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Local business: What to do if Wal-Mart arrives?

With the possibility looming that a Wal-Mart store will be built and operated in Pagosa Country, one of the primary concerns among both those who favor the arrival of the store and those who oppose it is the effect the big box operation could have on smaller businesses in the area.

What are local business owners doing to prepare for the day a Wal-Mart opens here? What do they figure the overall impact of such a store will be? What steps can be taken, what planning can occur to bolster the chances small businesses can survive and prosper?

SUN staff provided a series of questions to a number of local business owners. Four of those responses are printed here this week. Others will follow next week.


Goodman, Goodman’s Department Store

1) How long have you been here?

• What type of business do you have?

• How long have you been in business?

“My family is now a fifth generation business, with my daughter, Hayley, taking over the reins in June of this year after she graduates from CSU.

“We have a western wear business which is 113 years old, which boasts as being the oldest family-owned western wear business, west of the Mississippi.”

2) What type of threat do you think the operation of a Wal-Mart or other big box poses to your business? Why?

“Wal-Mart will affect most every business in Pagosa Springs. Unlike most big city shopping centers, Pagosa is filled with unique, family-owned businesses with wonderful personal flavor, which makes Pagosa wonderful and different. Wal-Mart will bankrupt most of these businesses and leave Pagosa with empty street fronts and a shopping area in front of Wal-Mart just like every other city. All of the individual owners who put their time and efforts into making Pagosa grow will be gone and you will depend on Wal-Mart to fill that void. I doubt we will feel they filled the void.”

3) What do you intend to do now and in the immediate future to minimize or deal with the threat that you see? Why?

“I, along with a number of businesses and individuals, will try to educate Pagosa Springs so that they will see what Wal-Mart will bring, what type of wages they will pay, how much they contribute to the economy before sending the profits to Arkansas, and how little low paying jobs they create, while eliminating their competition and higher paying jobs.”

• Do you intend to change your current business plan or create a new business plan? Why?

“I will probably downsize my store and eliminate anything that will compete with Wal-Mart, hang on and hope we will be one of the survivors.”

• How do you envision this affecting the number of people you currently employ or your ability to hire in the future? Why?

“If I am having to downsize to survive, of course it will affect my workforce in a negative fashion.”

• Do you envision it affecting your current pricing practices? Why?

“I carry quality items which are made well and are from higher end companies. Wal-Mart will carry the cheaper goods. I believe the items I carry are priced correctly and I have always tried to be competitive with all the bigger cities around me. It’s not about selling cheaper, it is the fact that the pie will always be the same size, and we will get what is left, after Wal-Mart has gotten their piece.”

4) What do you believe the overall impact to the local business community will be? Why?

“I believe Pagosa will survive, but the look of Pagosa, the small town atmosphere, will be gone forever and you will be left with the same look you get in any other city. Pagosa will cease to be unique. That breaks my heart.”

5) What else would you like to add?

“If Wal-Mart does want to bully their way into Pagosa, please make them jump through all the hoops that anyone else would have to jump through.

“No tax incentives to make it easier for Wal-Mart to put us out of business. They need to build a building that is aesthetically pleasing, with plenty of trees and shrubs and correct lighting, that the neighborhood can live with. They need to pay for any issues with wetlands and pay for all infrastructure including bike paths. It should be a privilege to come to Pagosa. They need to pay their share. They need to promise what they will pay their employees, and what benefits they will get. Talk is cheap. Make them put it on paper so they can be held accountable.”

Mike Haynes, Eagle

Mountain Mercantile

1) How long have you been here?

“I moved to Pagosa after graduating from college in the spring of 1984. Laura Haynes, my wife, moved to Pagosa in 1975.”

• What type of business do you have?

“We own Eagle Mountain Mercantile, a retail business selling an interesting mix of Sporting Goods, Quilting, Fabrics and Crafts, and Quality Pet Foods and Supplies.”

• How long have you been in business?

“My family bought an existing hardware business in 1984. We named that business Ponderosa Hardware. In 1987 we bought another local business, Federal Lumber, along with their building and lumberyard at the top of Put Hill. We combined our existing hardware store with the lumber business and called it Ponderosa Home Center. In 2008 we made the decision to sell the hardware and lumber business. That business is still operating in the same location here in Pagosa Springs.

“After selling Ponderosa, we took three parts of the business we had in our hardware store, found a new location, and opened Eagle Mountain Mercantile with sporting goods, quilting/crafts, and pet food and supplies.”

2) What type of threat do you think the operation of a Wal-Mart or other big box poses to your business? Why?

