The Retail Explosion Never Before Have So Many New Retailer Stores Entered The Spokane-Area Market At The Same Time

Spokane shoppers headed out with their Christmas lists are finding more choices and lower prices this year.

Spokane County has experienced explosive retail growth during the past year. Market observers say they’ve never seen so many new stores enter the region at once.

“There was a fair amount of retail growth in the late 1970s, but nothing of this magnitude,” said John Morrow, a commercial real estate broker and owner of Situs Realty Group.

Competition in everything from sporting goods to electronics spells good deals for shoppers.

“Consumers are in for a good time,” said Shaun Higgins, sales and marketing director for The Spokesman-Review. “There’s huge competition in home improvement and electronics. You have major players fueling that fight.”

Among the new retailers leading the charge is the 750,000-square-foot Spokane Valley Mall, with dozens of stores, including many new to the Spokane market.

The county’s first Wal-Mart, two new Circuit City stores, two Gart Bros. sporting goods stores, the first Home Depot, the first CompUSA computer store and a second Toys ‘R’ Us also have joined the fray.

That alone totals more than 1.2 million square feet of additional retail space. In comparison, NorthTown Mall alone has just under one million square feet of space.

“Retailers have recognized that Spokane was a growing market that had not seen a lot of growth for a while. It was a market that had pent-up demand,” Morrow said.

That demand is resulting in huge grand openings for new retailers. After Home Depot opened at Sprague and Fancher in October, Store Manager Tom Raynor said Spokane’s grand opening sales were the strongest in Washington, despite the fact that the company’s 12 other stores are on the state’s more populous west side.

“It was the best in terms of traffic and sales,” Raynor said. Home Depot, he added, had been looking for sites in the Spokane market for three years. The company’s second store is under construction north of the Division Street “Y.”

“The population supports it,” Raynor said. “A lot of middle class people who work hard and like to do things themselves - that’s generally who our customer is.”

Likewise, after Wal-Mart’s grand opening in June, Store Manager Joe Hawkins raved about the sales and customer traffic. Then, on the day-after-Thanksgiving annual shopping frenzy, Hawkins said Wal-Mart, near I-90 and Sullivan, surpassed its opening day activity. Some 400 people were waiting outside the door when the store opened at 6 a.m.

The arrival of big players like Wal-Mart and Home Depot surely will drive prices down. Doug Morton, president of Gart Sports, which opened two stores here in November, said when his company researched Spokane, it found sporting goods prices higher than markets in cities like Denver.

“We generally found prices in Spokane to be fairly reflective of a non-competitive market,” Morton said. “I think our presence will bring prices down.”

Market observers say a variety of factors brought on the wave of new retailers. The expansion of the “big-box” retailing format, Spokane’s economy, and increased competition all contributed.

In the early 1980s, Best and Kmart were pioneers when they opened stores near Sprague and Sullivan.

Shortly after that, big box retailing, as a format, began to grow in strength, said Joe Ward, owner of Pinnacle Realty, a commercial real estate firm. Big box retailers are those that build huge warehouse-type stores and are able to buy such large quantities that they can offer deeply discounted prices.

Unfortunately, Spokane’s economy hit the economic doldrums in the mid 1980s, which made it an unappealing place in which to open new stores.

When Spokane’s economy began to pick up in the early 1990s, many big box retailers had already saturated larger metropolitan areas and began to look for smaller markets. Many big box retailers are public companies with strategies of continued expansion to keep stock prices strong.

In 1990 and 1991, Spokane experienced a retail boom. NorthPointe Plaza opened on Spokane County’s North Side, bringing the region’s first Target store and first T.J. Maxx clothing store. Around the same time, NorthTown Mall completed a major expansion and other large discount stores, such as Eagle Hardware and Garden, opened Spokane stores.

At the nation’s biggest retailing convention, held yearly in Las Vegas, Spokane’s commercial brokers became more popular, Morrow said.

“There were years in Vegas where people laughed at Spokane,” Morrow said. “They’d say, ‘Why would I want to do a deal in Spokane?’

“Then people welcomed me in,” Morrow said. “They’d say, ‘Oh, you’re from Spokane? Come on in, let’s talk.”’

Ward said the commercial real estate community is small. Most of the representatives know each other and they find out about new territory for stores by talking to each other.

“They all started talking about Spokane,” Ward said. Once one company said it had been successful in Spokane, everyone wanted a piece of the action, Ward said.

Despite the success of the retail boom of the 1990s, Higgins said, what’s coming could easily surpass that.

“We are now entering a phase that will equal or exceed the impact of the earlier expansion,” Higgins said.

Higgins expects retail sales to increase 4 to 5 percent in 1997, compared with 1996 and another 5 to 6 percent from 1997 to 1998.

“Consumers will have a heyday and that is not going to change for sometime,” Higgins said.

Higgins pointed to the $50 million expansion of NorthTown Mall and the $100 million redevelopment of River Park Square, which will add two more slices to the retail pie when they are completed in the next few years.

Higgins said he also thinks another department store and a large discount bookstore, such as Borders Books or Barnes and Noble will soon join Spokane’s retail mix.

Also, many of the big box retailers already here are not finished with Spokane yet. Wal-Mart is searching for a North Side site and Home Depot is building its second store. Fred Meyer is building a new store in the Wandermere area and PETsMART, a discounter of pet supplies, is building a North Side store to join its first store in the Valley.

The growth won’t go on forever, Higgins said. By the year 2000, some of the big box retailers will go out of business, he predicted. Competition will be fiercest, he said, in electronics and hardware.

That might make some smaller retailers nervous. When PETsMART and Petco, two pet supply leaders, opened within a mile of each other in the Valley a year and a half ago, Evergreen Pet Shop, an 8,500-square-foot store, was sandwiched right in the middle. The owners of Evergreen decided then that personalized service and their years of experience in the market would keep them alive.

That’s exactly the attitude smaller retailers should take, Higgins said.

“You provide special services and you get to know your customers really well,” Higgins said. “The nature of the free market is that it’s competitive out there and contrary to popular opinion, price is not everything. It boils down to personalized service.”

That’s the plan at Aspen Sound as well.

The 15-year car stereo specialist has two stores in Spokane, one in Missoula and another in Kalispell, Mont. The fourth store, opened a year and a half ago, is right on the front lines. It’s located less than a mile from two big box electronics dealers, Future Shop and Circuit City. Car Toys, a national chain that sells car stereos, opened nearby two months ago.

Rich Perry, manager of the newest Aspen Sound, said the key to survival for smaller retailers is developing a niche and delivering reliable customer service.

“That’s why we get a lot of the business,” Perry said. “They’re so big they can’t focus their full attention on service. They can only focus on price.”

Perry said despite Spokane’s growth, people here still have a small-town mentality. Building rapport with customers over time goes a long way toward building a successful retail business, he said.

“They (the big box retailers) open all these stores and want to go national,” Perry said. “You don’t get that steady sales person you can always rely on.”

, DataTimes ILLUSTRATION: 2 photos (1 color) Graphic: Taxable retail sales