Wednesday, May 2, 2007

Winter business better than believed

Over long term, business closures outnumber openings

Express Staff Writer

Terry Murphy, owner of Bellisimo in Ketchum, relaxes with a companion. She believes some Ketchum businesses are hard pressed to pay employee wages that can meet the ever-escalating cost of living. Photo by Willy Cook

Business for Ketchum retailers during the past winter was not nearly as bad as rumor would have it, a non-scientific survey by the Mountain Express indicates.

The paper contacted 20 local retailers at random. The most common response was, "I've heard that business was bad for a lot of people, but I did all right."

Of 20 businesses queried, four said they had an above-average winter, nine said they had an average winter and seven said they had a below-average winter. Of those who reported a poor winter, most said it was just a little below average.

The Sun Valley-Ketchum Chamber & Visitors Bureau conducted a similar survey, asking 25 businesses how this winter's sales compared to those of last winter, which was a record season both for snowfall and sales. In that survey, three businesses said they did even better this winter, eight said they did about the same and 13 said they did worse.

Winter receipts from Ketchum's local option tax—which includes a 1 percent tax on retail items—backs up the claim that business this winter was not bad.

As of press time, receipts for sales in March were not yet in. However, the city took in $367,010 in LOT receipts for retail sales made during December through February. That's slightly higher than the average of $364,355 collected during those months for the years 2001 through 2006.

Some businesses reported having done well early in the winter, and then having bombed in March, though others reported an opposite scenario.

Most business owners expressed more concern about long-term trends than they did about the level of business this past winter. Figures released last week by the Sun Valley-Ketchum Chamber indicate that between 2001 and 2006, 96 businesses in Ketchum closed and 76 new ones opened. The survey included businesses of all types—retail, restaurants and hotels.

Among the retail businesses, 58 stores closed and 45 new ones opened, resulting in a net loss of 13 stores, or 22 percent.

Most of the retail businesses that closed were small clothing stores, gift shops and art galleries, as were those that replaced them.

One of the businesses that closed was Two Fishes, which had sold whimsical folk art for 11 years.

"I just chose a business that people didn't really need," owner Kathy Muller admits. "I loved one-of-a-kind things."

Stores that sold items viewed more as necessities in a mountain resort town reported a decent winter and steady long-term sales. Sturtevants Mountain Outfitters manager Jeff Davis said that though business declined this winter as the snow did, the store did even better than last year due to a record December.

Though there are fewer retail businesses than there were in 2001, annual LOT collections indicate that total sales have been generally on the upswing. Adjusted for inflation, LOT receipts for retail sales have been climbing fairly steadily since 1999. Every year since 2000 has been higher than the 1991-2006 average.

However, there is general agreement among Ketchum business owners that the town has less pedestrian traffic than it used to. The two most frequently cited culprits are lack of hotel space and the proliferation of banks and real estate offices on Main Street.

Claudia Greer, owner of the women's clothing store Comme Les Filles, said that until the mid 1990s, "we used to have a good thriving business when people were staying in town in hotels. Then everything turned into condominiums."

One result is an increasing reliance on second-home owners and other wealthy customers. The owner of a furniture store said she didn't have many walk-in customers this winter, but the store was involved in more projects furnishing big homes. One local boutique that sells expensive designer clothes reported a "great" winter and a general upward trend in her business. The manager of another clothing store said her store saw fewer visitors this winter and counted on those few to spend a lot of money.

"The middle-of-the-road people just don't seem to come anymore," she said. "It was all jet set."

On the other hand, Jan Mason, manager of the Gold Mine thrift store, reported steadily increasing sales there. That could mean that more local wage earners are buying used items instead of new, though Mason said a surprising amount of the Gold Mine's business—she estimated 60 percent—comes from visitors.

A related trend seems to be more polarized retail seasons.

"Slack is coming back more," said Backwoods Mountain Sports owner Andy Munter. "Our busy months are getting busier and our slow months are not increasing at all."

Business owners attribute that phenomenon to the flight of full-time residents and their replacement by second-home owners. It's no secret that many middle-class people have moved south where they can afford homes. Two Ketchum businesses—Lone Star and The Body Buff—recently closed their Ketchum stores to concentrate on stores in Hailey, a new one for The Body Buff and an existing one for Lone Star.

"I have no slack in Hailey," The Body Buff's manager, Petrea Mara, pointed out.

Jane's Business, Copy and Creative, which started in Ketchum and still has a store there, also has a Hailey store, now called Polka Dot.

"We're seeing a lot of people down here (in Hailey) that we used to see up there," store owner Doug Brown said.

The recent closing of Iconoclast Books' store in Hailey has been cited by some as a barometer of the local business climate, but store co-owner Sarah Hedrick doesn't see it that way.

"I think overall Hailey is booming," she said. "Businesses are increasing their sales every month. I think we have an educated community here and a lot of readers, but I think they're buying their books elsewhere."

Hedrick said that nationwide, small bookstores have been hit hard by Internet sales and chain stores. She pointed out that five bookstores have opened and closed in Hailey in the past 25 years.

"Five times the city of Hailey has spoken and said, 'We don't need a bookstore,'" she said.

Ketchum businesses have been further squeezed by increasing rents and the difficulty of finding employees.

"In the Mountain Express, there's ad after ad for help wanted, and they're not being answered," said Bellisimo owner Terry Murphy.

Murphy said most small-business owners can't pay their employees enough to meet the local cost of living.

Celia Streit, owner of Legacy Antiques, said she has also lost employees due to the proliferation of two-hour-only parking in Ketchum.

"I don't know if I'll be able to stay in the downtown location when there's no place for my employees to park," she said.

Sun Valley-Ketchum Chamber Executive Director Carol Waller cautioned people not to presume that all businesses close due to lack of sales or other problems.

"People are moving, changing their family situation and other things," she said. "There's a natural evolution in communities of all sizes."

Bob Rosso, owner of The Elephant's Perch outdoor sports store, is an optimist about local business. He attributes the general economic health of the area partly to the tendency of people to circulate their money locally, rather than at big box stores or over the Internet.

"The trend is really recognizing the value of the circle of community," he said. "It's what makes this place go round."

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