For the week of June 16, 1999 thru June 23, 1999
Moving to the mountains
National chains are changing some mountain resort towns
Second in a series of three
By GREG STAHL
Chain stores. They are an intrinsic part of Americas free enterprise system.
The jury, it seems, is always out on the hot-button issue of whether retail chain outlets benefit communities, particularly small towns where hard-working shop owners with deep-rooted traditions carve out livings.
Ketchum is such a community. Its part of that special universe of western mountain townsincluding jet-set destinations such as Aspen, Colo. or Jackson, Wyo. and small environmental jewels such as Crested Butte, Colo. or Taos Ski Valley, N.M.where locals pay special attention to their communities character.
These high-profile, resort destinationssuch as Aspen and Jacksonhave been attractive locations for corporate chains, while smaller mountain tourist communities have been largely bypassed.
Now, Seattle-based coffee chains Starbucks and Tullys are about to open in Ketchum amid local concerns that they could heavily impact local business by diverting profits into their deep coffers.
Will Starbucks, Tullys or other chains that could come to the Wood River Valley stake out positive economic and consumer positions in the community? Or will dire predictions of economic gloom settle upon the areas long-time businesses, which have attracted dedicated clientele for years?
The question is complex and answers may take years to ferret out.
To be sure, corporate giants, such as the ubiquitous Wal Mart or Barnes & Noble, have been accused by anti-chain activists of having a devastating economic impact on small entrepreneurs. When they have moved into smaller communities, critics charge, they have driven mom-and-pop operations into oblivion. Put simply, chains have the economic clout to smother traditional small businesses.
Harkening back to the wave of corporate takeovers in the 60s and 70s, "big fish" easily gobble the "little fish," say the critics, sometimes radically changing a towns character and ambiance.
"Chain stores, said Aspen assistant planner Sarah Oates, who has lived in Aspen her whole life, have "made Aspen into something you could find in New York City, (Beverly Hills) Rodeo Drive or San Francisco."
Chain store executives say, however, there are distinct benefits to the proliferation of chains. From pumping up a towns economy to providing consumers with a greater array of product selection, chains can help a town prosper, they say.
"Starbucks presence in the Ketchum market is going to increase customers overall through education on specialty coffees," Starbucks spokesman Chris Gimble said.
Reasons chain stores have moved into certain towns and not others are difficult to ascertain. City ordinances can sometimes discourage chains, but if a chain is set on entering a small resort towns economic arena, avenues are available.
Most city staff members and chain-store representatives say customer judgments and demand are primarily the only obstacles to a chain stores success in a community. If people dont shop, a business cant survive. That, at least, is one thing chain stores and mom-and-pop businesses have in common.
When it comes to comparing mountain resort communities, perhaps none is quite as akin to Sun Valley as Aspen.
Aspen is a resort community with a population of 5,618.
According to the 1990 census, the population only within the Wood River Valley was 12,787, with 5,283 of those living in Ketchum and Sun Valley. The Census Bureau estimates Blaine Countys total current population to be 17,200 from 13,552 in 1990, and most of the growth has occurred in the Wood River Valley.
Both resort areas boast silver-lined roots. Both are converted mining settlements. Both boast top, destination ski resorts. Both are prized for their summer recreational opportunities.
But Aspen has more high-end chain stores than Sun Valley.
Prior to 1980, recalled assistant planner Oates, Aspen didnt have any chain stores.
"It was dominated by small, funky businesses," she said.
Now Aspen boasts a chain hotel: St. Regis which is a subsidiary of Sheraton hotels. It boasts chain ski and outdoor shops: Christi Sports, Gart Brothers Sports, The North Face, Incline and Breeze. It has chain clothing stores: The Gap, Banana Republic, Gucci, Christian Dior, Chanel, Lana Marks and Boogies. And it has chain restaurants: Dominos, McDonalds, Hard Rock Café and Planet Hollywood.
