National retailers bring more choices for shoppers, tougher competition for small businesses
SALISBURY — A mini boom of national and regional retailers in Salisbury means more choices for consumers and a boost to the local tax base.
But it also means stiffer competition and an uncertain future for some mom-and-pop businesses that suddenly find themselves up against the buying power, brand recognition and advertising clout of a corporation.
When Jenni Pfaff, who owns a yarn shop in Spencer, heard Michaels Crafts was opening a 17,000-square-foot store beside the new Belk at Wallace Commons, she was scared.
“I was concerned, a little worried, but I think I need to turn that worry into positive action,” said Pfaff, who owns TranqWool Knitting Provisions.
Small, family-owned businesses in Rowan County can compete with the recent influx of retail giants like Michaels, Ulta, Sleepy’s, Shoe Carnival, Panera Bread and Badcock Furniture, economic development officials say. They might not be able to beat them on price, but independent retailers and restaurants often can provide more personal attention and tailored service.
Pfaff has taken Michaels’ arrival in Salisbury as a challenge to up her game and said other locally-owned businesses can do the same, whether they sell shoes, mattresses or lunch.
“You are going to see a pretty consistent voice of us saying, if you come in our stores, we’re going to give you a lot better customer service,” Pfaff said. “We all probably have to do this, educate our customers as to what your money’s worth.
“You may spend little bit more money, but you’re going to get better quality.”
Sheila Igo didn’t flinch when she found out Ulta Beauty was opening a beauty superstore and corporate salon just a few doors from her homegrown business, Greystone Salon and Spa, in Wallace Commons.
Instead, she took her staff to an Ulta location in Mooresville and paid for them to have hair and nail treatments.
“I believe that you have to know your competition,” Igo said.
She introduced herself to Ulta managers and checked out the services, products and prices she would be competing against.
“We are going to approach this head-on,” said Igo, who has a non-compete agreement to keep other salons out of the original Wallace Commons but not in the expansion, which has a different owner. “I’m not just going to lay down and not know what’s going on.”
Igo said she immediately saw ways that she could hold her own against Ulta.
“We absolutely can compete,” Igo said. “Our philosophy is totally different.”
Igo, whose staff has grown to 25 full- and part-time employees in three years, said she will emphasize Greystone’s broader service menu, as well as the pharmaceutical-grade products she sells under a doctor’s supervision. She said she will meet Ulta’s prices on brands they both carry.
“They’ve got buying power that I do not have,” Igo said. “They can sell products cheaper, but I will try to be aggressive and take a cut on my profit to compete with their prices.”
She’s considering adding some services that Ulta offers, such as 20-minute treatments, and said she feels buoyed by the growing “shop local” movement. More consumers are realizing that small businesses are the “fuel of the car for America to grow,” she said.
Philanthropy can help small businesses cement their relationship with consumers and strengthen their communities, Igo said. Last year, Greystone provided more than $10,000 in free services to single moms and foster children, she said, and clients like to support businesses that give back to the community where their employees live, work and go to church.
“I welcome Ulta,” Igo said. “They are great women, and I support any woman in business. We have done fabulous for three years, and we will continue to do well as long as we love our clients and continue to give back.”
Unlike upstart Greystone, Ralph Baker’s Shoes has been in business since the 1970s, when there were many places in downtown Salisbury to buy footwear, owner Ralph Baker said.
Baker said he’s happy that national chain Shoe Carnival has moved into Wallace Commons.
“I’ve always liked competition. Competition is good for everyone,” said Baker, who has about 10 employees. “The more people who come to Salisbury, the bigger the pie. I’d rather have a big pie and split it four ways than a smaller pie.”
With so many empty storefronts downtown, Baker said he’d like to see two or three more shoe stores in the heart of the city. Locally owned businesses can compete with national chains if they focus on customer service, he said.
“Bring them on,” Baker said. “We need more businesses all over town and all over the county.”
Rowan County does need more retail.
Every year, residents spend more than $200 million on retail goods and services outside Rowan and online, according to 2011 figures from RowanWorks Economic Development Commission. It’s called “retail leakage,” and the EDC and partner agencies — the Chamber of Commerce, Downtown Salisbury Inc. and the Tourism Authority — are all working to stem it.
The only retail sector in Rowan that brings in more money than it loses to other counties is automotive sales.
After a lengthy retail drought, new developments now boast eight new or expanded corporate businesses at exits 74 and 76 on Interstate 85, with space for one more next to Panera. Badcock has moved into the beleaguered Salisbury Mall.
More retail could be on the horizon, and soon.
The Chattanooga, Tenn., developer who expanded Wallace Commons is making progress toward landing a national anchor tenant for the proposed shopping center in Summit Corporate Center. Hutton Growth One has eight months remaining on an 18-month option to buy 54 acres of county-owned land.
Other developers are eyeing Rowan for a variety of retail and services, EDC Executive Director Robert Van Geons said, and smaller independent businesses in North Carolina and South Carolina are considering expanding into the county. He calls the interest level “substantial.”
“We have a good geographical location and a significant population draw,” Van Geons said. “Retail has recognized that we are a market where there’s a lot of opportunity.”
Baker’s point about expanding the pie is on the mark, Van Geons said.
Once most shoppers hit the interstate, Rowan County has lost them. During that excursion, they likely will do all of their shopping, dining and entertainment outside of Rowan, Van Geons said.
Then, all businesses in Rowan County lose, including the mom-and-pops.
More local choices translates into more shoppers for everyone, Van Geons said, and keeping sales tax dollars in Rowan.
“Having these new retail operations gives us a much better chance to keep consumers here,” Van Geons said. “We want to build and interconnect our unique businesses and individual businesses with our large retailers.”