“Wal-Mart brings a multitude of threats to local businesses — especially retailers. Probably the toughest threat for the retailer to deal with is the perception that Wal-Mart is priced lower than the smaller retailers. I have been dealing with this perception for the almost 28 years I have been in retailing. Wal-Mart is a huge corporation and makes a much bigger profit, percentage-wise, than most independent retailers. They have much of their merchandise priced at high profit margins in order to make healthy profits while pricing more price-sensitive to maintain the perception of low prices. Many of our customers have been surprised to find that Wal-Mart is priced higher than we are on many items.

“The second area Wal-Mart threatens smaller independent and family-owned businesses is with their large inventory. The large inventory means not only a broader selection than many independent businesses can afford to stock, but it also means a deeper inventory — more of each item in stock and less empty peg hooks or shelf space.

“Wal-Mart’s extended store hours are also a threat to my business and most other retailers in town. Over the years, we have tried having more extended store hours and even when we had our much larger business, Ponderosa, the number of customers we would see during those early and late hours were minimal at best. With Wal-Mart selling such a broad selection of merchandise and groceries, they can justify longer hours. If they aren’t open 24 hours, they will certainly be open from about 6 a.m. to 12 a.m., hours our small, locally-owned businesses certainly cannot compete with.”

3) What do you intend to do now and in the immediate future to minimize or deal with the threat that you see? Why?

“I can’t speak for all the retail businesses in our town, but we have been dealing the ‘big box’ low price perception for many, many years. Wal-Mart has done a great job convincing American consumers that they are always lower priced. It is well known that Wal-Mart as well as other ‘big boxes’ will open new stores with especially low pricing. Wal-Mart does have different pricing structures depending on the level of competition they face in each community. Obviously in a small town like Pagosa, they will not have a great deal of the competition they face in larger markets with other ‘big box’ retailers. Their profit margins will certainly be higher here in Pagosa than in more competitive areas.

“That being said, we have several advantages, being an independent retailer, which help us stay competitive price-wise. We are members of a co-op buying group. This affiliation allows us to purchase at volume discounts due to the volume of the many members of the whole co-op buying group.

“In addition to the competitive pricing we receive through our buying co-op, we spend, and have always spent, time and effort price shopping our competition.The old adage is ‘you can’t underprice Wal-Mart,’ so we try to make sure our prices are very competitive. When comparing prices local consumers should certainly compare our prices before the sales tax is added. The sales tax belongs to the state, county and town, and is only collected by the retail stores. It is not part of our profit.

“We use a very sophisticated retail computer system to help us track our inventory and sales. That helps us keep close tabs on sales and pricing of fast moving inventory and anticipate what we may need for future sales. We utilize our computer system to help keep the most popular items in stock and minimize empty bin tags. But, I will concede that we are not perfect.

“Another advantage we have over a large national chain like Wal-Mart is our ability to react to our customers’ needs immediately. Unlike the big corporate retailers, we can quickly special order items our customers ask for. When new products come out, especially items that may be of regional or local interest, we can bring them in quickly for our customers. Local small retailers can be much more reactive to local area needs.”

• Do you intend to change your current business plan or create a new business plan? Why?

“Certainly Wal-Mart will affect our future business plans and performance. But, as I have mentioned we have tried to run our business for many years as if we competed against the ‘big box’ every day. We have strived to make a fair profit, compensate our employees fairly, and provide competitive pricing for our community.

“We will look closely at the product lines we carry that are the same as Wal-Mart. As a rule, we carry higher quality merchandise than the typical ‘big box’ discount outlet like Wal-Mart. We hope that our customers realize that our merchandise mix is generally of superior quality to the inventory stocked by Wal-Mart. We will try to avoid selling the exact same merchandise lines as Wal-Mart where it is feasible. We will continue to seek out and bring into our store a superior mix of inventory and especially look for higher quality products that where possible are produced in the United States.

“Another area where Wal-Mart cannot compete with locally owned and operated businesses is with customer service and more importantly customer relationships. We pride ourselves on getting to know our customers—building relationships.”

• How do you envision this affecting the number of people you currently employ or your ability to hire in the future? Why?

“We have always strived for quick and convenient shopping for our customers. We want shopping to be a simple enjoyable experience and we work to help our customers get what they need and, if they’re in a hurry, to get out quickly. That means we definitely spend a lot more on our staffing expenses as a percentage of our sales than most ‘big box’ outlets. We have two cash registers, and we use them both.

“As to how a new Wal-Mart will affect our staffing once it opens, it will certainly have a negative effect on our sales. Obviously fewer sales will mean we look at every avenue to cut expenses. We will try to keep staffing cuts to a minimum, but in order for us to survive the opening of a store like Wal-Mart in our area, we will probably have to cut back on hours, if not people.”

