Friday, November 12, 2010

Myth vs. Reality

The Ketchum City Council on Monday will decide whether to allow development of a supermarket in the Light Industrial zone where they are now prohibited.

City planners have recommended that the council approve it. The drive for approval is based on myths that have nothing to do with realities of the marketplace or good planning.

Myth: Competition is always good.

Reality: Not if the economy is flat like the Sun Valley area's has been for decades. New stores divert income from existing stores. Multiple retailers serving the same clientele struggle along on life-support until some of them die.

Myth: Ketchum needs another supermarket to increase competition.

Reality: Ketchum recently had two full-service grocery stores in the commercial core. Lack of business closed one. A new one is preparing to open. Also, competition exists from a national chain located in Hailey, the area's largest community.

Myth: New competition will drive down food prices.

Reality: This is doubtful. Food cost as a percentage of family incomes is as low in the U.S. today as it has ever been. As a percentage of Ketchum's high family incomes, it's already lower than average.

Myth: Construction of a new supermarket will expand the economy.

Reality: Supermarkets don't create growth in a tourist-based economy. They follow it. Local-option sales-tax revenues show unequivocally that Ketchum's economy has declined.

Myth: A new supermarket will provide good new jobs.

Reality: Construction will provide temporary jobs. Jobs in a new supermarket will be offset by job cuts in the existing downtown grocery stores.

Myth: Retail stores in Ketchum's core make lots of money.

Reality: Ketchum's retail stores are mom-and-pop operations that survive on a shoestring. They look better to their customers than to their bankers. Diverting even a small part of their business to another part of town could make the downtown a ghost town.

Myth: A supermarket outside the town core won't hurt other businesses.

Reality: Supermarkets today don't confine themselves to selling groceries. They offer everything from banking to barbering. Walmart's destruction of businesses in other small towns is an example.

Myth: The supermarket will be beneficial because it will include community workforce housing.

Reality: This is a Trojan horse. Legal, logistical and economic issues have consistently defeated workforce housing required by area cities and Blaine County. Developers also have been successful in persuading elected officials to relieve them of housing requirements.

So, why is this a good idea?

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