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Big changes sweep booming retail industry

Posted: Saturday, April 22, 2000

Economists say booming tourism, population growth and a growing tendency to shop locally have made retail trade the fastest growing sector of the Kenai Peninsula economy.

Owner Jose Ramos said booming tourism is what fueled expansion of Don Jose's restaurants in Homer, Kenai and Anchorage. He has nearly tripled his Homer staff since opening there in 1982, and nearly doubled his Kenai staff since opening there in 1991. Now, he is building a new restaurant on the Homer Spit.

"I expect in the next three years to grow another 25 percent," he said.

By Alaska Department of Labor figures, small businesses account for most of the growth in retail jobs. There were 297 peninsula retailers in 1990, and 381 in 1998, department reports said, and restaurants accounted for about half the growth.

Taxable retail sales in the Kenai Peninsula Borough grew from $191 million in 1991 to $364 million in 1999. By state figures, retailers added 1,200 jobs from 1990 to 1998, accounting for 38 percent of all new wage-and-salary jobs.

Musical chairs among the big stores has wrought big changes in the pattern of retail sales. Developer Allan Norville, of Soldotna and Tucson, Ariz., bought 24 acres from the city of Kenai, and in 1992, lured Carrs Quality Center there from old Carrs mall in Kenai. Norville enticed Kmart to the site the following year.

In 1994, Fred Meyer left the old Carrs mall for for a new store in Soldotna. From 1993 to 1994, Soldotna's taxable retail sales rose 25 percent, while taxable sales in Kenai and Homer fell by more than 1 percent. Seward taxable sales rose 6 percent from 1993 to 1994.

Since 1994, Soldotna's taxable retail sales have grown by 33 percent, Kenai's by 7 percent, Homer's by 11 percent, and Seward's by 37 percent -- including a 15 percent jump from 1998 to 1999, following the opening of the Alaska SeaLife Center. There are more changes in the wind.

Reached in Tucson this month, Norville said he has been struggling to recruit another power store to his land. Meanwhile, he has brought in Burger King, Blockbuster and Subway. This spring, he plans to build a 16,000-square-foot strip mall just west of Carrs.

Meanwhile, the old Carrs mall, minus its two former anchors, lost many small retailers. The complex had a deserted air in November 1998, when the state leased much of the mall for office space. This winter, Peterkin Distributors took a temporary space in the old supermarket. Now, Sears is negotiating to open a dealer store in the space formerly occupied by Fred Meyer.

More change could be coming. Real estate agents say Wal-Mart and Home Depot have recently scouted the central peninsula. Mergers are affecting present retailers: The Kroger Co., based in Cincinnati, bought Portland, Ore.-based Fred Meyer Inc. in 1998. Last year, Safeway Inc., of Pleasanton, Calif., bought Anchorage-based Carr Gottstein Foods.

Small retailers struggle to compete with the giants.

"The key for us is learning to exist with the box stores, and learning what we can offer that they can't, or won't," said Steve Beeson, a co-owner of Beemun's Variety in Soldotna. "If you try to go head-to-head, you get hammered."

Since the chains arrived, he said, Beemun's has expanded its arts and crafts section, and switched from inexpensive bicycles to higher-quality models.

"We listen to customers," he said. "You have to be willing to risk some money along the way. Last year, we got into stained glass. We invested $9,000, and we've done fine with that. It's not a barn-burner, but we're serving a need that wasn't being addressed."

He said membership in the True Value system gives Beemun's the buying power to compete with giants like Fred Meyer. Essentially, True Value members pool their purchases to get price breaks.

In August, Peggy Mullen opened the Cornerstone Market Place in Soldotna with seven new businesses, including her own River City Books. She said River City is making payments despite Kmart, Fred Meyer and Internet outlets such as Amazon.com.

"Kmart and Fred Meyer have best-sellers. They don't do special ordering," she said. "We can get books with no freight charge and no handling charge in just over a week. The part that's missing from virtual stores is what we can offer. You can pick up a book and read the cover to see what other people say about it. You can read the first chapter."

