‘Big box’ retailers seem to love Chico, but are there enough Chicoans to keep them in business?
Love ’em or hate ’em, it’s impossible not to notice the many huge retail chain stores that have made Chico home in recent years.
Especially in south Chico, but increasingly everywhere else in town, too, Chico is beginning to look a bit like an urban jungle—albeit a well-planned one. The Chico skyline, once broken only by a power pole or two, is now lighted by the neon signs of an increasing bevy of retail giants (read: Wal-Mart, Home Depot, Lowe’s, Old Navy and Best Buy). In a lot of ways, these new neighbors have changed life in Chico.
Their presence and continued interest in locating here, say financial analysts, is a sign that the economy here is as healthy as the proverbial horse, that local home prices will probably continue to rise, and that people here have the money to spend that these “big box” retailers want.
But historically, Chicoans have been proud of the city’s small-town atmosphere and its previous lack of widespread chain stores. Generally, we like to shop locally.
But the city gets almost 50 percent of its general-fund revenues from sales taxes. That means that while the city is dependant on these big stores to bring in the big bucks (the bigger the store, the bigger the sales tax roll), it has to walk a fine line between attracting the retail giants it needs to grow and maintaining the small town quality of life that people move here to enjoy in the first place.
It is, noted City Manager Tom Lando, “the eternal paradox.”
“The more desirable you are as a city, the more people want to move here, the more people live here, the busier it gets, and so on,” Lando said. “It’s something every growing city struggles with.”
Chico’s big growth spurt really started in 1980, when the city was re-classified as a “metropolitan statistical area.” That designation, said Center for Economic Development Director Dan Ripke, put Chico on the nationwide “retail map.”
“The big retailers have charts and graphs that show where growth is happening … and where business opportunities are,” Ripke said. “Once you’re on the chart, everyone knows about you.”
And so it was with Chico. Eight years after being designated as an MSA, in 1988, the Chico Mall was built, starting the retail gold rush in south Chico. Before the mall was built, Chico had a total of about 1 million square feet of retail space. The mall added 500,000 square feet to that, and since then, Lando said, retailers have increased their square footage in Chico by an average of 250,000 square feet every year.
Lando acknowledged that while that’s a whole lot of retail space, Chico has always been the retail hub for the more economically depressed surrounding cities and counties. Last year, there was almost $981,000 in taxable retail sales within Chico’s city limits—a number that has been rising steadily for years.
“That’s been since the inception of the town,” Lando said. “Everyone comes here to shop.”
But Ripke added that there’s a danger to this retail boom. When so many competitive chain stores start moving into any smallish town, not only do they often drive smaller, locally owned firms right out of business, they compete with each other so heavily that almost always one of them ends up closing and letting go dozens of employees.
“It’s really a danger of oversuccess,” Ripke said. “Retailers figure out that there’s a demand for, say, office supplies or building materials, so they move here and start competing … and eventually, there’s a winner and a loser. You see it everywhere.”
Including, of course, Chico. The most recent major closure announcement came from House 2 Home, which, when it was Home Base, competed mightily with do-it-yourself behemoth Home Depot, just down the road.
Lowe’s, which carries many of the same products as Home Depot and the former Home Base, just opened last month. It has yet to be seen if it will be around in five years, Ripke said, given the fact that there’s also an Orchard Supply Hardware (OSH) under construction in town.
“When you have a market as tight as this one, the profit margins are going to be very small,” Ripke said. “There’s no way smaller retailers can compete with them.”
Even so, Vic Makau has been successfully competing with many of these big-box retailers for years. Makau, who founded A1 Plumbing Supply himself more than 20 years ago, said that he’s seen dozens of large retailers open up shop with a lot of fanfare and then close almost silently.
He ticked off a list of failed big-box retailers that closed up shop in Chico since he’s been in business: Fisco, Fred Meyer, Grossmans, Pay & Pak, Biggers Home Center, Ernst, Home Base (which was formerly called Home Club), Handyman and Gemco.
“I just find it sad for the people that work for these places,” Makau said. “They probably have high hopes when they open, but I always think, ‘I wonder how long they’ll be around before they pack up and move out.’ There’s all this fuss when they arrive, and then they’re gone, and I’m still here.”
He added that many of the 18 employees working for his company worked for the big-box retailers before, and all of them report that working conditions in smaller companies are far better. He said he provides all his employees with health insurance and two weeks’ vacation every year.
Jeannie Burgess is one of them. She started working for Home Club in 1988, as a customer service representative. The store was renamed Home Base in the early ‘90s, and she continued working there and enjoyed it. It wasn’t until the owners decided to again change the store’s name (to House 2 Home) and inventory last year that things got bad.
She was told she could keep her job, but only if she took a one-third pay cut—along with many of her coworkers. Feeling abused—she’d worked for the company for almost 13 years, after all—she quit and quickly was offered a job at Makau’s company.
The difference between working for a locally owned company and a retail chain, she said, is “like night and day.”
“Here, it’s really like a little family,” she said. “Everyone knows each other, and their job, and it just works better. … There’s not the big communication problems that you get at the big places. I mean, the owner is here every day.”
She added, though, that many of her former co-workers from Home Base weren’t so lucky. Many of them chose to keep their jobs—even with a pay cut—at House 2 Home and will be out of a job soon, she said.
“I’m glad I left," Burgess said. "Because who knew that they’d be closing four months after they opened. I feel sorry for the kids who believed their promises and stayed on."