It’s too soon to know how the mini boom will impact sales tax and property tax revenues for Salisbury and Rowan County, Van Geons said, but it will be significant.
National retailers also can help lure commercial and industrial development. Well-known retail and restaurant brands are a quick way to gauge the vitality of a community, Van Geons said.
While chain stores have a “very positive impact,” locally owned businesses still leave a bigger mark on a community, he said. The unique shop or restaurant, not the cookie cutter, is the one that makes consumers want to return.
“They have the opportunity to compete with better service and unique offerings and creating a really special customer experience,” Van Geons said. “There are tens of thousands of Starbucks and Paneras, but it’s the Koco Java that somebody’s going to remember as being unique and special.”
Customers can develop an emotional connection to that kind of business.
Panera, one of the fastest-growing restaurant chains in the United States, opened this summer on East Innes Street, and some locally-owned restaurants have taken a hit.
Laura Murph, who has owned and operated L.A. Murph’s Fine Cooking for six years on West Innes Street, said Panera has had a “tremendous impact” on her business, which offers dine-in lunch and dinner, take-out entrees, catering and a full-service bakery.
“We have definitely seen a slowdown in the lunch business,” Murph said.
Catering orders, which make up a large portion of Murph’s business, are also down significantly from this time last year, she said. Murph said she’s been in professional offices that previously used her catering service and seen platters of sandwiches and salads from Panera.
Murph, who employs 14 full- and part-time workers, hasn’t let anyone go during the slowdown.
“Being a small business and being as close as we are, I have done everything in my power to retain these people,” she said. “On slow days, I do have to send people home early, but letting someone go is beyond the realm of my imagination.”
L.A. Murph’s continues to have a strong niche in take-out entrees, Murph said, and will work to bring back customers in other segments of the business. She said she can’t compete with Panera on price because the chain buys in huge volumes at much lower cost, but L.A. Murph’s can offer more variety, better quality —everything is homemade — and a relationship. Employees can call most of their customers by name.
When people support local businesses, their money stays in the community, Murph said.
“It goes to help my employees send their kids to camp or put food on their tables, pay their mortgage,” she said. “The buck stops here. It’s not helping some CEO buy a second or third house.”
Panera also made a dent in sales for Sidewalk Deli, said Rick Anderson, who has owned the downtown landmark for almost two decades. Anderson predicted the novelty of some of the new national chains will wear off.
“At this point, I’m just trying to keep my quality high and consistent and just doing the same thing I’ve done for 17 years, to keep it as sharp as I can,” Anderson said in September. “People will want to try the news things, but if I keep things good, people will come back.”
A month later, Anderson’s prediction is becoming reality. He said sales are back up.
Manager Nick Bishop said Stoudemire Furniture in Spencer has been competing with big box stores for 20 years, long before Badcock ventured into the Salisbury Mall.
Bishop said chains don’t have a huge impact on Stoudemire because the shop has carved out a niche with better customer service, including delivery and set-up and more variety. For example, customers can order exactly which pieces they want in a bedroom suite and easily change upholstery fabrics, he said.
“If you have problems, you can come and complain to us instead of going through a whole procedure to get something corrected,” Bishop said. “You don’t have to call corporate headquarters.”
Taylor Mattress owner John Heilig has a similar view. Heilig said he’s not worried about Sleepy’s mattress store, opening soon at Wallace Commons, or any other chain.
“I’m not in the kind of market that I compete with these people,” Heilig said. “I don’t want to, and I never wanted to. But the more junk they sell, the faster the turnaround for people to come and see me.”
He said about 90 percent of his business is made up of disgruntled big-box customers. Heilig no longer manufactures mattresses, and his South Main Street plant is for sale as he attempts to downsize to a storefront. The mattresses are now produced in a friend’s factory in High Point, but to Heilig’s specifications.
“It’s still my mattress, still my recipe,” he said. “We just cook it in his kitchen.”
Big box stores often dictate how much people are willing to spend on products, even when locally owned stores offer higher quality. Heilig said that won’t change until the economy improves and people are earning a higher wage.
“Until we’ve got more people in this town with more disposable income, retail is just going to continue to be the lowest common denominator,” he said.
When the Rowan County Chamber of Commerce launched its buy local campaign this year, the group was sure to include national retailers along with mom-and-pop businesses.
“All of those folks are our neighbors and friends and family members,” Chamber President Elaine Spalding said. “We want to support all businesses in the community that employ people and support the community.”
Panera, for example, donates food every day to Rowan Helping Ministries, Spalding said, and the new Belk is doing “everything they can” to reach out to the community.
Salisbury and Rowan benefit from a mix of locally owned businesses and national and regional chains, she said.
“That’s the best of all possible worlds, when there are lots of options for our citizens,” Spalding said.
Many national retailers and developers are trying to replicate what Salisbury already has — a hometown feel with unique southern charm, she said.
Pfaff, the TranqWool owner, said competition from a national retailer has caused her to differentiate her shop by focusing on second-to-none customer service. She started a wish list, where customers fill out a card with their favorite yarns, knitting supplies and art from her other business, the Green Goat Gallery.
Pfaff keeps track of her customers’ birthdays and anniversaries. Recently, as a special date for one customer approached, Pfaff texted the woman’s husband photos of items on his wife’s wish list.
The husband texted back with his choice. Pfaff wrapped the gift and mailed it that day. The husband sent a check and never stepped foot in the shop.
While she won’t buy yarn or art there, Pfaff acknowledged that she’ll probably shop at Micheals too. “The more I think about it,” she said, “it’s going to force me to be a better business person.”
Contact reporter Emily Ford at 704-797-4264.