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Making Change:  Big Box Stores

Friday, December 20, 2002 at 4:16 PM

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Despite a sluggish economy, this holiday shopping season is expected to have a 4% increase in sales over last year. That's a pretty modest improvement, according to the National Retail Federation. Not surprisingly, one survey found that more than half of all shoppers intend to make their purchases at discount department stores. The boom in the number of discount and so-called "big box" stores has prompted many consumers to make different choices about where they shop. As part of Making Change: Reinventing our Economy, ideastream's Shula Neuman reports on how the influx of national retail chains doesn't necessarily mean locally-owned stores are in trouble.

If you check out the numbers, the importance of retail to our local economy is obvious. A study by the Cuyahoga County Planning Commission found that more than 200,000 people work in retail in Northeast Ohio; retail generates more than $345 million annually in taxes. And there’s nearly 13.7 million square feet of retail space in the region - about 10 million of which is vacant. Despite the empty space, new retail development - that is to say, new buildings for new stores - are still in demand. One of the region’s newest additions just opened in October.

Sam Desiderio: It’s called the Market Place at Four Corners. It sits in the corner of Bainbridge Township and is bordered by three other counties. That’s how it got its name - Summit, Portage and Cuyahoga County. And if it’s sitting in Bainbridge, it’s in Geauga County as well.

If the address sounds familiar, it’s because Six Flags is right across the street. Bainbridge Township Trustee Sam Desiderio says the development is a big box shopping center featuring Wal-Mart, Babies-R-Us and Kohl’s, among others. Three years ago, the site was nothing more than a forest. Desidereo says if it were up to him and the other trustees, the trees would have remained standing. But the property was zoned for commercial use and the owner wanted to sell, so the township had to go along with it. Desiderio says the promise of an increase in jobs and sales tax revenue certainly sounded good. He says Kenston School District alone expects an additional one million dollars in its coffers once the mall is fully operational.

SD: Interestingly enough the township, which the residents really receive the brunt of something like this in terms of congestion and all, will get the least amount of money out of the tax base, that’s just the way it breaks down.

In fact, the school district will get most of the revenue, the rest goes to Geauga county and the township. The developers of Market Square and the township trustees worked to build a project that was aesthetically appealing and environmentally sound. But even without those concessions, national trends indicate that the mall would probably still be a success.

Throughout the country, big box stores are gaining market share at a much faster clip than regular retail outlets. Ten years ago they had a 2.5% share of the market; today that share is 8%. Richard Dekaser, chief economist at National City Corporation, says the rapid growth is no mystery. Big box stores offer customers what most small retailers can’t: low prices, convenience and, often, selection.

But the value of the big chains cannot only be measured in customer satisfaction. You also have to consider the economic impact on the entire community - and by that measure, Dekaser says, the benefits are negligible.

Richard Dekaser: Historically, Economic Development strategists have not focused on the retail sector. And the reason is that the retail sector pretty much follows the rest of the economy. When you bring in a large retailing operation it doesn’t in its own right tend to be a net job creator but rather mostly a job displacer.

Dekaser says the new stores do provide a few hundred jobs for the locals, but those jobs tend to be low paying and with poor benefits. And because of the popularity of the discount chains, smaller, locally owned, specialty stores are often forced to close. But so what? I mean, as long as people are still buying, why should it matter whether the local hardware store is owned by Janusz in Parma or by Home Depot? Ernesto Poza, director of the Family Business Program at the Case Weatherhead School of Management, says it matters because when the company isn’t local, there’s a loss of local wealth creation and there’s a loss of local philanthropy.

Ernesto Poza: You don’t have the same kind of community responsiveness by the big boxes or national chains. Not that they’re not socially responsible and not that they’re not good businesses also. But they don’t have the same mentality around supporting the community in which they operate because any one community is not as important to them.

But locally-owned businesses still exist and some - like Alson Jewelers in Woodmere - thrive because they’ve found a niche the national chains cannot fill. Alson co-owners and brothers David and Chad Schreibeman recently moved their store to a new locale with three times the floor space and three times the inventory.

Chad Schreibeman: We really felt there was no one in town today doing what we’re doing in this new location. From the standpoint of just the size of the store, the amount of inventory that we carry. The selection, they styles the quality. And then we just have, what we tried to create in the new location is just a nice experience, a nice shopping experience.

Chad Schreibman says that means investing for the long term in a knowledgable sales staff, unique products and small amenities like a play area for children. According to business professor Poza, it’s finding those unique hooks that will ensure the longevity of locally owned businesses in a nationally competitive market.

In Cleveland, Shula Neuman, 90.3.

Additional Information

Ohio Council of Retail Merchants

Ecocity Cleveland

Northeast Ohio Regional Retail Analysis available through the Cuyahoga County Planning Department web site.

The New Rules, an organization that promotes community-oriented economic development. The web site contains speeches and statistics on the growth and impact of national chain stores.

Ohio Department of Development for numbers on top employers in Ohio

American Planning Association's answers and bibliography about big box retail.

National Retail Federation - This site contains all kinds of surveys and consumer forecasts.

Tags

Making Change, Regional Economy/Business - Analysis and Trends, Regional Economy/Business - News

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