10 Years After: The Beginning of the End for Big Boxes?

Note: Today I am re-publishing here a couple of articles that originally appeared in the Genesee Sun online newspaper. Thanks to Publisher Josh Williams for giving me a new platform!
 
Many local people were surprised by the Jan. 3rd closing of the Geneseo Staples store. At the time, much blame was placed in this news outlet and elsewhere on a supposedly greedy landlord jacking up rents. Readers of the financial press, however, may be aware that there is a little more to the story.
 
If you search “Staples store closing” you will find that there are a rash of similar stories from all over the country. In fact Staples announced in November that they expected to close 170 stores in 2014! This comes amid a continuing trend of falling sales and earnings and a proposal last week that Staples merge with arch-rival Office Max. It seems that the miracle economic engine allegedly created by Bain Capital wunderkind Mitt Romney some 30 years ago is growing a little long in the tooth!
 
Of course most people are aware that the economy has never really recovered from the Great Recession that started in 2008, but another big reason for Staples’s problems is the prevalence of online shopping which has continued to bleed bricks and mortar retail in many categories. (See Amazon.com)
 
The fact that this column is appearing in an online newspaper is just one example of the dramatic changes that have occurred in our economy over the last 15 years since the Internet Anschluss. As publisher of my own quaint “ink on crushed wood” venture not so long ago I am intimately familiar with this process. (At one time I even owned my very own brick and mortar building on Main Street!) That perch provided me with a front row seat on the Great Geneseo Big Box War, in which I eventually became an active combatant.
 
Looking back through the Clarion archives I see that this year marks the 10th Anniversary of the opening of Geneseo’s 205,000 square foot Super Wal-Mart, the King of all local Big Boxes. That event created a big vacancy in the Geneseo Plaza when the old mini Wal-Mart (only 94,000 square feet) moved out. It took almost three years to fill, but eventually Staples moved into part of that space opening in the fall of 2008. A little more than 6 years later they are gone!
 
Even before the new Super Wal-Mart had opened, a proposal was floated in March of 2005 to build a 170,000 square foot Lowes across the street in the so-called Gateway District. I can still remember my horror when I first heard of this monstrosity at a presentation by then Town Supervisor Wes Kennison at my weekly Rotary Club meeting. As I recall, Wes had read a book about the “invisible poor” and dreamed of being their champion by bringing the Gospel of low prices to the masses.
 
Space does not allow me to recount the entire history of that War, but the interested reader can refer to the archives of this “Clarion Call” column or my partner in crime Bill Lofquist’s excellent blog “Preserving Small Towns.
 
The bottom line, however, is that the rag tag group of rebels known as PDDG (Please Don’t Destroy Geneseo) won the war after losing every battle. We won not because our cause was just (even though it was) or because of the brilliance of our strategy (which goes without saying), but because in the end the Lowe’s proposal, in fact the whole dream of a Big Box Utopia, was fatally flawed.
 

As amply documented in Professor Lofquist’s blog, in the early years of this century (until the rude awakening of 2008), the United States was caught up in a huge Retail Construction Bubble that was simply not sustainable. In fact the Wall Street Journal reported in 2008 that projected retail demand “will justify only 43 percent of the new space delivered this year and last.” At the time I thought that some of Bill’s  “Dr. Doom” predictions were a little gloomy, but history has proved him very prescient.

 
As economist Herbert Stein said, “Things that cannot go on forever, will stop,” and that is what eventually happened to the Lowes proposal.  Looking back with our 20-20 hindsight, I dare say that was a good thing. I note that the Lowes store that opened in 2008 in Batavia (a much larger market then Geneseo) lasted barely 5 years before closing, so we may have dodged a bullet. Although, perhaps not as vulnerable to Internet competition on their big ticket items, if you search  “Lowes store closing” you will find dozens of other communities that have not been so lucky.
 
On a personal note, sensing the direction the wind was blowing, I moved my printing business, Genesee Graphics, off Main Street in 2009 to a much lower cost location: my home. Now that I sense a change in the weather I am going to re-establish a retail beachhead. This week I will be moving my copying and printing business to 61 Main Street in Geneseo (the former Frugal Fashionista). Why don’t you stop in to order some copies or printing and talk about the good old days!
 
 
 
 
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s