• Do you envision it affecting your current pricing practices? Why?

“As I said earlier, we have always attempted to stay competitive with the different ‘big boxes’ and Internet outlets that are out there. It hurts me to read the letters to the editor that make the blanket statements that all of the local retailers are overpriced, priced for the tourist, or gouging the locals. What we generally find is that most of our customers are pleasantly surprised to find out how competitive we are. We’re not the lowest priced place to buy products and you can always find someone somewhere—out of town or on the Internet—selling it cheaper. But what I hope our community tries to do is spend some time in the local businesses, including the grocery store, and really see what we offer and that our prices may not be exactly the same as the ‘big box,’ but they are certainly very competitive. If you’re grocery shopping compare your whole grocery list. Don’t just assume that because potato chips are cheaper at the ‘big box,’ that your whole grocery list is also cheaper. You will probably be surprised because the grocery store price shops their competition just like we do.

“If Wal-Mart does decide to open in Pagosa, we will certainly spend time in that store comparing their pricing and product offerings with our goal being to offer our products at competitive prices.”

4) What do you believe the overall impact to the local business community will be? Why?

“From what I have seen in other communities and heard from friends and other retailers in small towns like ours, the arrival of Wal-Mart can have a dramatic effect on a small town. Local businesses are already struggling. We are beginning to see that things are turning around, ever so slightly. A ‘big box’ opening now will cause our struggling businesses even more difficulty. I know the local government leaders hope to see increased tax revenue from Wal-Mart. I just hope they have weighed all the costs associated with this new ‘big box’ against the potential benefits. Wal-Mart is quick to tout the benefits of having their store open in town, but reality in many small towns tell a different story. Our downtown is particularly struggling with the exit of the longtime downtown grocery store. This Wal-Mart will not help our downtown area at all. The effects will more than likely be temporary, but they will hurt many of our local businesses nonetheless. Two to four years of struggling while waiting for the ‘new’ to wear off the new Wal-Mart store in town may be too long for some small business owners.

“On the other hand, I am a free market supporter. If Wal-Mart believes there is enough business for them to make a go of it in Pagosa, and they abide by and follow all the local codes, rules, and planning processes, they have every right to open up shop. They certainly don’t need stipends of our tax dollars in order to convince them to come to our small community. The Wal-Mart representative has stated they are not getting any special favors from our local government entities and I hope no one will consider using public funds to persuade them to build in Pagosa Springs.

“I do think the negative effects Wal-Mart will bring will be temporary, but for those that lose their good paying jobs or small businesses, the effects will be very painful and will last much longer. I don’t think a new Wal-Mart store will create the number of jobs or the average wage being bantered about by the Wal-Mart representative. It is a fact that the majority of jobs at Wal-Mart are part-time positions and are going to pay considerably less than a similar job at an existing small business here in town. I don’t think Wal-Mart’s benefit package is as good as they would have folks to believe, but I also understand that for someone who needs a job, and many folks do in Pagosa, a Wal-Mart job is better than nothing at all.

“Each new corporate chain store that opens in our small town will change the character of our town. Wal-Mart will certainly alter the climate of our small close-knit community. I personally like the idea of our town having a small town flavor, but I also understand that with growth come the ‘big boxes’ and changes to our community. The same reasons I came here almost 30 years ago are the same reasons other have continued moving to our area. Without growth my business probably would have closed years ago.”

5) What else would you like to add?

“Unlike the ‘big box’ corporate retailers, we (my family and my wife’s family) chose to open a business in Pagosa because we liked Pagosa and the folks who call it home. It is a great place to live and raise a family. But, we do need to make a fair profit to stay in business and continue to live in Pagosa Springs. Therefore, our goal is to be a part of the community and form long-lasting relationships with the residents of our small town.

“Wal-Mart is just a huge corporation headquartered in Arkansas. And, while they may donate and support certain causes and provide employment in our area, they are simply opening up their store to make a profit and increase their bottom-line performance for their shareholders. We just want to make a fair profit allowing us to continue to employ our local folks and allowing us to continue to live in this great town.”

Steve Potter, Mountain Home and Security

1) How long have you been here?

“I have been here 10 years, my wife 22 years.”

• What type of business do you have?

“We own a retail audio/video store and custom installation and security.”

• How long have you been in business?

“We have had our retail store for five years; we have been working the custom install and security business for 10 years.”

2) What type of threat do you think the operation of a Wal-Mart or other big box poses to your business? Why?

“The threat that we feel from a Wal-Mart coming into our town is that we will not be able to compete with some of the products that we both sell. An example would be the smaller personal electronics like iPod accessories, headphones, computer accessories, batteries, etc.”

