"Big boxes’ mean big changes
When a “big box” store like Avon’s 115,000 square foot The Home Depot, opens in a small market, the magnitude of change created can be enormous.
Increased traffic, bigger roads, increased or decreased sales-tax collections, increased competition for employees, possibly increased office rent and lots of competition for small businesses. They also have the ability to keep more shoppers in the area, providing opportunity for properly positioned businesses.
Two years ago, Parker, bedroom community southwest of Denver with a population of about 30,000 people, saw an influx of big boxes. The experience there has parallels here.
“We didn’t lose any business directly related to the opening of Wal-Mart or Home Depot,” says Dawna Callahan, executive director of the Parker Chamber of Commerce. “Some people had to downsize or specialize. Big boxes have been a plus. People now stay in Parker and shop and the sales tax stays in town. The businesses that left all had other things going on (that contributed to their departure).”
Parker is in upscale Douglas County, which until recently was among the fastest-growing counties in the country.
Dave Stoufer, who has operated a hardware store in Parker for 30 years, doesn’t paint that rosy a picture about big boxes. He says his business has been cut by 40 to 50 percent since the arrival of the big boxes.
“I’m quite discouraged by the trend nationwide,” he says. “Consumers believe bigger is better, so they automatically go to big boxes.”
To combat the arrival of the mega competitors – right across the street from his store – Stoufer says he works hard to train his employees so they’re knowledgeable about products and provide good customer service.
Stoufer is quick to admit the decline in business is not all from the big boxes. The stagnant national economy has had an impact too, he says.
Lately, however, he says he’s seeing some renewed activity.
“People are really careful with a buck,” he says. “Since the war ended we’ve seen a pretty good pickup in business. People’s buying habits are slowly turning around.”
When PetsMart came to Parker, Loren Bengston had to take some quick action to ensure the future of his pet store.
“I became more specialized and made sure I carry things they don’t carry,” he says. “I do a lot of advertising and carry higher-quality products.”
Bengston says he also downsized his store from 3,300 square feet to 2,000 and moved it to a higher-traffic location that surprisingly carried a lower rental rate.
“I used to carry 11 brands of dog food. Now I carry six,” he says. “You have to become more people- and service-oriented in order to put yourself a step above the big boxes. I even carry out large bags of dog food for my customers. Big boxes are convenient. That’s about it.”
Bengston and Stoufer say they’re not sure the arrival of big boxes has been a good thing.
“I don’t think (the arrival) is a good thing,” Bengston says. “I think people think it’s a big box, so it has to be cheaper. It isn’t always that way. They have to make up their losses somewhere.”
Bengston, too, makes sure his staff is primed with product knowledge – something he says is lacking at the big boxes.
Stoufer, meanwhile, says he’s concerned the proliferation of big boxes may presage the end of many small, independent businesses.
“Manufacturers are capitulating to big boxes,” he says. “They don’t care about the small businesses because we don’t’ represent enough sales of product.”
But there are other, less-visible and subtle influences. Stoufer and Callahan say the price of retail and office leases has increased since the big boxes arrived.
“They (big boxes) pay so much for the land and the building that they tend to raise the market for available businesses,” Stoufer says. “It’s just going, up and up.”
Big box stores also need lots of employees and, until recently in Eagle County, finding enough employees has been a struggle. In Parker, Stoufer says the national economic downturn has meant there are more people looking for work.
“Employees are easier to get this year than any year in the 30 I’ve been in business,” he says.
More traffic, more roads
The popularity of big boxes will create plenty of shopping traffic in and around Avon and Eagle-Vail. Crews have been busy building a roundabout in Eagle-Vail, as well as working on a “half-diamond interchange” with Interstate 70, in part because of the arrival of the big boxes and the traffic they will generate.
It’s projected the new stores and adjacent commercial space and residential development could generate 10,500 more vehicles a day in the Avon and Eagle-Vail area. However, the new interchanges actually could reduce traffic through Avon’s roundabouts by as much as 30 percent, says the town’s manager, Larry Brooks.
For governments like Vail and Avon, which depend on sales tax for significant portions of their operating budgets, the arrival of the stores will change things.
Vail is forecasting flat sales-tax receipts next year, says Judy Camp, the town’s finance director. That isn’t a surprise, she says, because sales-tax collections in Vail have been flagging for most of the last decade.
In Avon, meanwhile, the arrival of a Wal-Mart Supercenter – with a grocery store – later this summer is expected to cut 40 percent from the City Market’s sales this year, says Brooks.
Brooks says Avon is forecasting a 25 percent drop the second year and 10 to 15 percent each of the following two years.
Avon, too, has budgeted for flat sales tax receipts, he says, but that’s due, in part, to uncertainty about the national economy. Avon has deferred collecting sales tax on the two new big box stores for years, allowing the developer’s metro district to fund development bonds.
Another trend, called “leakage,” or the migration of shoppers out of the area, most agree, will slow, once the big boxes are operating here. Just how much remains a question because numbers on exactly what out-of-county leakage exists have not been tracked.
For Loren Gifford of Vail Valley Ace Hardware in West Vail, the arrival of Home Depot last week was a shot across his bow. But Gifford has been preparing for this battle for the past year.
“We’re still concentrating on customer service and want to work that even more diligently than in the past,” he says. “Customer care is where, if we survive, we’ll beat them.”
Gifford and his wife, Judy, will be celebrating their 10th year in business in August. They’ve reset the merchandise in their store and created more specialty departments, as well, he says said.
“We can get into a whole lot more detail than Home Depot and we can do a better job than they can,” he says.
Gifford also says the impression big boxes always have cheaper prices may not be correct.
“We’ve had Ace corporate here, and they’ve been convincing a number of stores that they need to raise their prices to match Home Depot’s,” he says.
If national trends hold, Gifford says, he expects a number of mom-and-pop operated business will begin to close and leave town when both of Avon’s new big boxes are open for business.
Cliff Thompson can be reached at 949-0555 ext 450 or email@example.com
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