You could maybe save a couple bucks by making your next purchase online. Or you could help generate $1.2 billion in new economic activity by buying from a local Michigan retailer.
New research finds that people in Michigan would benefit by much more than a couple bucks if they shift just one of every 10 online purchases back to a local retailer. That would create nearly 10,600 jobs and increase wages by $350 million, according to a study commissioned by the Michigan Retailers Association and conducted by Public Sector Consultants.
“Even a modest switch back to local purchasing could have a notable positive economic impact,” the study states. “Ultimately, this small change in purchasing behavior could mean a big economic impact for Michigan’s future.”
Nationwide, e-commerce sales have more than doubled over the past decade, from less than 4 percent of total retail sales in 2008 to around 10 percent today. In Michigan, residents last year spent an estimated $18.5 billion on off-site retail purchases either online or via catalog or TV shopping channels. That accounted for more than 13 percent of total retail sales in the state — nearly $1 of every $8 spent. And that ratio is much higher when taking groceries and gas out of the equation.
But while individual consumers might save a few dollars buying online, in no small part due to tax advantages for online sellers, there’s a downside to the trend: As more people shop online, the share of retail spending at brick-and-mortar stores in Michigan is falling, and local retailers and their employees are feeling the pinch.
The trend’s not only bad for Michigan businesses, but also for everybody in Michigan since retailers are big employers and economic contributors — accounting for nearly one-fifth of the state’s total economic activity. When Michigan’s retailers struggle, the entire state feels the pain.
“While the growth in remote sales has provided some consumer benefits, this growth has not come without costs,” the study states.
So, what can we do about it? The Michigan Retailers Association is responding to online trends with its Buy Nearby campaign, which encourages consumers to keep their shopping dollars in Michigan and educates them on the benefits of doing so.
Retailers in Michigan employ more than 877,000 people — about one of every five jobs in the state — and they pay those employees $21.6 billion per year in wages. In addition to jobs and pay for employees, Michigan retailers indirectly support additional jobs for people working in other sectors by buying goods and services such as cleaning services, security, legal, accounting and more.
The ultimate impact is significant: Between the direct and indirect jobs that retail supports, and the money that retail employees in turn spend, the study projects that Michigan would gain 10,578 new jobs and more than $350 million in new income if people shift just one of every 10 online purchases back to a local store. Economic activity would grow by $1.2 billion.
If people shifted even more of their shopping back to Michigan stores the impact would be even bigger. On the other hand, if people increasingly buy products online, people in other states and countries will benefit from Michigan dollars.
“Why would we not want that money to stay in Michigan? Our Buy Nearby campaign encourages people to be intentional about their purchasing habits,” said James P. Hallan, president and CEO of Michigan Retailers. “Think before you click: Can you easily find that same item at a store down the street?
“If it costs a bit more locally, isn’t it worth the customer service and expertise you receive with an in-store purchase? What would you do if that store closed because more dollars were being funneled to online competitors? Keep your money in the Mitten.”
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