Community anxious, excited over arrival of retailer
When the Kenai Walmart opens at the end of March, it might feel something like Fred Meyer on Black Friday. Throngs of eager shoppers may line up outside in the wee hours of March 31, eagerly waiting to bust through the doors.
But just as Black Friday is only a small indication of what's in store for the holiday shopping season, opening day at Walmart won't really tell the story of how the superstore will affect business on the Kenai Peninsula.
"It depends on whose crystal ball you're looking into," said Kenai City Manager Rick Koch when asked about Walmart's expected economic impact.
Kenai's FY2011 budget will include an expected sales tax revenue increase of $600,000, but Koch said that's just a safe estimate. It will likely take at least a year before Walmart's impact is truly known. Sales tax generates more than half of Kenai's yearly revenue.
The general line of thinking on Walmart goes something like this: Businesses that are in direct competition with the new store could have some difficulty. It might require adjusting prices, increased marketing or expanding product offerings. But other businesses, especially Kenai restaurants, not in direct competition with the superstore could benefit from increased traffic coming to Kenai.
Koch and Kenai Finance Director Terry Eubank expect Walmart to draw shoppers from Homer, Nikiski and Soldotna.
"When they go to buy a pair of pants now, they don't stop in Kenai. They go to Fred Meyer," Koch said of Peninsula consumers. "Even though that traffic moves through town, they didn't stop to shop here on the way through."
"Think about all the things you can't buy here," Eubank added. "People are just either stopping here or not even coming here."
The Kenai Peninsula Borough is not anticipating a major increase in sales tax revenue as a result of Walmart in Kenai.
"What we think we will see is a shift in some revenue from Soldotna to Kenai," said Borough Finance Director Craig Chapman.
Walmart is expecting to bring 370 jobs to the area. About 80 percent of those jobs are going to be full-time positions. About 700 people have applied.
Alyssa Shanks, an economist with Alaska's Department of Labor, said when a Walmart came to Juneau, there was not a significant increase in retail employment. Shanks also said consumers don't adjust their purchasing habits simply as a result of having more options.
"Just because there's a new store doesn't mean people are going to spend a whole lot more," Shanks said.
Perhaps a good barometer of Walmart's impact on Kenai is to look at what happened with Kmart.
"Years ago when Kmart was here, there were businesses that found themselves in direct competition with Kmart that ended up having to close their doors," Koch said. When Kmart closed, Eubanks estimated it resulted in a million dollar loss to the city.
Walmart will have even more to offer than Kmart. In addition to having a grocery section, the Kenai superstore will house a Subway sandwich shop, a hair salon and a Denali Alaska Federal Credit Union branch. It will be open 24 hours and stock about 142,000 items.
When asked, several local restaurants were resistant to the idea of predicting how their business might be affected. None seemed to be upset at Walmart's imminent arrival, but none were willing to speak openly about benefits, either.
"I think your restaurants will see a benefit purely from a traffic standpoint," Eubank said.
For those who have negative feelings toward Walmart, Koch said it is important to pick your battles.
"If you don't like Walmart, the only thing worse to having one in your town is to have one right outside your town where you don't get any sales tax revenue to deal with some of the negatives that come along."
But when it comes to realizing Walmart's impact on the local community, only time will tell the whole story.
"I'm not going to try and fool myself," Koch said. "In 12 months you'll know exactly what it is because we'll have performance data."
Andrew Waite can be reached at andrew.waite@peninsulaclarion.com.