Other peninsula areas pick up business after Big Kmart closes

Posted: Thursday, April 01, 2004

According to figures recently released by the Kenai Peninsula Borough, Kenai's losses seem to be the rest of the central peninsula's gain.

In the borough's "Quarterly Report of Key Economic Indi-cators," the city of Kenai appears to have been the biggest loser in 2003, as the city saw its taxable sales drop by 11.3 percent from 2002. This drop was expected, as Kenai saw the loss of its largest retailer, Big Kmart, depart in early 2003.

The loss of Big Kmart, however, meant area shoppers had to go somewhere, and indications from the borough's report seem to show that instead of traveling to Anchorage as some had feared shoppers simply went down the road to Soldotna.

In contrast with Kenai, Soldotna saw its taxable sales rise by a robust 7.4 percent in 2003, representing an overall gain of more than $13 million. In fact, Soldotna's taxable sales in 2003 set a record, reaching an all-time high of just over $190 million.

The reason for the swing appears obvious when the numbers are looked at more closely. The biggest swing appears to be in retail sales, the area where Kenai was most hurt by Big Kmart's departure.

According to Kenai Finance Director Larry Semmens, the loss of Big Kmart is definitely the reason the city saw its numbers drop so dramatically.

Despite actually seeing a slight gain in its overall sales totals, Kenai's retail sales fell by 11.8 percent. When taxable retail sales are taken into account, the drop was even more sharp, as Kenai dropped by more than 15 percent.

Despite the gloomy '03 figures from Kenai, cash registers could again ring true in the peninsula's most populous city. That's because Home Depot moved in to replace Big Kmart in late '03, and the gain of a new, major store could help return Kenai's sales figures to previous levels.

According to Semmens, Home Depot is not expected to make up all of the loss seen when Big Kmart left. However, he did say the addition of the building supplies store coupled with the expansion of the Kenai Three Bears store and the addition of several other small businesses indicate Kenai is poised to see a big recovery over the course of the next year.

"Some stores are filling the void by selling similar products to what Kmart did," he said. "Overall, we're going to see an improvement in our sales tax."

Although Kenai's numbers were down over 2002, it appears the borough as a whole is in good shape as far as sales are concerned. The Kenai Peninsula Borough saw its gross sales receipts grow from $1.8 to 1.9 billion in 2004, a jump of 1.7 percent.

This gain was seen both in Soldotna, where overall sales rose 3.3 percent, as well as the borough's unincorporated areas.

It appears that while shoppers abandoned Kenai to some extent, unincorporated areas including the likes of Kalifornsky Beach, Nikiski, Kasilof and Sterling became more attractive to shoppers in 2003.

Although overall sales in these areas were down slightly in '03, retail sales saw a large increase, rising more than 10 percent. Those figures include a jump of 4.3 percent in taxable retail sales meaning Kenai's loss was absorbed in part by the borough as a whole.

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