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Peaks and Valleys of Retail Stability


Business as usual: when one retailer fails another succeeds. In the current economy, sink or swim has become sink or float. And while not all looks bleak, regardless of marketing, product quality, and cost, less competition is one way retailers can keep from drowning.

Modern retailing in the United States began in 1859 when the Great Atlantic and Pacific Tea Company (A&P) became the first chain store in the country. Since then, measured solely by revenue numbers, the United States has become the undisputed leader of the retail industry. Consumer spending accounts for more than two-thirds, approximately 70%, of U.S. economic activity and according to the U.S. Department of Labor as of March 2009, even with a 9.5% unemployment rate, approximately 14.8 million people work in the retail industry.

A sector of the economy comprised of individuals and companies engaged in the selling of finished merchandise to end users, the retail industry is comprised of two types of retailers. Store retailers are those that sell products from a physical location and attract customers to make purchases on site. Non-store retailers do not have a physical location but use marketing methods such as infomercials, catalogs, vending machines, and in-home demonstrations to sell their products.

Despite this year’s tightened consumer budgets, retail sales increased approximately 1.8% in January and 0.3% in February. And although small gains were seen at grocery and health care stores, suggesting a focus on necessity spending, March numbers declined 1.1%. The U.S. Commerce Department attributed much of the drop to declining purchases for items such as electronic goods and appliances, which fell 5.9%. The decrease also was the result of lower-priced merchandise, as retailers compete to attract customers. According to the U.S. Census Bureau, total sales for the U.S. retail industry declined 0.1% to $4.475 trillion from 2007 to 2008 (including food service and automotive). But while the industry continues to struggle, the spending environment looks stable; net change in spending during the first three months of 2009 still represents a small gain of close to 1% for the first quarter GDP.

The current U.S. economic recession has seen the retail industry plagued by bankruptcies, store closures, and layoffs, but not all news is negative. Rite-Aid (0.7%), Costco (-5.0%), and JC Penny (-7.2%) may have had weakening numbers from this same time last year, but companies like Buckle, Inc. (+14.7%), Hot Topic (+7.1%), Aeropostale (+3.0%), and Walgreen Co. (+1.5%) have seen growth. And while Circuit City and KB Toys have closed all doors, and Starbucks, Macy’s, and Rite-Aid have closed some, others businesses are expanding. Major chains making forward progress in 2009 include Dollar General (400 new stores), GameStop (200 new stores), Panera Bread (80 new locations), Aldi Supermarkets (75 new stores), Lowe’s (60 new stores), and Kohl’s (55 new stores).

Many of the positive trends supported by consumers in 2009 support “green” trends. Green products and services, green facilities, and green activism are attracting customers as well as attention. With less money to spend and more time and energy going into how best to spend it, buyers are becoming increasingly detail oriented. Environmentally educated, a great number of consumers are noticing whether or not retailers and/or products are biodegradable, organic, reusable, natural, and LEED-certified. Compliance with the green movement may give companies the green they really want in the long run. Another way retailers are trying to gain a leg up, and attract a younger audience, is through Internet face time. Retailers can pay for their videos to appear in search results on popular sites such as YouTube, advertising to an estimated 90 million people with hopes of drumming up much needed consumer traffic.

Retailers also are looking to increase revenue using free promotions…literally. From coffee and ice cream to pancakes and sandwiches, restaurants aren’t the only retailers giving to get. Clothing stores have lured shoppers with alcohol to help liberate spending, drugstores with health care for positive publicity’s competitive edge, and amusement parks with admission to motivate birthday boys and girls to celebrate with paying family and friends who will buy high-priced food and souvenirs. And once the “free” runs out, the $787-billion economic stimulus package might help boost sales. Offering tax credits of $400 per worker and $800 per family, along with tax incentives and write-offs for small business, President Obama stated, “It’s a plan that will ignite spending by businesses and consumers, make the investments necessary for lasting economic growth and prosperity, and save or create more than 3.5 million jobs over the next two years.”

The National Retail Federation (NRF), the world’s largest retail trade association, projects that industry sales will decrease 0.5% in 2009 due to shifts in spending priorities. “Most of the consumer behavior we saw in 2008 will continue well into this year,” said NRF Chief Economist Rosalind Wells. “Shoppers will be seeking value and trading down to discount and off-price retailers in order to stretch their purchasing power.” Although sales in the first half of 2009 are expected to decline, NRF predicts third and fourth quarter sales will improve due to a strengthening economy.

Wheeling, A Winning Location

Located in Chicago’s prestigious north suburban market, Wheeling, IL is enhancing its standing as one of the region’s hottest business centers.