She said she is glad book giants Barnes & Noble and Borders are no closer than Anchorage.

"I wouldn't be able to make it if a big chain store was already in town," she said.

Bill Popp, owner of the former Toonz music stores in Soldotna and Homer, said the big box stores played a big part in the demise of his business.

"One of the big chains (Fred Meyer) went on a price war with competition Outside and extended its pricing to Alaska," he said. "That cut the heart out of Alaska music stores."

Popp said he could not compete with Fred Meyer. He tried to diversify into books about the time Barnes & Noble and Borders opened in Anchorage. He could not match their discounts.

"I watched 13 book stores close in Anchorage, Mat-Su and the Kenai Peninsula," he said.

Toonz closed in 1996, the same year Pennsylvania-based Rite Aid Corp. bought Alaska's PayLess Drug chain. Rite Aid closed its PayLess stores in 1998, including the one that anchored the Peninsula Center Mall in Soldotna.

The Peninsula Center had a half-dozen vacancies in February. Glen Martin, its new owner, was rumored to have several possible new tenants. However, Martin was out of state, and the Clarion was unable to learn his plans.

Popp said many holes at the Peninsula Center resulted from problems in the parent chains.

He and Norville said the Peninsula Center also suffers from the lack of a major store opposite Safeway.

"When you build a mall, you put your anchors at either end, so you get the cross-traffic," Norville said. "Now, with (PayLess) gone, you don't get much traffic at all. Unless you've got a major business at the other end, those businesses are never going to do well."

Rik Bucy, former manager of the Soldotna Fred Meyer, said filling the far end of the mall would certainly help.

"It would have to be someone strong, like Lamonts," he said. "I know Lamonts is in (Chapter 11) bankruptcy, but they have what customers like. It would help them both."

Lamonts could provide the second anchor, he said, and would itself benefit from traffic through the mall.

HEAD:Big changes sweep booming retail industry

CREDIT:Clarion file photo

CAPTION:Traffic moves down the Sterling Highway near the intersection of the Kenai Spur Highway in Soldotna. The stretch of road is one of the area's prime retail magnets.

BYLINE1:By DOUG LOSHBAUGH

BYLINE2:Peninsula Clarion

Economists say booming tourism, population growth and a growing tendency to shop locally have made retail trade the fastest growing sector of the Kenai Peninsula economy.

Owner Jose Ramos said booming tourism is what fueled expansion of Don Jose's restaurants in Homer, Kenai and Anchorage. He has nearly tripled his Homer staff since opening there in 1982, and nearly doubled his Kenai staff since opening there in 1991. Now, he is building a new restaurant on the Homer Spit.

"I expect in the next three years to grow another 25 percent," he said.

By Alaska Department of Labor figures, small businesses account for most of the growth in retail jobs. There were 297 peninsula retailers in 1990, and 381 in 1998, department reports said, and restaurants accounted for about half the growth.

Taxable retail sales in the Kenai Peninsula Borough grew from $191 million in 1991 to $364 million in 1999. By state figures, retailers added 1,200 jobs from 1990 to 1998, accounting for 38 percent of all new wage-and-salary jobs.

Musical chairs among the big stores has wrought big changes in the pattern of retail sales. Developer Allan Norville, of Soldotna and Tucson, Ariz., bought 24 acres from the city of Kenai, and in 1992, lured Carrs Quality Center there from old Carrs mall in Kenai. Norville enticed Kmart to the site the following year.

In 1994, Fred Meyer left the old Carrs mall for for a new store in Soldotna. From 1993 to 1994, Soldotna's taxable retail sales rose 25 percent, while taxable sales in Kenai and Homer fell by more than 1 percent. Seward taxable sales rose 6 percent from 1993 to 1994.

Since 1994, Soldotna's taxable retail sales have grown by 33 percent, Kenai's by 7 percent, Homer's by 11 percent, and Seward's by 37 percent -- including a 15 percent jump from 1998 to 1999, following the opening of the Alaska SeaLife Center. There are more changes in the wind.

