Antarctica Next?

[gregb@corecom.net (Greg Brown)]

Kodiak retailers brace for Wal-Mart 
 Customers of two minds as giant discounter plans
 spring opening 

 By JIM CLARKE
 The Associated Press 


 KODIAK - When one of Dave Rickard's customers wants a video game
 that his Radio Shack store doesn't have in stock, he calls a Wal-Mart in
 Anchorage and gets the game shipped for a lower price than his usual
 supplier charges. 

 That's good, right? Rickard gets a happy customer; the customer gets the
 game. Here's the bad news for Rickard: Wal-Mart is moving into this
 remote island town. 

 "It's going to be scary," Rickard said. 

 The tension between small-town retailers and discount chains like
 Wal-Mart is hardly a new story. The big store comes in, some local
 businesses die and others adapt. 

 But when one plops down in a place as far off the grid as Kodiak, one
 expert says, its market power gets magnified. 

 "I've never seen anything quite like this situation," said Kenneth Stone, an
 Iowa State University economics professor who also counsels small
 businesses on how to survive when the big discounters come to town. 

 "(The existing businesses) don't have the opportunity to pull retail trade
 from surrounding communities because there are no surrounding
 communities," Stone said. 

 The city of Kodiak sits on the northeast corner of the Connecticut-sized
 island of the same name and probably is best known as the home of
 North America's biggest brown bears. It's also one of the nation's busiest
 fishing ports and home to the largest Coast Guard base, with about 2,000
 people stationed here. 

 During the summer, the island is a mecca for hunters, fishermen and
 tourists. Commercial fishermen rely on Kodiak's supermarkets and
 hardware stores year-round to keep galleys full and ships shipshape. 

 The Kodiak Chamber of Commerce asked Stone to visit earlier this year.
 He concluded that Wal-Mart was likely to gobble up as much as 20
 percent of the $100 million in annual sales on the island. 

 From Kodiak's point of view, that's not all bad because part of that
 amount would come from the estimated $22 million that "leaks" off the
 island to stores in Anchorage and Seattle, or to mail-order companies. 

 "If Wal-Mart captures just half of that (off-island spending) at a 6 percent
 sales tax, we'll have more to spend on police and the fire department and
 other things," said Wayne Stevens, the chamber's executive director. 

 For the town's small retailers, such as Tom Merriman, waiting for
 Wal-Mart to open is taking much of the fun out of the upcoming
 Christmas season. 

 Arkansas-based Wal-Mart hasn't set an opening date for the
 67,000-square-foot store, other than to say it will be sometime next
 spring. 

 Merriman, who owns Mack's Sports Shop, has been in business for
 nearly two decades. A year ago he sank hundreds of thousands of dollars
 - he won't exactly say how much - into a bright, well-organized new
 store. Its centerpiece is a huge stuffed brown bear Merriman killed
 himself. 

 "We're plum scared to death. There's just no other way to look at it,"
 Merriman said. "I can't help but think that we're going to survive it, but it's
 giving us cause for concern." 

 Like his peers, Merriman is counting on service, better merchandise and
 old-fashioned customer loyalty to survive. 

 Mack's stocks top-of-the-line rifles, handguns and fishing tackle and
 some of the priciest names in outdoor clothing, such as Patagonia
 outerwear and Danner boots. It's not the kind of thing most Wal-Marts
 carry, and Merriman says his customers expect a better brand of gear for
 Kodiak's damp, chilly climate and mountainous terrain. 

 Wal-Mart spokeswoman Daphne Davis says the company understands
 that it's going into what is probably its most remote, unique location in the
 country. There are plans to tailor the store's stock to local needs, and that
 means more hunting and marine supplies. 

 "We don't stock snow shovels in Miami," Davis said. 

 And she points out that Stone's study concluded Wal-Mart's entry into
 Kodiak would lower retail prices by as much as 10 percent, and the
 overall cost of living by 2 percent. 

 "Consumers are very excited about this store," she said, dismissing the
 suggestion that it would mean the end for local merchants. 

 "You can compete with Wal-Mart," she said. "You can coexist. There's
 thousands of communities where that happens every day." 

 The company has been accused in the past of lowering prices to drive out
 smaller competitors, but Stone said the company typically only tries to
 undercut competitors on about 1 percent of the 75,000 items in stock -
 usually common items such as light bulbs and toothpaste. 

 At Kodiak's harbormaster office, clerk Maggie Wall said she's heard the
 worries of local business owners. Some of the hardware and general
 merchandise stores she now shops at may go out of business, she
 acknowledged, but that's balanced for her by the chance to save money. 

 "They're going to have to change the way they do business or get out,"
 Wall said. "Dish towels, plant pots and lampshades. These are the things
 I'm looking forward to getting cheap."