Lowe’s: Impacts to Summit County businesses will be minimal | SummitDaily.com

Lowe’s: Impacts to Summit County businesses will be minimal

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SILVERTHORNE – Small businesses in Silverthorne won’t be casualties of a new big box, according to a recently released economic study commissioned by Lowe’s, the national home-improvement chain. Local business owners, however, say the study is flawed.

Lowe’s hired DSR Marketing Systems of Northbrook, Ill., to conduct an analysis of the Silverthorne-area market potential and possible impacts to existing businesses. The town required

the study as part of the company’s development application for a 111,000-square-foot store and adjoining 27,000-square-foot garden center.

Report authors say the Summit County area has an unmet demand for building-and-construction retail stores – a demand Lowe’s couldn’t meet completely on its own, thus leaving room for existing local businesses to succeed.

“The sales losses produced by the Lowe’s store will vary among the competitors currently operating in Silverthorne, and will ameliorate over time,” the report says.

Retailers like appliance stores, building supply outlets and hardware stores would likely see an initial drop in business of anywhere from 0 to 12 percent if Lowe’s came onto the scene, according to the report. And gradually, the report says, those stores may even benefit as a larger number of home-improvement customers are drawn to Silverthorne rather than places like Denver or Avon.

But local businesses are taking little comfort in DSR’s predictions.

For one, the firm’s assessment of the Silverthorne-area market potential was based on data from 2007 Census of Retail Trade, conducted by the U.S. Census Bureau. At that time, the construction business was booming, relative to today’s economic environment. And the town’s construction industry has been among the hardest hit. For the first five months of this year, sales in Silverthorne’s building retail sector were 28 percent worse than during the same period in 2009. And in 2009, the sector saw only about two-thirds the sales it had in 2008. Silverthorne’s total sales tax revenue, a key economic barometer, totaled $8.7 million in 2007. In 2009, the town collected $7.5 million in sales tax revenue.

“In this situation, a lot of people in building-related businesses have been lucky to break even the last two years, and everybody’s guess is that will be the case next year as well,” said Don Sather, owner of Ace BigHorn in Silverthorne and an ardent critic of the big boxes. “If a business has been losing money or breaking even, and you add a major competitor or a big box on top of that, those businesses aren’t going to be around.”

The DSR analysis predicted, of all local businesses, Sather’s would take the biggest initial hit from a Lowe’s store. Ace BigHorn’s business would drop by an estimated 12 percent.

Sherie Sobke, co-owner of Alpine Gardens, a Silverthorne nursery, said she found DSR’s estimate of a 0-5 percent decline for her business “kind of laughable.” Sobke fears her customers would be lured away by lower prices on plants and other garden products in the Lowe’s garden center, especially if the economy doesn’t improve soon.

“I think it’s got to have an impact on everybody, or other communities wouldn’t be running out of small businesses,” Sobke said. “I don’t know how they can tell us it won’t have an impact here, when it’s already happened in other communities.”

However, the DSR study says a Lowe’s could actually improve business in the area. And DSR says much of Lowe’s business would capture “leakage.”

“As happened in Glenwood Springs in 2005-6, the Lowe’s opening will retrieve building materials spending and sales by Summit County residents that is currently flowing out to Eagle County and the Denver area. By increasing the attractiveness of Silverthorne for these hard-line purchases, the presence of Lowe’s will increase the ‘pool’ of sales available to its indirect competitors in the town,” the report says.

At the time of the 2002 Census of Retail Trade, per capita sales of building materials and hardware in Mesa County totaled $1,779 – 41 percent higher than the $1,259 in Garfield County, the report’s authors say. At that time, Grand Junction (in Mesa County) had both a Lowe’s and a Home Depot, while Glenwood Springs (in Garfield) had neither.

In 2005, Lowe’s opened a store in Glenwood Springs. In 2007, per capita sales in the sector were $2,458 in Garfield County – 7 percent higher than the $2,294 in Mesa County in 2007.

DSR says, “There have been no subsequent competitor closings (in Glenwood Springs), and the sales of the competitors continued to grow through 2008.”

According to Sather, DSR isn’t telling the whole story. A True Value store in Glenwood was approaching the end of its lease when Lowe’s was about to move in. The combination of a relocation and the threat of big-box competition “put the risk level too high, and they walked away from the market,” Sather said. The community’s lumber yard, he said, struggled but survived in good times and is “near death today.”

DSR’s analysis of Lowe’s limited impacts to BigHorn assume the store caters mostly to construction contractors rather than the do-it-yourself crowd. But Sather says he is much more reliant on the latter than he used to be, now that new home construction has all but ground to a halt.

Katie Roberts, executive director of the Summit Independent Business Alliance, takes issue with the DSR study because it doesn’t include a proposed Home Depot in the picture. Lowe’s main rival in the home-improvement world also has a development application before the town – although it appears to be moving at a much slower pace. If both companies are required to submit economic impact studies, but neither addresses the possibility of the other, the community won’t get a serious, realistic analysis of the combined impact of both stores, she said.

Silverthorne town manager Kevin Batchelder said the town gave input to earlier drafts of the Lowe’s study.

“Upon initial review, it appears that the information provides a reasonably accurate representation of the fiscal impact this development would bring to Silverthorne,” Batchelder said. “We continue to review the report, and will be providing the town council with our review comments as part of the final development review.”

As part of the development process, the Lowe’s application is now under review by multiple “referral agencies,” including Summit County government and the Colorado Department of Transportation.

SDN reporter Julie Sutor can be reached at (970) 668-4630 or jsutor@summitdaily.com.

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