"Some of the [privately owned stores] have definitely suffered as a result," Oates said. "Commercial rents have risen."
Aspens average commercial rents are around $10.42 per square foot per month, Oates said.
In Ketchum, according to the Sun Valley/Ketchum Chamber of Commerces Relocation and Business Guide to the Wood River Valley 1998-1999, local commercial rents range from $1.75 to $2.50 a square foot per month.
Oates said before Aspens conversion to a chain-store-dominated economy, commercial rents were much closer to what Ketchums are.
Oates said there is mixed local opinion on the transformation of the town. People like the added product selection and increased quality of the product they can buy, but dont want to see the small businesses forced out.
Indeed, Aspens astronomical rents have even forced certain chains out of business. Colonel Sanders and his Kentucky Fried Chicken outlet were squeezed because of the high overhead. So were Post Blue Jeans, RIX and The Market, all medium-size chains selling womens clothing.
"People have grown to accept it now," Oates said, "despite the fact that there was a large amount of protest in the mid to early 80s. We just have to go to Glenwood (Springs) to buy socks and underwear now."
Glenwood Springs is about 45 miles north of Aspen.
When the chains first started to appear, many Aspen locals protested at city council meetings and tried to drum up anti-chain boycotting support. But consensus was not found. The chains still managed to attract tourist and some local business, and commercial rents rose. People learned to accept the transformation, Oates said.
Were she planning in the 1980s and had the foresight of what Aspen has become, Oates said she would have tried to avoid the modern-day niche Aspen has carved.
She would have liked to help small business owners through tax breaks or educational efforts. If the people had been educated on what the town could become, she said, they might have shopped differently.
Still, she said, Aspen does have a healthy economy with the chain operations there.
City of Jackson associate planner Gordon Gray has lived in the Teton Valley for almost 20 years and has witnessed the transformation of Jackson from mom-and-pop retailing to a primarily chain-driven economy.
The city has come a long way since it decided not to allow pigs in the town square in 1907. Now, fancy commercial buildings, jogging shorts and cars bound for Yellowstone clog the square.
Gray still loves Jacksonnot to be confused with the ski resort of Jackson Hole, some 10 miles away. But, he said, certain problems have arisen from the increasingly chain-oriented flavor of the town.
"It runs contrary to what we want to see in terms of community character," he said. "The 1994 comprehensive plan states that the city is a community first and a resort second."
But the implementation of that part of the comprehensive plan has not come out, senior planner Brian Wood said.
"The comp plan expresses concern about chains and says we dont want to become a shopping destination, but that seems to be happening," Wood said.
Jacksons increasing rents have made it more difficult for small business ownersthose without the deep pockets or slick marketing skills of chains to scoop a living out of the resort city. The bottom line is that the prime retail area has become so expensive the small guys cant afford to operate, Gray said.
Gray gave an example of a local, well liked and shopped, grocery store named Freds Market, which was in the citys town square.
The high rents, which rose to keep pace with chain store budgets, combined with difficult-to-keep employees, drove Freds out of business four years ago, Gray said.
When the market closed, the storefront blossomed into a shrine of hung wreaths and cards. The people of Jackson loved their locally owned market. Now they shop at Albertsons, part of a chain, or at a locally owned Food Town market.
Property around the town square has become so expensive that only chains can afford to pay the asking price, Gray said.
In Jacksons town square, recent retail leases have been signed in excess of $3 to $4.50 per square foot per month. Outside of the town square, rents drop to between $1.80 and $3.00 a square foot per month.
In Jackson, an amazing number of summer tourists provide a large demand for products that are familiar to them, products that can be found at chain-oriented stores.
Jackson is the main gateway community to the most visited national park in the countryYellowstoneand experiences two to three million visits each summer.
In 1981, the only chain operation Jackson had was a McDonalds. Now, the downtown is dominated by well-known chains, like Orvis, The Gap, Ralph Lauren, Eddie Bauer, Cool Water Creek, Best Western, Days Inn, Super 8, Motel 6, Wendys, Taco Bell, and Gray doesnt see anything on the horizon that will change that.
