CHARLESTON GAZETTE REPORT - Small Town Big Wal-Mart: Spencer WV

Spencer lured the giant to town — what are the effects?

By Jennifer Ginsberg, Staff Writer


SPENCER — Spencer Mayor Terry Williams worked for three years to bring Wal-Mart to the Roane County seat before the supercenter opened Jan. 26, 2000.

"We were losing so much of our retail base," he said. "I didn't know if they would be a positive or negative."

From 1988 to 1998, the town lost $30 million in retail sales, he said. Several longtime downtown department stores and clothing shops closed. Much of the money was flowing to the Wal-Mart in Ripley and the Kmart in Elkview, both 30 miles from Spencer.

"On Friday night in the Ripley Wal-Mart, you could have a Spencer, Roane County, reunion," Williams said.

Now, people drive from outside the county to come to Wal-Mart and spend money in the town's other businesses. The supercenter is the town's largest retail contributor of building and occupancy tax.

"Wal-Mart has been a success story for this town," Williams said.

Areas such as Spencer in the central part of the state and in the Southern coalfields, where there wasn't much retail before, tend to be helped by Wal-Mart, said Patti Hamilton, executive director of the West Virginia Association of Counties.

"They're prime examples of how a county's population has to leave the county to get basic things," she said. "There's not much left to take away."

Hamilton has seen what's happened in Spencer happen around West Virginia.

"It will draw customers and other businesses but traditionally what happens is the longtime businesses that are traditionally downtown are hurt," she said.

Logan Mayor Claude Ellis credits his town's Wal-Mart for bringing in 10 to 20 times more business from places outside of the town, and increasing tax revenue. But many of the downtown merchants have either moved to the Fountain Place shopping center — two miles away — to be near Wal-Mart or closed because of lack of business, Ellis said.

Some of the businesses that are still downtown have remodeled their stores, lowered their prices and offer more sales to compete with the supercenter.

"They're still hanging on, trying to do what they can to keep business in town," Ellis said.

'You can't compete on price'

Spencer's Foodland was one of Roane County's top 10 employers in 1999 and 2000. Then, Wal-Mart, the nation's largest grocery store, moved in down the road.

Foodland hasn't made it back into the top 10 since.

Businesses that sell the same merchandise as the discount stores usually lose sales, said Kenneth Stone, a professor of economics at Iowa State University in his 1995 report, "Competing with the Discount Mass Merchandisers." Stone has studied Wal-Mart for nearly 20 years.

Struggling stores also tend to crumble under the pressure of a new Wal-Mart. Some say it's the survival of the fittest. Other's say it's Wal-Mart's shrewd business tactics.

In 2003, 14 fewer people worked in Roane grocery stores than in 2001. Roane County also lost two grocery stores, according to the West Virginia Bureau of Employment Programs. The average weekly wage for employees who worked in these stores decreased $37, after inflation was taken into account.

Those numbers weren't available for 2000, when Wal-Mart opened in Spencer.

Foodland had 65 employees in 2000, said manager Greg Sutphin. Now, 32 remain. Sutphin said sales have decreased dramatically, but declined to give a dollar amount.

When Wal-Mart came to town, four of Foodland's meat department workers took a job with the new store.

"We fared good against them in the first year," Sutphin said. "I don't know how we managed to stay afloat the past two years. We struggle every day to keep the doors open and try to serve the community the best we can."

Wal-Mart spokeswoman Mia Masten said that any business, regardless of size, has to meet its customer's needs.

"Small businesses have thrived in the presence of Wal-Mart because they met their customer's needs," she said.

Sutphin admits Wal-Mart is probably good for Spencer. "Before they came to town, you probably couldn't buy a white shirt in Spencer," he said.

But he hates that they have a grocery store and the way the corporate giant does business.

He recalls when Wal-Mart employees used to come into Foodland and conduct weekly price checks and take circulars to post at their store so customers would get the lowest price at Wal-Mart.

Sutphin called the manager and threatened to prosecute.

"If you put out a price of 99 cents, they put out 98 cents," he said. "You can't compete on price."

Some skeptics convinced

Even those who were skeptical of the supercenter's Spencer debut admit it has benefited the town.

"I was really against Wal-Mart because I thought it was going to hurt us. I always said they'd put people out of business," said Benny Varda, who bought McIntosh Hardware from the McIntosh family in 1956.

Now, his sons run the more than 100-year-old downtown business. The store is reminiscent of older, simpler days when Calhoun County farmers stopped by to shoot the breeze with Varda.

Wal-Mart's opening has hurt McIntosh's small appliance sales, said employee Bill Miller. These items tend to be cheaper at the supercenter because Wal-Mart orders larger quantities for a lower price and can afford to charge its customers less.

But, Wal-Mart has also helped McIntosh's by referring customers to the specialty store if they don't have something on hand. Plus, the big-box store has brought more business to town.

Ultimately, Miller and Varda admit Wal-Mart's addition has been positive for McIntosh's.

"They do an incredible amount of business for a little country town," Varda said.

Broadening business base

There are both positive and negative effects when a discount store like Wal-Mart opens in a small- to medium-size town with little population growth, Stone noted in his report.

