By Lorna Gutierrez
JCPenney. Macy’s. Sears. Kmart. These brands have been around for generations. Now, in an increasingly competitive environment, many of these stores are closing.
The nationwide mix of closures has also hit retailers including Payless ShoeSource (400 stores), Abercrombie & Fitch (60 stores), Guess (60 stores), Wet Seal (171 stores), Staples (70 stores) and CVS (70 stores).
Colorado Springs is holding its own in the midst of the closures, though — and that is perhaps a testament to a city that is showing strong economic progress, as smaller retailers continue to grow. Take, for instance, University Village on North Nevada. Both UCCS and Westsiders have reaped the benefits of the new hot spot’s growth, anchored by Lowe’s and Costco and populated by several smaller retailers and a variety of restaurants.
“One of the aspects of Colorado Springs is that we have a good balance between big city and small town,” said Dirk Draper, president and CEO of the Colorado Springs Chamber & EDC. He added that being able to see and access goods is an essential part of the buying experience of many consumers.
And those retailers taking a hit?
Online competition can, in part, take the blame. According to a recent report by Women’s Wear Daily, online retail sales amount to $201 billion annually (accounting for 180 companies tracked by eMarketer). The top 25 retailers accounted for $159 billion of that, or about 80 percent.
Amazon.com, Walmart and Apple took the top three spots. And of those 25 retailers, 18 of them also operate brick-and-mortar stores. Sears Holding Corp.’s online presence, which includes both Sears and Kmart, currently accounts for 7.9 percent of its revenue.
JCPenney.com has seen double-digit revenue growth of its e-commerce site, and 75 percent of its online orders passed through a physical store, according to a recent JCPenney news release. However, the company is in the process of closing 138 stores (approximately 13 percent of the company’s store portfolio, which represents less than 5 percent of total annual sales), as well as two distribution facilities. JCPenney decided to invest more in stores focusing on beauty, home wares and specialty clothing sizes, as they generate significantly higher sales. The cost savings is estimated at approximately $200 million.
“While any actions that reduce or exclude our presence in communities across the country is always difficult, it is essential that JCPenney continues to evolve in order to achieve long-term growth and profitability and deliver on shareholder value,” said Marvin R. Ellison, chairman and chief executive officer of JCPenney.
About 6,000 workers are affected and will qualify for a voluntary early retirement program. JCPenney representatives say more workers are eligible for the program than will be affected by the closures.
JCPenny’s Colorado Springs locations will remain open but four locations in Colorado (Fort Morgan, Glenwood Springs, Longmont and Sterling), will close.
A surprise to some, perhaps, would be the faith Amazon.com has in the brick-and-mortar model, as it has begun setting up physical bookstore locations in cities throughout the country.
So what is a brick-and-mortar store’s greatest asset? Sometimes it’s an experience online shopping can’t offer. And sometimes that comes in the form of a unique boutique.
Leah Fitzgerald, a manager at Terra Verde, a popular downtown boutique that has been serving its Colorado Springs clientele for nearly 25 years, said it’s the experience of exploring that brings customers back — that and customer service.
“No matter what, customers come first. You don’t get that online,” she said.
Draper said that while Colorado Springs has seen some closures since the recession, many retailers are not only holding their own, but are thriving.
One of those businesses is Poor Richard’s, which has stayed strong as a downtown staple through good times and bad. With 54 employees, it’s withstood the test of 45 years — and, according to its Chief Operating Officer Laszlo Palos, it pays more than a living wage.
Many factors go into making Poor Richard’s, and any store for that matter, successful. Its decades in business have meant spanning generations of customers.
“We have children that used to play back in the play area in the restaurant now come in with their own kids. Regardless of age, every customer is important to us. … If they have fond memories, they come back,” Palos said.
In addition, it recognizes the value of offering customers locally sourced products, including gluten-free breads from a family-owned and -operated company, Outside the Breadbox, which has a bakery in Old Colorado City.
“We try to source [from] as many local food vendors as we possibly can,” said Palos. Poor Richard’s also has local jewelers, artists and photographers represented.
Studies show that locally sourced products have proven to be an important issue for Millennials and younger Gen Z consumers.
“It’s a longer race, as opposed to a short-term race,” Palos said about avoiding mass-marketed consumer goods. “In the long term you win because, even though you may spend more money, people want to go places where they feel their values are represented.”
Colorado Springs was recently voted one of the top metro areas to start a business by CNBC. The city, coming in at No. 13, is noted for having access to the large Denver metro market as well as the smaller, but reputable, Pueblo market. In addition, a competitive tax environment (corporate income tax is 4.63 percent) as well as a fairly low cost of living, aids the ranking.
Craig Lebsack, senior leasing representative of POAG Shopping Centers, which counts The Promenade Shops at Briargate as a client, sees Colorado Springs as an ideal place for retail.
“Colorado Springs is an attractive market for several reasons,” said Lebsack. “The local economy is fairly diversified with the local government, the Armed Forces are located there and it’s a growing area that’s attracting new, high-tech industries, which is attractive to retail businesses.
“Another important factor is it is the second-largest MSA in Colorado and is attractive to tourism — Colorado Springs is the gateway to Pikes Peak,” he added. “There are a lot of good attributes to Colorado Springs … retailers recognize all of those things.”