success and continued livelihood of local producers and manufacturers.”

In other words, when you buy your apples at Johnnies Fruit Shop (and youshould!), far more of your money goes back into the community than when you buy at Woolies.

Small businesses are more accountable to their local community

When you have a gripe with a local store, you can speak with the actual owners. And because they’re locals, like you, and they see you all the time, they actually pay attention.

Not so, at Coles. You have to submit a form on a website, and of course nothing ever seems to get done.

Small businesses are more ethical

Woolworths and Coles have a track record of unethical behaviour.

For example, according to ethical consumer group, ShopEthical, Woolworths is Australia’s biggest operator of poker machines, they label their eggs free range when technically they’re not, they have nanoparticles in their food products, and they’ve been fined for misleading customers, anticompetitive conduct and unfair conduct.

Look at Woolworths’ scorecard:

Woolworths Shop Ethical Scorecard

Coles’ history is much the same. ShopEthical reports that they mislabel their ‘free-range’ eggs, that they score just 8.8 out of 22 on the WWF Palm Oil Buyers Scorecard, that they’ve been fined for misleading conduct and unconscionable conduct, and that they were caught underpaying workers.

Here’s Coles’ scorecard:

Coles Shop Ethical Scorecard

Small businesses are better for the environment

Woolworths ranks way down at number 345 in Newsweek’s Green Ranking list for environmental impact. That’s miles behind even the likes of BHP (ranked 69), Shell (ranked 142), Rio Tinto (ranked 188) and Glencore (ranked 20)!

Woolworths Newsweek Green Ranking

Woolworths also scored only 29% in The Forest 500 rankings, based on their public policies, and commitments and potential impacts on tropical forests in the context of forest risk commodities (palm oil, soy, beef, leather, timber and paper):

Woolworths Forest 500 ranking

Coles has a similar track record. The World Wildlife Fund (WWF) rates Coles as ‘lagging behind’ on their approach to their palm oil supply chain, with a score of 8.8 out of a possible total of 22.

Coles Palm Oil Buyers Scorecard

Coles also received Environment Victoria’s DUMP (Damaging and Useless Materials in Packaging) Award for using unrecyclable and unnecessary plastic packaging in 2007 and 2009. (And let’s not even get started on their plastic toy campaigns!)

Small grocery stores have all your favourite products

Because small retailers tend to specialise, you’re pretty much guaranteed to find everything you want. You can also be confident that the quality will be top-notch.

The big chain stores, on the other hand, stock only the most popular products, and as you know, popular isn’t always best. The most popular products are often the cheapest or the best marketed.

Indeed, Woolworths and Coles typically make their own store brands more prominent so they can encourage more people to buy based on price alone. Over time, this reduces the range, because the higher quality products can’t compete on price.

Don’t believe me? Try finding a croissant at Woolworths that’s even half as good as the melt-in-your-mouth delights at Rustique Bakery at Mosman. Or the hot smoked trout from Avenue Road Delicatessen. Or the dried Australian mango from Scoop Wholefoods.

Small grocery stores are better for your health

If you’re after organic only or super nutritious, you know that’s exactly what you’ll get when you shop at Dr Earth, Return to Wellness or Shoulder to Shank.

Shop at Woolworths or Coles, though, and all you get is a couple of ‘Health food’ shelves!

The service at small grocery stores is better

Small retailers are friendlier. Simple as that.

According to Canstar, 99% of small business owners say they always welcome their customers with a smile, 94% always personally thank their customers, and 92% know the names of their regulars.

They understand that one of the big reasons you shop with them is the friendly exchange each time you do. They know their value is in service, not just convenience, so they try harder.

And it’s their business, so they’re intimately aware of the impact of good (and bad) service.

But there’s more to it than that. Small business owners also tend to be more community-minded. Canstar found that 59% of small business owners said the pull of “serving the community” was a major reason why they set up their business in the first place. And 79% said they defined the success of their business as whether they were having a positive economic and social impact on their community.

Small grocery stores are part of the local charm

Last, but not least, the local specialty shops (and their owners) add character to your neighbourhood. They’re part of its charm and uniqueness – its identity.

I don’t know about you, but I like to live in a place that feels like home, not like a corporation.

What do you think?

What’s your experience shopping with small, local grocery retailers? Please comment below.

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