3) What do you intend to do now and in the immediate future to minimize or deal with the threat that you see?

“To minimize the threat, we will promote our custom installation and customer service side of our business as well as the security services.”

• Do you intend to change your current business plan or create a new business plan?

“If Wal-Mart does come to town, we will need to take a serious look at our retail business.”

• How do you envision this affecting the number of people you currently employ or your ability to hire in the future?

“It may not affect the current number of employees we have due to the installation and security business. Retailwise, we may have to trim down a bit. I believe that the people that are employed now will not be the people that go to work at Wal-Mart, and the people that are unemployed at this time will still be unemployed. I find it interesting that I know two people that came from out of town and were employed within two weeks of arrival, but so many people state that they cannot find work.”

• Do you envision it affecting your current pricing practices?

“We may have to look at our prices on some inventory. We price our inventory at MSRP (manufacture suggested retail price). Most electronic manufacturers make items specifically for Wal-Mart or the big box stores, therefore as a custom business we cannot buy the same products and models. Our products cost more to produce and carry a higher MSRP.”

4) What do you believe the overall impact to the local business community will be?

“I believe that community will be shocked at the number of businesses that will in fact close their doors, or need to completely reinvent themselves.

“I believe that the people that are wanting a Wal-Mart in our town have missed a most important fact. The money will not stay here. Wal-Mart will not use our local banks, the number of jobs that they will provide to our community will not offset the number of jobs and businesses that will be lost.

“I believe that if we concentrate on making our town a destination for tourists and create an inviting downtown, the money will stay in our community. We are a mecca for the outdoors, and there are several towns like Moab, Utah, that are comparable in size that do not have a Wal-Mart. They survive through the promotion the outdoor activities and events that are scheduled on almost every weekend of the year.

“It amazes me that the current administration of this town, after 36 years, have not had a vision for our town and that their best effort comes down to inviting a Wal-Mart to the dance. The Ross Aragon Community Center is not the current mayor’s legacy. His legacy will forever be defined by the state of our downtown area. There is a good reason for term limits and bringing in new leaders with a new vision and energy. The current town manager was quoted as saying that he sees Pagosa as a young Castle Rock. I have never heard anyone tell me they were going to Castle Rock for vacation. We are a destination, not a stop on the side of the highway to use the facilities and shop in the outlet mall.”

5) What else would you like to add?

“I am not sure this area can support a Wal-Mart or any other big box. I do know that as for me and my family, we will not darken the door step of any Wal-Mart.”

Scott Slind, re•sport

1) How long have you been here?

“Two and half years.”

• What type of business do you own?

“It’s a sports consignment business and also a bicycle shop.”

• How long have you been in business?

“The same amount of time that I’ve been here, but the business was here two and half before I moved here.”

2) What type of threat do you think the operation of a Wal-Mart or other big box pose to your business? Why?

“I think it’s a tremendous threat. I can’t even think of a business in town that competes against Wal-Mart.

“If they moved in, I don’t think I would die a slow death; I would find something else to do. I don’t think anyone can compete with what they sell.

“People tell me my stuff is much different than what Wal-Mart sells, but if it’s cold and snowing and your kid needs a new jacket, you’ll pick it up there regardless of the quality.”

3) What do you intend to do now and in the immediate future to minimize or deal with the threat that you see? Why?

“I’m being as active as can with the Pagosa First group. I’d certainly like to see an alternative to Wal-Mart coming into town; something that would benefit the town instead of just Wal-Mart.

“As far as changing the business plan for the store, I’m in no position to do that financially. You know small businesses barely hang on as it is. If I take a ten-percent cut, I wouldn’t survive three months.”

• Do you intend to change your current business plan or create a new business plan? Why?

“Most likely I would create a new business, rather than a new business plan. I don’t know what that would be yet; but a retail business, I wouldn’t base my future on that. Some wise people once told me that hope is not a strategy.”

4) What do you believe the overall impact to the local business community will be? Why?

“I think it will be devastating, at the minimum. I look around at the stores, and I don’t think people compete with Wal-Mart. They will continue to lower prices and specialize in products. People say, ‘Well, they don’t sell skis.’ Not yet, they don’t, but that doesn’t mean they can’t. Their prices are based on surrounding competition. Compare prices to City Market, but once City Market closes, they’ll have nothing to compete with and prices will go up. And the same with whoever else they view as a long-term threat. I can’t imagine who would survive.”

5) What else would you like to add?

“I’ve got a sign hanging over my door that reads, ‘People should be careful what they wish for.’ The worst case is Wal-Mart comes in, tries it for five years, pulls out and leaves a giant empty building and a lot of other empty buildings. Numbers can sound good, but towns aren’t based on numbers.”

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