By Anne White
Holiday shopping represents one of the most significant economic opportunities of the year, with the National Retail Federation (NRF) projecting Americans will spend between $979.5 billion and $989 billion this season. The decisions consumers make about where to spend those dollars—whether online, at big-box retailers, or w ith local businesses—carry profound consequences for their communities.
When shoppers prioritize local merchants, they not only boost revenue for small businesses but also amplify the economic health of their neighborhoods. According to the American Independent Business Alliance (AMIBA), for every $100 spent at a local business, $68 stays in the community, compared to just $43 when spent at a chain. “Local businesses act as economic engines,” said Stacy Mitchell, co-director of the Institute for Local Self-Reliance. “When you support them, you’re strengthening an entire ecosystem of jobs, services, and civic life.”
LOCAL SPENDING’S ECONOMIC MULTIPLIER
The benefits of local spending stem from what economists call the local multiplier effect. Research from Civic Economics shows that independent retailers recirculate 47% of their revenue into the local economy, compared to just 14% for national chains. For restaurants, the disparity is even greater: 65% versus 30%. This reinvestment happens through local supply chains, higher rates of charitable giving, and spending by employees in the community.
“The multiplier effect is a proven driver of economic growth,” said Michael Shuman, author of The Local Economy Solution. “Each dollar spent locally works harder—it supports not just one business but an entire network of interdependent enterprises.”
JOBS AND HOLIDAY HIRING
Local businesses also play a critical role in job creation, particularly during the holiday season. The NRF estimates that retailers will hire between 500,000 and 600,000 seasonal workers this year, with many of those jobs concentrated in small businesses. Local merchants often rely on the holiday surge to generate a significant portion of their annual revenue, which sustains year-round employment.
“Small businesses tend to hire more locally, especially for the holidays,” said Amanda Miller, a researcher at the Urban Land Institute. “These jobs often lead to higher retention rates because local employers are more invested in their workers and their communities.”
Moreover, wages paid to employees of local businesses are more likely to be spent on housing, groceries, and services within the same area, further amplifying the economic impact.
HOLIDAY SHOPPING AND PUBLIC SERVICES
Supporting local businesses during the holidays also translates to more robust funding for public services. A report from Local First Arizona found that $25 of every $100 spent at local businesses goes to taxes, payroll, and community donations, compared to $13 from cha in retailers. These funds directly support schools, roads, and emergency services.
“Holiday shopping is not just a financial decision—it’s a community investment,” Shuman said. “Every purchase helps to fund the services we all rely on.”
THE THREAT FROM E-COMMERCE
Despite their importance, local businesses face mounting pressure from e-commerce giants like Amazon. The NRF projects that 25% of this year’s holiday sales will occur online, a trend accelerated by the convenience of home delivery and aggressive discounting by large retailers.
While some local businesses have adapted by offering hybrid models with online ordering and local delivery, many still struggle to compete. “The shift to online shopping presents an existential threat to small businesses,” Mitchell warned. “When consumers prioritize convenience over community, the ripple effect is reversed—jobs are lost, storefronts close, and municipal budgets shrink.”
“Local businesses are often the heart of their neighborhoods,” said Miller. “They sponsor holiday events, support local charities, and create gathering spaces that build social connections.”
A CALL TO ACTION
Consumers wield enormous power during the holiday season. By consciously directing spending toward local businesses, they can create a cascade of economic and social benefits that last far beyond the holidays.
“Holiday shopping is an opportunity to align your values with your spending,” said Mitchell. “Every dollar you spend locally is a gift to your community.”
As shoppers finalize their gift lists, the choice to buy local can make the difference between a thriving main street and empty storefronts. For communities, the impact of holiday spending goes beyond dollars and cents— it’s about building resilience, preserving identity, and investing in a future that benefits everyone.