He said Jacksons residents dont like the transformation of their town into a chain shopping destination. But he said it is still not becoming "basic town USA." He said he likes Jackson better now than he did in 1981, and said it is still a great place to live.
For every issue, there is a flip side. Both the city of Crested Butte, Colo., and the Village of Taos Ski Valley, N.M., are fairly chain free. Crested Butte has only a Rocky Mountain Chocolate Factory, a candy vendor that has recently expanded into the Midwest market, while Taos Ski Valley has no chains at all.
The two communities are comparable in several respects. They are both in dead-end valleys; they both have small populations; and they both are near larger, more chain-store-dominated cities.
Crested Butte planning administrator John Hess said his city is pedestrian-oriented, and therefore has ordinances that limit many chain stores, which he said are automobile oriented. He also said the people of Crested Butte would not support chain operations.
Hess said three things help keep Crested Butte unchained. The city requires new businesses to install parking lots behind buildings rather than in front of them, which could discourage popular store designs used by fast food vendors. Drive-through windows are not allowed. And a nearby community, Gunnison, has a better market for chains.
"We dont encourage [chains]," Hess said. "We like the small business. But its really up to the people, and the people of Crested Butte wouldnt support chain stores."
Taos Ski Valley planning assistant Jerry Williams said his villages ordinances dont really discourage chain stores. The popular ski valleys low permanent population and its proximity to the city of Taos dont provide a market for chain operations there, he said.
Both Crested Butte and Taos Ski Valley are close to larger municipalities that do have chain operations. Gunnison is 30 miles south of Crested Butte; Taos, 20 miles from Taos Ski Valley. Taos and Gunnison have larger populations; they are not in dead-end canyons like the nearby resorts; they have through highways; and they both have a number of chain operations.
Williams said Taos Ski Valley and Taos have an interdependent relationship. The ski valley has just one tiny convenience store and no gas stations. Its approximately 150 permanent residents must travel to Taos for basic shopping. In return, the privately owned resort in Taos Ski Valley provides jobs and recreation for the citizens of Taos.
It boils down to supply and demand. The small populations of Taos Ski Valley and Crested Butte do not offer the potential that chain stores demand. The numbers of residents and tourists dont demand the amounts of goods chain stores can supply at economically feasible quantities.
So far, Ketchum and the Sun Valley area seem to inhabit middle ground. The area is not chain dominated, but a few are here.
Ketchum is still relatively chain free, even with the soon-to-open coffee shops, Circle K and ski boot specialist Sure Foot Boot. Hailey has several, including Kings, Subway and Baskin Robbins 31 flavors.
But the fact remains: business is tough here, even for a well financed chain.
In Ketchum, according to the citys fiscal 1998 local-option tax receipts, 47 businesses closed their doors for good in that year. In the city of Sun Valley, two stores closed in the same time period.
Because operating a business proves to be so difficult in the Wood River Valley, some local business owners say the amount of new retail space that is proposed for building here could become a problem.
Ketchum is rapidly building new retail space. Projects currently under construction or approved by the Ketchum Planning and Zoning Commission total 289,123 gross square feet in eight buildings that will each include, at least in part, space for retail merchants.
Many of the buildingsthe new Colonnade on Sun Valley Road, the Courtyard Building where the Buffalo Café once stood and Private Residence Resort to be built on the old Snug Building site, to name a fewwill ask high-end rents, the sort of costs chain operators can afford to pay and smaller merchants may not.
Declared Elephants Perch owner Bob Rosso in an interview: "I have a handle on what it takes to stay alive here. My concern with the amount of new space proposed is that there isnt the demand for it."
As for the impact on the towns roots and culture, he ponders, "When you add these chains, you end up not being any different from anyone else."
Next Week: What it takes to survive as a small business in a resort economy
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