Wheeling is an entertainment destination for diners and shoppers in the area. Home to the renowned “Restaurant Row” along the Milwaukee Avenue corridor, Wheeling offers dozens of opportunities for unique, upscale dining. New entertainment businesses plan to join the restaurant community in this lively district this year.

Wheeling is in the heart of the Chicago area, a region companies value for its central location to markets across the nation. Within 19 miles northwest of downtown Chicago and nine miles north of O’Hare International Airport, Wheeling’s central location in the region makes it a natural location for business owners. Wheeling has successfully leveraged its transportation amenities to become a magnet for corporate, hospitality, and manufacturing industries. With two interchanges and direct access to I-294 (Tri-State Tollway) and Illinois Route 53, Wheeling businesses enjoy easy roadway access to and from destinations throughout the Midwest. Rail service in the community provides freight service to its business parks, and commuter service to the Wheeling Metra train station, offering convenient transit options for the region’s workforce.

In addition, Wheeling is co-owner of Chicago Executive Airport, which handles nearly 200,000 private and corporate flights each year. The airport offers a flight-training school and an additional transportation option for executives in the region.

Community educational institutions include National Louis University, Harper College, and Solex College, which complement the acclaimed educational opportunities the Chicagoland area is known for.

Wheeling is home to 40,000 residents and was honored earlier this year by Family Circle magazine, which named Wheeling “One of the Top Places in the U.S. to Raise a Family.” Wheeling received this honor due to its globally diverse population, educational system, parks and recreation opportunities that provide an outstanding quality of life for families and businesses alike. Wheeling also was awarded an Illinois governor’s Hometown Award in 2008 in recognition of the active volunteer spirit in the community. The local government administration is aggressively encouraging the development of new retail and industrial businesses and has implemented a number of incentive and financing programs to encourage its continued growth.

The Village’s Department of Economic Development regularly monitors local real estate conditions and maintains an updated list of available buildings and land development opportunities. The Village encourages inquiries about site availability and has professional staff at hand to assist your company in finding a home for your business in Wheeling. Just call (847) 459-2605.

Welcome to the Future: Hesperia Industrial Rail Track

The business-friendly City of Hesperia in California’s Inland Empire North is a leader in supporting the long-term development of the regional economy. Having secured $2 million in federal grant funding from the Department of Commerce Economic Development Agency, the city is ready to build the G Avenue Industrial Rail Lead Track Project, consisting of approximately one mile of new railroad lead track and a parallel runaround track. Construction is slated to begin in January 2010 and take approximately one year to complete.

Hesperia’s proactive Economic Development Department and its Redevelopment Agency (RDA), the wealthiest municipal RDA in the High Desert, are two powerhouses fueling Hesperia’s current growth. The addition of the rail track, one of the city’s far-reaching industrial development goals, will facilitate operations for a greater number of warehousing and distribution centers near Interstate 15. The new track will offer many opportunities for industrial users to purchase rail-accessible properties.

The thriving City of Hesperia exemplifies smart growth, maintaining a healthy balance between population and development. The rail project is guided by Hesperia’s efforts to create sustainable development that include locally created partnerships and focus on regional solutions for economic development. It is closely tied to Hesperia’s strong commitment to grow its economy, attract new businesses and development, and provide jobs for its residents.

The completion of this project will stimulate the development of 210 acres, and indirectly will impact the attraction and expansion of other businesses into the 1,300-acre I Avenue Industrial area. In addition, the project fosters entrepreneurship by making rail accessible throughout the region to smaller businesses without rail access to ship and receive goods with the use of a team trans-load facility.

Strategically positioned for logistics and distribution, the fast-growing City of Hesperia is conveniently situated within easy access to the logistics network that serves the combined ports of Los Angeles and Long Beach (LA/LGB), the nation’s largest international cargo trade area. Hesperia is sited along Interstate 15, and Highway 395, a major corridor linking southern California with northern California, Nevada, Oregon, and Washington to the Canadian border. The rail project will make Hesperia one of the few viable locations in southern California able to provide new rail accessibility.

Some of the most important distribution centers in the world are regional facilities in inland southern California markets; many, like Hesperia, are in San Bernardino County. Completion of the rail spur project will provide a strong incentive for businesses that recognize Hesperia as a prime place to relocate or expand.