Reached in Tucson this month, Norville said he has been struggling to recruit another power store to his land. Meanwhile, he has brought in Burger King, Blockbuster and Subway. This spring, he plans to build a 16,000-square-foot strip mall just west of Carrs.

Meanwhile, the old Carrs mall, minus its two former anchors, lost many small retailers. The complex had a deserted air in November 1998, when the state leased much of the mall for office space. This winter, Peterkin Distributors took a temporary space in the old supermarket. Now, Sears is negotiating to open a dealer store in the space formerly occupied by Fred Meyer.

More change could be coming. Real estate agents say Wal-Mart and Home Depot have recently scouted the central peninsula. Mergers are affecting present retailers: The Kroger Co., based in Cincinnati, bought Portland, Ore.-based Fred Meyer Inc. in 1998. Last year, Safeway Inc., of Pleasanton, Calif., bought Anchorage-based Carr Gottstein Foods.

Small retailers struggle to compete with the giants.

"The key for us is learning to exist with the box stores, and learning what we can offer that they can't, or won't," said Steve Beeson, a co-owner of Beemun's Variety in Soldotna. "If you try to go head-to-head, you get hammered."

Since the chains arrived, he said, Beemun's has expanded its arts and crafts section, and switched from inexpensive bicycles to higher-quality models.

"We listen to customers," he said. "You have to be willing to risk some money along the way. Last year, we got into stained glass. We invested $9,000, and we've done fine with that. It's not a barn-burner, but we're serving a need that wasn't being addressed."

He said membership in the True Value system gives Beemun's the buying power to compete with giants like Fred Meyer. Essentially, True Value members pool their purchases to get price breaks.

In August, Peggy Mullen opened the Cornerstone Market Place in Soldotna with seven new businesses, including her own River City Books. She said River City is making payments despite Kmart, Fred Meyer and Internet outlets such as Amazon.com.

"Kmart and Fred Meyer have best-sellers. They don't do special ordering," she said. "We can get books with no freight charge and no handling charge in just over a week. The part that's missing from virtual stores is what we can offer. You can pick up a book and read the cover to see what other people say about it. You can read the first chapter."

She said she is glad book giants Barnes & Noble and Borders are no closer than Anchorage.

"I wouldn't be able to make it if a big chain store was already in town," she said.

Bill Popp, owner of the former Toonz music stores in Soldotna and Homer, said the big box stores played a big part in the demise of his business.

"One of the big chains (Fred Meyer) went on a price war with competition Outside and extended its pricing to Alaska," he said. "That cut the heart out of Alaska music stores."

Popp said he could not compete with Fred Meyer. He tried to diversify into books about the time Barnes & Noble and Borders opened in Anchorage. He could not match their discounts.

"I watched 13 book stores close in Anchorage, Mat-Su and the Kenai Peninsula," he said.

Toonz closed in 1996, the same year Pennsylvania-based Rite Aid Corp. bought Alaska's PayLess Drug chain. Rite Aid closed its PayLess stores in 1998, including the one that anchored the Peninsula Center Mall in Soldotna.

The Peninsula Center had a half-dozen vacancies in February. Glen Martin, its new owner, was rumored to have several possible new tenants. However, Martin was out of state, and the Clarion was unable to learn his plans.

Popp said many holes at the Peninsula Center resulted from problems in the parent chains.

He and Norville said the Peninsula Center also suffers from the lack of a major store opposite Safeway.

"When you build a mall, you put your anchors at either end, so you get the cross-traffic," Norville said. "Now, with (PayLess) gone, you don't get much traffic at all. Unless you've got a major business at the other end, those businesses are never going to do well."

Rik Bucy, former manager of the Soldotna Fred Meyer, said filling the far end of the mall would certainly help.

"It would have to be someone strong, like Lamonts," he said. "I know Lamonts is in (Chapter 11) bankruptcy, but they have what customers like. It would help them both."

Lamonts could provide the second anchor, he said, and would itself benefit from traffic through the mall.



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