"The retail trade area size will expand. Businesses selling merchandise different than the discounter usually benefit from the increased traffic flow the first few years," he said.

Wal-Mart has helped bring shoppers back to Spencer, Mayor Williams said. The town's retail base has increased from 25,000 people to 40,000 in the past five years.

Before the Spencer Wal-Mart, Dean and Julie Summers of Orma in Calhoun County drove an hour to the Elkview Kmart to shop for clothes and other general merchandise and 30 minutes to the Spencer Foodland and IGA to buy food.

Now, the Summerses split their shopping evenly between Foodland and Wal-Mart. IGA closed around the same time Wal-Mart moved in. The Summerses like Foodland's groceries better, but find lower prices on dishwashing soap and laundry detergent across Main Street at Wal-Mart.

"The meat department is a whole lot better," Julie said of Foodland, during a recent Spencer shopping trip.

The family buys its clothes, bread, snacks and canned items from Wal-Mart. They don't shop at the Elkview Kmart much anymore.

A changing economy

Manufacturing jobs that were part of Roane County's base for decades have been replaced with retail. With about 200 employees, Wal-Mart is the county's largest private employer, according to the Bureau of Employment Programs. The second largest private employer, Spencer Veneer, employs about 150.

Only the county board of education and hospital, both public employers, employ more people in the county.

Wal-Mart has held its supreme ranking since 2001. In 2000, it was ranked second behind the Kellwood Co. Kellwood closed around January 2001 and eliminated nearly 300 jobs.

The garment manufacturer had been in Spencer for nearly 50 years.

Also missing from recent lists is the BF Goodrich Co., which was the third largest private employer in the county from 2000 to 2002. In 1999, before Wal-Mart, BF Goodrich was the second largest private employer after Kellwood.

BF Goodrich closed in October 2002 and cut about 150 jobs. The employees made evacuation slides for Boeing aircraft, and business was hit hard by the Sept. 11, 2001, attacks, Mayor Williams said.

"We need jobs but we also need a place to shop," Williams said. "Now, retail development is considered economic development. [It has] allowed more businesses to come in."

Advance Auto Parts moved into the Wal-Mart plaza two years ago and Movie Gallery set up shop earlier this month. A Chinese restaurant is scheduled to open in a few months.

Williams is working to bring a shoe store and men's and women's clothing stores to town. He also wants another sit-down restaurant and hotel.

All of these stores will be chains.

Williams isn't sure these new additions would be possible without an anchor like Wal-Mart.

"You have to have a reason to come here," he said. "I think anything we can get to locate here, to come to Spencer, is good."

Luring Wal-Mart

When Wal-Mart opened four other stores in West Virginia, the company or its developers received at least $10 million in either state or city subsidies, according to Good Jobs First, a Washington, D.C., based research group.

The city of Nitro gave THF Realty a 20-year business and occupation tax break for infrastructure improvements for the Nitro Marketplace, which is anchored by a Wal-Mart Supercenter and Lowe's. Good Jobs First estimates Wal-Mart's subsidy is worth $4.9 million.

Wal-Mart also received at least $1.25 million in tax credits from the state to open West Virginia's first Wal-Mart in Beckley in 1989. This store closed in 1995 and was replaced by a supercenter.

The Spencer Wal-Mart didn't receive any tax credits or B&O breaks, Williams said. The town did sell them nine acres for $100,000.

Wal-Mart added new sewer and water lines throughout the property and paid a large portion of the cost to put in the road connecting the store with Main Street. Williams estimated the company spent more than $1 million. Masten said Wal-Mart doesn't discuss those dollar amounts.

"At that time, I didn't have anyone interested in it," Williams said of the nearly 20-acre lot where the former Spencer Hospital was being torn down. "I probably would have given them the land, but I didn't tell them that."

Surviving with a supercenter

Stone led a seminar for Spencer merchants in the fall of 1999 on how not to compete with Wal-Mart, and instead find their own niche. He suggested selling different and complementary merchandise, extending hours and offering excellent customer service.

Rocky Deel and Mike Burgess will bag customers' groceries, push the shopping cart from the store to the parking lot and load the bags in customers' cars at Foodland.

"It's better for an older person," said Shirley Marks, 64, after receiving a hug from Burgess in the Foodland parking lot. She has known "Mikey" (as she calls him) for 20 years, and stopped by the store to give him a reindeer toy for his son.

She shops at Wal-Mart, Foodland, Save-A-Lot and a local produce market.

"I try to do most of my shopping here because I don't want to see Wal-Mart run these businesses out," she said. "They're sure making it hard for them." Besides carrying out groceries, Foodland also will cut hams and special cuts of meat for customers in its meat department.

A sign proclaiming "friendly service" hangs above the cash register at McIntosh Hardware.

"We try to go out of our way to help people, because service is what brings people back," said employee Bill Miller. The hardware store services all the items it sells, and employees offer to help its customers.

"At Wal-Mart you have to find someone. And most people you find don't know what they're doing," Miller said.

McIntosh's tries to do things differently than Wal-Mart — even down to the small details.

"If you come here, you can buy one screw. If you go to Wal-Mart, you have to buy a whole box," he said.

To contact staff writer Jennifer Ginsberg, use e-mail or call 348-5195.