Hesperia’s Economic Development Department also maintains an aggressive program to attract a diversity of businesses to the City, offering many services to site selectors, business owners and entrepreneurs who are looking for the right place to expand or locate. The second largest city in the High Desert, Hesperia encompasses nearly 75 square miles of space, offering an abundance of land at a fraction of Los Angeles’ costs, a healthy and pleasant desert climate, and clean air quality, free from the congestion of Los Angeles and Orange County. To request more information on this project and others, e-mail econdev@cityofhesperia.us or call (760) 947-1906.

Marion Making Its Mark

Just west of Memphis, TN across the Mississippi River, Marion, Arkansas is an area that has retailers taking notice. The city’s expanding retail market, with double-digit growth and interstate exposure, is getting the attention of commercial developers and investors in the Memphis, TN market. The city landed almost $21 million worth of commercial real estate growth in 2006, solidifying its position as the fastest-growing sector of the Memphis metro area. A recent census put Marion’s population at 10,408, a 17% jump over the 2000 census. And with a young, eager population (median age 32.3) and an average household income of $59,000, it’s a demographic that is enticing retailers. A 92-acre mixed-use retail, office, and residential development at the intersection of U.S. Highway 64 and Interstate 55 is the location of a significant piece of Marion’s retail development. Traffic count on I-55 past the U.S. 64 interchange is in excess of 42,000 vehicles per day. Angelo’s Grove, developed by Memphis developers Kenneth F. Farrell and Richard Leike, already has located national fast food outlets Wendy’s, Zaxby’s, and Captain D’s, along with Colton’s (a casual restaurant). A 27,000-square-foot strip center is a new addition to Angelo’s Grove, as are Country Inn & Suites, Wingate Inn, and an office park. There is space allocated for a big-box retailer, secondary anchors, a 12-screen cinema, and a town center with mixed use on three levels. A 260-unit apartment complex is under construction adjacent to the center.

Besides the interstate exposure and high traffic count, residential growth is beckoning Memphis-area retailers to make Marion one of their suburban branch locations. The city’s housing stock is increasing at a rate of more than 6% per year. More than 250 upscale homes have been built just outside the city limits in the past four years. The numbers are not an anomaly for Marion, where almost 1,500 new homes have been built in the past 10 years.

Growth is being driven by the suburban sprawl of the Memphis metro area on the east side of the Mississippi River, where new suburbs are being built 30 to 45 miles from the city’s downtown business and entertainment center. By contrast, Marion’s primary residential subdivisions are less than 10 miles from downtown Memphis. The combination of lower property taxes, low crime rates, a highly rated school system, and quick access to big city amenities continues to draw Memphis area residents.

Despite growth in Marion’s retail market, big opportunities still remain, particularly in the areas of clothing and restaurants. Total retail sales potential for the area of Marion and Memphis’ downtown residential community is $1.279 billion.

The Iowa Advantage

Often referred to as part of the American Heartland, Iowa’s central location, convenient transportation, and educated workforce benefit both retailers and shoppers alike. Iowa offers a vibrant environment that propels all types of businesses to thrive—from entrepreneurial start-ups to established market leaders. Discover advantages that simply cannot be found anywhere else, a government that will work with you to ensure success, and a balanced quality of life.

Iowa businesses appreciate the value of its well-trained, highly productive workforce and experience one of the best business climates in the nation. From employee training and recruitment programs, to financial assistance and tax benefits, relocating or expanding in Iowa can help businesses become even more competitive and successful. Des Moines, the state’s capital and most populous city, was ranked fourth on Forbes magazine’s “Best Places For Businesses and Careers” in 2007, based on factors such as cost of doing business and cost of living, and ninth on Kiplinger’s Personal Finance 2008 Best Cities List. It is the economic center of Iowa with various communities and vibrant downtown areas.

From treasures to trinkets, shopping in Valley Junction is an Iowa experience not to be missed. It offers the friendly atmosphere of neighborhood shops highlighted by unique stores in the Fifth Street area of West Des Moines. Along with cuisine ranging from award-winning pizza to special Asian flair, the shops, featuring antiques, specialty clothing, elegant glassware, custom furniture, and one-of-a-kind jewelry, make shopping Valley Junction a fascinating experience for shoppers of any age.

Located 45 minutes north of Des Moines, Story City offers exceptional dining and shopping enhanced by beautiful surroundings. It is a thriving business and industrial community with plenty of old-world charm. Shoppers come from miles around to find just what they’re looking for in the bustling downtown business district or at the nearby factory mall.

Variety is the spice of life in Ames’ Main Street Cultural District. From cute boutiques and mouthwatering steaks to the freshest pasta and community markets, Ames will entice you with a diverse selection of great eats and shopping treats. It’s the perfect setting for any relaxing, affordable, safe, and fun time.

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