Merchants wary as Wal-Mart comes to N. Kitsap

Ace Hardware is already changing its line of merchandise, its owner says.

Bainbridge may not be in the eye of a looming economic storm, but some local store owners are already battening down the hatches and jettisoning cargo.

“We’ve been planning ahead for this for two years,” Steve Mikami, owner of Bainbridge Island Ace Hardware on High School Road, said of retail giant Wal-Mart’s nearly completed store in Poulsbo. “We’ve already scaled back some housewares and appliances and this year we’re changing what we usually offer for Christmas.”

The Arkansas-based chain plans to open a “supercenter” by February in a new shopping development at the intersection of Highways 3 and 305, near the Poulsbo branch of Olympic College.

The store will offer groceries, clothes, housewares, gardening supplies, toys, appliances and many other retail items 24 hours a day. The Poulsbo Wal-Mart, one of the latest to join more than 1,300 stores in nine countries, will anchor the new 540,000-square-foot shopping space, which will include Home Depot, Starbucks, Payless Shoes, T-Mobile, Jiffy Lube and others.

The city of Poulsbo expects to rake in more than $500,000 per year in taxes, adding to the roughly $13 million in state and local taxes Wal-Mart pays in Washington each year.

The store will likely employ 500 people and offer the low prices that have made Wal-Marts a shopping mainstay for low- and middle-income Americans.

But Wal-Mart has also been the target of critics on multiple fronts. The “big box” stores have been accused of undercutting local businesses and gutting downtowns. The company has taken hits for employing low-paid laborers in Asia and for poor treatment of its domestic employees.

“Wal-Mart will have quite a bit of an impact” on Bainbridge, said resident and land use attorney Ryan Vancil. “It will reduce on-island spending and draw folks who go for the bottom-dollar. We’re already seeing a lot of draw from the north end to Suquamish, the Silverdale area and Poulsbo.”

Vancil has assisted various Washington communities, including Poulsbo and now Port Orchard, in challenging Wal-Mart.

He will speak Thursday at the Bainbridge Commons about Wal-Mart’s possible local impacts, following a screening of “Wal-Mart: the High Cost of a Low Price,” a new documentary that takes a critical look at the retailer’s practices.

Mikami beleives Wal-Mart will exacerbate a wound that began bleeding Bainbridge dollars long ago.

“It started with Silverdale,” said Mikami, whose family formerly operated the Coast to Coast hardware store in the area now occupied by the Safeway shopping center. “Then there was Home Depot in Silverdale. That made us drop a lot of our big ticket items, like lawn mowers, riding tractors and gas grills.”

Wal-Mart, however, is a breed apart, he said. “They have $300 billion in sales,” he said. “That kind of buying power is impressive.”

Mikami was so impressed by the competition he’ll soon face that he has already cleared some popular items from his shelves.

“I don’t sell the $6.99 coffee maker or toaster,” he said. “Now I offer the $39.99 toaster. I’m going for people that are not (Wal-Mart’s) clientele.”

As businesses can no longer compete on price for similar items, other island retailers may need to diversify or find niche markets that Wal-Marts won’t touch, said Bainbridge Island Chamber of Commerce Director Kevin Dwyer.

“Local businesses may have to sharpen the pencil and differentiate themselves with products and services and improve their customer service,” he said.

Many Winslow businesses have already done this by offering upscale or uncommon goods.

Karin Lehotsky, owner of Loli Pop Children’s Boutique on Madison Avenue, says she’ll see little change to her clothing store’s bottom line.

“My customers are not going to shop at Wal-Mart,” she said, estimating that the majority of her buyers are tourists. “I think this will impact Target more than me because (those customers) are already looking for inexpensive clothing.”

Alyse McConnell, co-owner of Paper Products on Winslow Way, is unsure what impact Wal-Mart will have on her office supply and gift store.

“We’ll have to wait and find out,” she said. “At the end of the day, competition is a fact of life.”

McConnell said her store makes most of its money from greeting cards and off-beat gift items. The sale of staples, pens, printer paper and other office supplies are “lower margin items” offered more as a service to locals.

“For instance, ink cartridges are a break-even item that nobody has the time to drive a half hour to get,” she said. “We offer that because of a commitment we have to the community.”

But many basic items are not offered on the island, spurring shoppers to cross the bridge or catch a ferry.

“We have about 40 percent leakage of shoppers going off-island to buy cars, appliances, hardware and other items,” Dwyer said. “You still can’t go (downtown) and buy men’s underwear or socks that are relatively inexpensive.”

According to Al Norman, founder of Sprawl Busters and considered “the guru of the anti-Wal-Mart movement” by “60 Minutes,” Bainbridge boutiques and shops will likely weather the initial impact of Wal-Mart, but the damage to other anchor businesses will eventually erode the entire island’s economy.

“Wal-Mart will not have an impact on unique, niche stores that sell products dissimilar to Wal-Mart,” he said. “But the grocery stores, hardware stores will be affected from 12 miles away, and the loss of those stores will weaken the base of the existing downtown.”

Areas near Wal-Marts showed an average 4.7 percent decline in the specialty retail sector during the first year after a Wal-Mart opened, according to a five-year study conducted by the University of Maine and Iowa State University.

The decline lessened and eventually stabilized as businesses folded or adapted. The retail sector for non-Wal-Mart towns showed an average 2.5 percent increase during this same time period, “implying that Wal-Mart might have a negative impact on specialty stores.”

Mikami believes additional retail drain may occur as small businesses prefer to open near anchor businesses like Wal-Mart.

Dwyer hopes the answer for both island shoppers and retailers is unified.

“With Wal-Mart, a lot of people have this feeling that it’s this large, predatory retail corporation and that they come into a community and undercut prices and put people out of business,” he said. “We hope that doesn’t happen. Hopefully, people will shop local first and Bainbridge businesses will differentiate themselves with quality and service.”

* * * * *

Price wars

The documentary “Wal-Mart: the High Cost of a Low Price” will be shown Thursday starting at 7 p.m. at Bainbridge Commons on Brien Drive. Speakers, including local land use attorney Ryan Vancil, will discuss Wal-Mart’s local implications starting at 8:35 p.m. Admission is free.

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