Archive for Thursday, July 19, 2001

Eudora losing retail dollars to other towns

Economist offers ideas for keeping tax dollars in town

July 19, 2001

Consider your household and your neighbors on either side.

Conceptually, only one of you spends any money in Eudora.

Statistics from the Kansas State University Research and Extension office show that the city's 2000 pull factor, a balance of retail trade in the business community in a given year, was .33. That means only one-third of Eudoran's sales tax money is staying in Eudora.

David Darling of the KSU Research and Extension presented information to help De Soto deal with its slow retail spending at last week's De Soto Chamber of Commerce meeting.

Darling's checklist for success asks communities to rate themselves in different areas. Eudora fares well in some categories, like its proximity to K-10, two car dealers, a drug store and a hardware store, and community attractions like the CPA Picnic.

"If you think of the town of Eudora as a shopping center, what are your anchor businesses?" Darling said.

Shopping mainstays

Grocery stores are the top anchor store, but car dealers come in close at number two because they generate a tremendous amount of retail action.

Shaun Henry, owner of East 23rd Street Auto Sales, said he was surprised auto dealerships were anchor businesses because cars are usually something for which consumers shop around at many different dealerships.

Henry estimated that about 20 to 25 percent of his business came from Eudora, the rest coming from surrounding towns like Linwood, Baldwin City and Tonganoxie with a small amount of business from Lawrence.

"I definitely get more business from small town people," Henry said. "Small town people like to deal with small town people. They get intimidated by the bigger businesses."

The company, once in Lawrence, bought the Eudora location and closed the Lawrence operation. Henry said the business benefited somewhat by being in Eudora because it owns the property rather than renting.

"We're in charge of our own destiny here," he said.

Having fun can boost a community's pull factor as much as retail action.

"Any time you can celebrate community that's a good thing," Darling said. "If you can bring people outside the community, all the better."

Shopping around

Despite community activities like the CPA Picnic and anchor stores, Eudora doesn't fare as well in other categories. The town doesn't have a store selling general merchandise, and competitors like Super Target in Lawrence's South Iowa shopping district are a little more than 10 miles away. Eudora also doesn't have a hospital and isn't the county seat.

When Darling spoke to the De Soto Chamber of Commerce, the group discussed the fact that what consumers perceive as a bargain isn't always as cheap. Going the distance to travel to a chain retail store to save pocket change isn't always worth it.

For instance, to really save money buying a screwdriver at the South Iowa Wal-Mart instead of at Arrowhead Hardware in Eudora, shoppers should make sure they're saving more than 50 cents, depending on their car's average miles per gallon. For a car getting 25 miles per gallon, it takes about 50 cents worth of gas at $1.25 per gallon to get to the superstore.

While perceived lower prices and larger selection may drive consumers to shop out of town, service-related business, like medical care, keep residents at home.

According to Darling's research, shoes are the most purchased out-of-town item while consumers shop locally most often for their plumber.

Keeping it local

People shop according to a hierarchy, Darling said. Consumers begin with their own market. If they can't find what they need there, they go to the next biggest market. For Eudora, that's Lawrence. But for people in Ottawa, where Kansas City suburbs and Lawrence are about equal distances apart, shoppers skip the hierarchy and head to Olathe or Lenexa.

Generating hometown retail differs, depending on whether the businesses are locally owned or chain stores.

"Local businesses are run by people who are community leaders and active in the chamber of commerce, run for city government, chair charity committees," he said.

For managers of chain stores, the main goal is to run a bigger store, he said.

Moreover, money earned from local business stays in town while Wal-Mart's profits go to Bentonville, Ark., he said.

Henry, whose Eudora car dealership is four years old, agreed, saying that employee wages are the only money coming into the local economy from chain stores.

Pushing for the pull

Towns can actively increase their pull factor, Darling said, citing Sabetha as a role model.

Along U.S. Highway 75, businesses like Alco and Dollar General have popped up alongside the grocery store that moved from downtown.

How do locals feel about business moving away from downtown?

"Most hate it, but they patronize it anyway," Darling said. "Everyone has this memory of downtown. They've seen it on the TV, or someone told them or they've lived it."

In Darling's opinion, highways are the future of commerce.

"Businesses need energy, and they feed from where (business) is coming," he said.

Speaking as a business owner, Henry said Eudora needed to maintain a strong school system and strong banks. He was also concerned with conveniences like drive-up windows at banks to keep money in Eudora. Additionally, businesses need to make themselves visible, the dealership owner said.

"Local advertising for local businesses is a good thing," Henry said.

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