In some towns, ‘big box’ can mean better

By Kevin Wack
Portland Press Herald
Monday, Feb. 2, 2004

LINCOLN — Much has changed along this mill town’s Main Street since 1993, when retail behemoth Wal-Mart set up shop. Gone are the town’s two clothing stores, its general store, drug store, hunting and fishing store, auto parts store and TV store.

Yet downtown Lincoln looks nothing like a ghost town, even after two destructive fires and the recent shutdown of the community’s largest employer, Eastern Pulp and Paper. Today, Main Street is home to two hardware stores, a jewelry store, a surplus store, a bank, a home furnishings store, plus a smattering of restaurants and offices.

All these businesses have one thing in common: None of them try to compete with the low-price warehouse down the road.

Thirteen miles to the southwest sits the town of Howland, where Gerard Belanger has owned and operated Howland Family Grocers, a red-shingled market on the town’s Main Street, for the last 16 years. The 1,800-square-foot store went up for sale four years ago as Belanger and his wife started planning for retirement. They’re still looking for a buyer.

“If I had this store in Boston, I could probably sell this and get a million dollars,” Belanger said. “But I’d say in another 10 years you won’t see any more of these stores around.”

The regional impact of Lincoln’s Wal-Mart is typical of big-box stores that have been blanketing the state since the early 1990s. Most host communities have gained shoppers, while neighboring communities have lost them. And as critics have started questioning the benefits of these large shopping developments, some small businesses have learned how to fight back.

There’s no consensus on what constitutes a big-box store. A recent vote in Kennebunk involving a proposed 57,000-square-foot Stop & Shop supermarket hinged partly on a debate over how to define a “big box.” But the big-box label clearly describes larger, low-price warehouse stores such as Wal-Mart and Home Depot. Those chains and others, such as Target department store and Lowe’s home improvement center, are looking to build large new stores in Augusta, Biddeford, Brunswick, Topsham and Westbrook.

Leslie Bray is a Gorham consultant who studies the economic impact of big-box retailers in Maine. Using sales and population data from the Maine State Planning Office and the U.S. Census Bureau, he compares a community’s per capita sales with the state average. One of the categories he analyzes is called general merchandise, which includes sales of shoes, clothing, furniture and appliances.

Bray finds that host communities see benefits, and their neighbors incur costs, when a big box arrives. Out of 18 Wal-Mart communities, 15 saw their share of the state’s per capita general merchandise sales rise during the 1990s. But in clusters of towns near those Wal-Mart communities, the opposite effect occurred. Only four of those 18 regional areas saw an increase in their share of the state’s per capita general merchandise sales.

The big boxes become shopping destinations, Bray says, luring customers from smaller outlying communities.

“All that’s really happening is that you’re redistributing the customer base,” Bray said. “Some win and some lose.”

Many of the losers, it turns out, are in relatively poor, rural areas. A small toy store that thrives in Portland’s Old Port, despite the nearby presence of big-box stores, might struggle in a small town in northern Maine. In the Old Port, a store has access to a larger base of more affluent customers. Some will pay higher prices for items they can’t find at national chain stores.

But the arrival of a big box has a more dramatic impact on Maine’s small towns. For example, 18 towns surrounding Lincoln generated general merchandise sales equivalent to 4,310 year-round customers in 1990, according to Bray’s figures. Ten years later, that number was down to 322.

In Brunswick, on the other hand, the downtown district is thriving 11 years after Wal-Mart’s arrival, with shops and restaurants that draw customers from a wide geographic area, says Matthew Eddy, the town’s director of economic development.

He says the retail stores most hurt by the Brunswick Wal-Mart have been other large chains, such as Sears and the now-defunct Ames, in the Cook’s Corner area.

Robert Dodge, director of economic development in Biddeford, says he does not expect a proposed 460,000-square-foot shopping center to have much effect on the city’s downtown businesses.

“Wal-Mart and Home Depot are nothing new to these mom-and-pop retailers,” Dodge said, noting that the Maine Mall opened in the early 1970s. “The shakeout has already occurred.”

But even in more-populated areas, the impact of a big-box store is felt regionally. Both Waterville and Biddeford saw their shares of the state’s per capita general merchandise sales decline during the 1990s, even though Wal-Mart opened stores in both communities. That may be because Waterville is within easy driving distance of a larger shopping mecca in Augusta, and Biddeford is just a short ride from the Maine Mall area, Bray says.

Keith Luke, Windham’s economic development director, says a Super Wal-Mart on Route 302 allows the town to capture shopping dollars from other communities. Otherwise, residents of Naples and Raymond would use the same road to shop elsewhere, he says.

“If Windham residents were shopping at the Maine Mall,” he said, “we’d get none of the return from that.”

Critics of big-box developments argue that because of their regional economic impact, large-scale retail projects should be subject to review by regional planning boards.

Regional reviews are done in Vermont and Cape Cod, Mass., but not in Maine, says Stacy Mitchell of the Institute for Local Self-Reliance, a Minneapolis-based nonprofit group that is part of the “smart growth” movement.

“I do think we need more scrutiny at the regional level,” Mitchell said, adding that Gov. John Baldacci has spoken about the need for better land-use planning. “I’ve been sort of disappointed that he hasn’t more scrutinized some of this retail development that’s come down the line.”

Martha Freeman, director of the State Planning Office, says Baldacci’s proposal to create municipal service districts would let communities choose to band together for regional land-use planning. But that plan is not on the Legislature’s front burner, she says, with Baldacci pushing his proposal to regionalize school districts.

Under the current system, communities in Maine are less apt to vie for big-box stores than in some other states. That’s because Maine’s tax structure does not include a local sales tax, so all sales tax revenue goes to the state.

But communities still see fiscal incentives to encourage the construction of big boxes. The stores are often built on undeveloped land where the community has been collecting little in property taxes. In Biddeford, a tax-exempt church is currently the only building that’s on the proposed site of a development expected to be anchored by a Target department store and a Lowe’s home improvement store. City officials estimate the proposed development will generate $700,000 in annual property taxes.

Mitchell, who lives in Portland, says communities often fail to assess the added costs they’ll incur for services to big-box developments, such as road maintenance and policing at the large new developments. She favors requiring developers to pay for an economic impact analysis before large-scale projects can go forward.

There’s another hidden cost of shopping at the big boxes, Mitchell says, pointing to a study her organization conducted in the midcoast last year. It found that only about 14 cents out of every dollar spent in a big-box store is recirculated in Maine. But in locally owned stores, which are more dependent on in-state suppliers, the figure rises to 45 cents.

That kind of abstract argument will not likely be enough to lure all the former shoppers back to downtown Lincoln. After all, many consumers are most concerned with price and selection.

But some Main Street retailers have adapted during Wal-Mart’s 11 years in town.
Larry Smart, whose family has owned Smart Hardware in Lincoln since 1928, says his sales fell by 55 percent to 60 percent following Wal-Mart’s arrival. Last year, he was forced to sell the Main Street building to restructure some debt, and he took out a $40,000 loan to bulk up his inventory. Now he’s concentrating on areas such as plumbing, electrical and hardware, where Wal-Mart only stocks the top-selling items.

“We have beefed up areas that they aren’t strong in,” Smart said, adding that his sales doubled last October and November and tripled in December. “It’s brought people back.”

Across the street, Kathy Wilson owns J.K. Vose, a jewelry and gift shop that is the only other Main Street business that’s survived the competition from Wal-Mart. She doesn’t stock items that Wal-Mart sells.

“You feel like you’re on life support for years, and you just can’t pull the plug,” she said. “But we’ll stay as long as we can.”