Success story: Community-owned Wyoming mercantiles lead the way

POWELL, Wyo. – Ione Jackman journeyed here on a quest for answers about a pressing problem back home.

Story and photos by MIKE STARK
Gazette Wyoming Bureau

http://www.billingsgazette.com/index.php?id=1&display=rednews/2003/12/21/build/business/30-coops.inc

In Ely, Nev., J.C. Penney is closing its downtown store because it’s not making enough money. When the doors close next summer, the nearest department store for Ely’s 5,000 residents will be more than 100 miles away.

Jackman, who owns the building where J.C. Penney has been located, said locals tried to lure Kmart, Wal-Mart and other corporate retailers to their remote town but no one bit.

"They won’t even talk to you. They think it’s a big joke," Jackman said.

So she and a few others in Ely are taking the future in their own hands. One of their first steps was traveling to Wyoming earlier this month to visit the Mercantile in Powell, a community-owned department store that opened in 2002 and has been doing a booming business ever since.

"We wanted to see how they did it," Jackman said.

Impressed with what they saw and learned, Jackman and her group returned to Ely, made a public presentation about their visit and quickly persuaded the town to try their own locally owned store.

"We think we can make it work," she said. "Hopefully the downtown area will become alive and prosperous again."

Ely isn’t alone in wanting to emulate what has happened in Powell. The store has been contacted by a half-dozen other small towns in Wyoming and by people in Iowa, Nebraska, Pennsylvania and New York.

The success story at the Mercantile – where local investors own shares of the store and elect a board of directors – is becoming an alluring option for small towns struggling with the loss of corporate department stores.

"I think the thing that selling the shares does is it gets you some loyalty to your hometown store," said Steve Cooper, a Riverton businessman who also recently visited Powell in hopes of starting a similar venture in his town. "I think that’s the reason this is catching on."
Community ambition

The history of the Powell Mercantile is rooted in a common American theme these days – the struggle to maintain a viable downtown in the face of corporate demands and sprawling "big box" stores on the outskirts of town.

Powell looked to be one of the latest victims in 2001 when the Stage store, the latest owner of the downtown department store that had operated for generations, decided to pull out.

After unsuccessful attempts to attract a "big box" retailer to town, community leaders decided to try something different.

Taking their cues from community-owned department stores in Plentywood and Malta, the citizens of Powell formed a corporation and began selling stock to open their own store.

Roughly 800 investors bought shares in the company and in the summer of 2002 the Mercantile opened in a 7,500-square-foot space downtown that once housed a portion of the Stage store.

Since then, sales have taken off, topping projections of $500,000 in the first year.

"We surpassed the goal we had last year and this year is looking even better," said Ken Witzeling, a retired pharmacist who is now president of the Mercantile’s board.

In fact, things have gone so well that the store recently expanded into a 2,500-square-foot shop for children’s clothing. Although the addition is located in a basement a few doors down, business has been brisk.

"We’re confident it’s going to go," Witzeling said.

Working with buyer and consultant Mike Reile, a longtime department store manager in the area, the Mercantile has managed to attract customers from Lovell, Greybull, Meeteetse, Burlington, Otto and other towns in the region including Cody, which has a wealth of local shops, a Wal-Mart and a Kmart.

"Every day there’s Cody people over here," Witzeling said.

Inventory is mostly men’s, women’s and children’s clothing, shoes and accessories. Some of the Mercantile’s shoppers are investors but most of them aren’t, said Paul Ramos, the store’s manager. Many of them come for the personalized service and the prices, he said.

"We try to be comparable to the malls and big department stores," Ramos said. "We could make the prices higher but that might defeat the purpose of shopping locally."

There’s also the issue of convenience.

"Especially for the older folks, instead of having to make that trip to Cody or Billings, they can get in their car and drive the two or three blocks to get here," Ramos said.

The Mercantile has also played a key role in revitalizing downtown Powell. People often come downtown to shop at the department store and then stay to visit other merchants. Parking spaces, which sat empty with the absence of a department store, are now full most days.

Those spin-off benefits seem to keep local merchants and investors happy.

"At our annual meeting, not one person asked ‘When do we get our dividend?’ " Witzeling said. "We sold this as an investment in Powell as a community."

The profits will come, he said, but right now the money is being pumped back into the business.
A store in Worland

Like Powell, Worland lost its Stage department store a few years ago, a blow that left fewer and fewer people coming downtown.

"Worland was the shopping center for the southern Bighorn Basin 20 years ago," said Dan Frederick, owner of Hedge Music shops in Worland and Powell. "People were making the trip from Ten Sleep, Greybull, Basin, Thermopolis, even Meeteetse."

To fill the void, Worland followed Powell’s lead by establishing its own corporation. They raised $400,000 by selling stock to 328 investors.

Last June, community-owned Washakie Wear opened for business in the 12,000-square-foot store that was once home to Stage. Sales have been good.

"They’ve been almost perfectly in line with our projections," said Frederick, who is also CEO of Washakie Wear.

He said customers are eager to shop in Worland if the selection and price are right.

"We have people that are saying if we have this available to us, we’d love to shop locally, but we just haven’t had that available," he said.

Since it opened this summer, the store is seeing more and more customers from outside Worland, similar to what business used to be like downtown.

"We’re certainly not back where we were then but we’re seeing more people that are getting in the habit of stopping by," Frederick said.

The presence of the store has helped spur a renewed interest in downtown Worland as community leaders push for more events and improvements.

"Other retailers around us have noticed it, too," said the store’s manager, Richard Ramos, brother of the Mercantile’s manager. "Having Washakie Wear downtown to anchor it, it’s attracting more people."

Although they’re owned by different stockholders, the stores in Powell and Worland often work together in trying to provide merchandise that may be available in one store but not in another.

"We do a lot of shipping back and forth," Ramos said.

Frederick said he’s pleased with the success of Washakie Wear but not exactly surprised because the investment in the store – both by shareholders and shoppers – is an investment in the survival of Worland.

"I’ve decided the thing that made Powell and Worland go is the community interest. We’ve got towns that pull together to try to get something going," he said.
Spreading the news

In the coming years, others towns in Wyoming and elsewhere may test whether they have what it takes to support their own department stores.

Managers at the Mercantile and Washakie Wear have visited with representatives from Riverton, Torrington, Douglas, Rawlins, Gillette and Sheridan. With varying degrees of interest, all want to know how to set it up their own store and keep it running.

Cooper, the businessman pushing the proposal in Riverton, said the idea there is still in its infancy but interest is brewing in finding a replacement for the lost Stage and J.C. Penney stores.

"For people that live in rural Western states, there’s a need in a lot of our towns," Cooper said. "The response here has been very positive."

Do the initial successes of the Powell and Worland experiments mark an emerging trend in small-town retailing?

It’s probably too early to say, according to Tom Power, a professor of economics at the University of Montana.

The potential rise of community-owned department stores may embody two competing trends, he said.

"One is that consumers are paying more attention to where they’re buying products and who’s selling them," Power said. "Competing with that is shopping as recreation where a lot of rural people look forward to driving once a month to a large trade center."

It’s possible, Power said, that in places like Worland and Powell, locals may still trek to places like Billings for a day of occasional shopping and still support their locally owned department store on a more regular basis.

"So maybe both survive," he said.

Back in Ely, where locals are beginning to rally around the idea of their own store, Jackman said she’s hoping the model provided by Powell will help chart the course of a city at a crossroads.

"We want to keep our downtown alive and going," she said.

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