Gift shop draws fire from businesses

Posted: Friday, June 27, 2003

Some Kenai retailers are crying foul over what they consider to be unfair competition from the Kenai Visitors and Cultural Center's retail operation.

The center netted about $30,000 from the sale of books, maps, T-shirts and other gift items last year. That money could have gone to area businesses, said some local retailers at a work session meeting held between the Kenai City Council and Kenai Convention and Visitors Bureau representatives June 18.

"The visitors center needs to be supportive (of local businesses) or there won't be anything left," said Susan Jordan, owner of Fireweed Herb Garden and Gifts in Kenai. "You've got $30,000. That might be small potatoes to you, but we'd all like a split of that."

At the heart of the complaint is the fact that the city of Kenai provides about $40,000 a year to pay for the maintenance and utilities of the center, which the city owns. The city also pays $60,000 a year to the Kenai CVB to operate the center as part of its management contract, down from the $70,000 it paid in the fiscal year 2003.

To the retailers who spoke at the June 18 meeting, that sounds like the city is in effect subsidizing the center's gift shop.

"The city is providing the facility and a small stipend to operate it," said Ron Goecke, owner of Gallery 25 in Kenai. "I cannot compete with the visitors center on a day-to-day basis -- it's impossible. The price (of the merchandise) is the same, but they don't have to worry about overhead."

Council members Jim Bookey and Pat Porter expressed sympathy with the retailers' point of view during the meeting.

"I really wish the visitors center would consider the private people that are out there, whether they feel like they're (competing with them) or not," Porter said. "They really ought to be concerned about what they're doing to the private sector."

Ricky Gease, executive director of the Kenai CVB, said it is a misrepresentation of the center's budget to think the city is in effect subsidizing the gift shop because the Kenai CVB does not operate the center at no cost.

The city covers the cost of maintenance and utilities for the facility with the roughly $40,000 it spends a year, but the center's operational budget above and beyond the cost of maintenance and utilities for the fiscal year 2003 was $230,000. The $70,000 the city paid for the management contract in fiscal year 2003 covered less than a third of this cost. The rest of it was paid for by the Kenai CVB, Gease said.

"If anything, one of the issues is we have contributed a million dollars to the city of Kenai to operate one of its public facilities (since the Kenai CVB has been operating the center)," Gease said. "... We are paying our fair share, more than our fair share of the cost of operating this facility. Nobody is getting a free ride here, there is no free lunch."

The money raised from gift sales at the center goes to help cover the two-thirds of the center's operational budget that the city does not pay for, Gease said.

The Kenai CVB gets other funds from membership dues, Gease said, and the majority of the money it uses to operate the center comes from charitable gaming -- the future of which is uncertain after Gov. Murkowski tried to increase the gaming tax this year and there has been talk in the state of instituting electronic gaming and limiting the nonprofit groups that can operate pull-tabs.

Another complaint against the center is that it sells items that compete with merchandise sold in local gift stores, like T-shirts, cards and prints of artwork.

"If (visitors) find what they want in the center, they won't be coming out to (local stores)," Jordan said. "... Because that's where all our visitors go -- it's like a captive audience."

Jordan said the center should be pointing visitors in the direction of local stores for shopping purposes. In a letter Gease sent to the board of directors of the Kenai Chamber of Commerce and the city of Kenai after the meeting, he said to receive direct business benefits and marketing exposure to visitors from the center, a business needs to be a Kenai CVB member.

In the meeting, Gease said there may be some overlap in the products the center sells and the products sold in local stores. In the letter, he elaborated by saying all the merchandise the center sells -- the majority of which is books and maps -- is related to the center's mission, which is to promote and propagate the history and culture of Kenai and Alaska.

Gease said it is the rule, not the exception, for museums to have gift shops, and cited the Alaska SeaLife Center, Kenai Fjords National Park and the Pratt Museum, among several others, as examples of this.

"It is a standard business strategy of visitor centers, cultural centers and museums to operate profitable museum stores," he said in the letter.

By contrast, the city of Soldot-na's visitor information center, which doubles as the headquarters for the Soldotna Chamber of Commerce and is run by the chamber, sells only Soldotna logo merchandise.

Gease said selling things like T-shirts, which may be in competition with local retailers, is in line with the center's role as a museum if the items relate to an exhibition the center has displayed, and the center's role of promoting the city.

"That's part of our mission -- to promote artists like Ray Troll and the image of Alaska," he said. "Part of our mission is to give people items that they take out of Alaska that promote Alaska. It's the concept of having a museum without walls."

The decision of whether to continue, scale back or discontinue the center's retail operation lies with the Kenai CVB. According to Gease in his letter, the board plans to continue its retail operation.

"The basic customer expectation is to see a museum store when coming out of a museum, not elsewhere. Hence it will continue to be a business strategy of the Kenai CVB to operate a museum store at the Kenai Visitors and Cultural Center," he stated.

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