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5/7/2017 6:36:00 PM
Terre Haute feels retail's shake up

Howard Greninger, Tribune-Star

Retail is in a shakeup in Terre Haute.

HHGregg has closed after filing bankruptcy and finding no buyer.

The city is one of 50 locations to lose a Sears Auto Center. Terre Haute’s center is located at the Honey Creek Mall.

The Honey Creek Mall in 2013 reported that 97 percent of the mall store space was leased. By 2016, that lease percentage dipped to 93 percent, according to Mall owner CBL & Associates annual Form 10-K report with the U.S. Securities and Exchange Commission.

And another store, Gander Mountain, has an uncertain future in Terre Haute. The company filed for bankruptcy in March, initially planning to shutter 32 stores, but that could be as many as 160 stores after Camping World won a bankruptcy auction of Gander Mountain assets for $390 million. Camping World CEO Marcus Lemonis in a statement after the auction said at least half of Gander Mountain stores will close.

“This started more than a decade ago. It is Internet retail and it will continue to grow,” said John G. Ragle, president of Ragle & Company, which owns the Southland Shopping Center and Corporate Square Office Complex in Terre Haute.

“My thought is Internet retailing is now entering adolescence. It is out of its infancy, but still has a long, long way to go,” Ragle said. “It has definitely had an impact,” he said as several shopping areas in Terre Haute have vacancies. “It is not rocket science and it will continue.”

That means nearly any merchandisable commodity can be obtained on the Internet, Ragle said.

As illustration, Amazon’s market value as of Dec. 30, 2016 was $355.9 billion, more than the combined $297.8 billion market value of Walmart, Target, Best Buy, Macy’s, Kohl’s, Nordstrom, JC Penney and Sears, according to 

In 2006, Sears has a market value of $27.8 billion, but fell to $1.1 billion by 2016. Contrast Amazon’s $17.5 billion in 2006, which grew to its 2016 value of more than $355 billion, the web site reports.

“What I see as surviving, so far, are small convenience strip centers, where services like hair cuts or dry cleaning or pharmacy or coffee shops are located. Drug stores are somewhat insulated,” Ragle said.

“I would not want to own a lot of the big box anchor strip centers. I think the small neighborhood convenience center with a dollar store, barber shop and cell phone store will not be hit as hard. Retail has become tougher and tougher primarily from Internet retail,” Ragle said.

A retail hub

Terre Haute is unique in that it is a destination retail hub, being the largest retail center between Effingham, Illinois, and Indianapolis.

Yet, don’t expect the retail to be an engine of economic growth, says Kevin Christ, associate professor of economics at Rose-Hulman Institute of Technology.

“In terms of employment for the area, retail has always been important — retail and restaurants account for about a quarter of our region’s employment,” Christ said. “Since 2009, the region’s employment in restaurants and retail has actually gone up by about 4.4 percent — but most of that has been in restaurants.  Retail has been flat,” Christ said.

Christ said while he is not overly optimistic about how retail trends are going to affect the regional economy, he is “not overly pessimistic either.”

Christ and Robert Guell, economics professor at Indiana State University, wrote a 2017 economic outlook for the Indiana Business Review. The two point out the addition of Meijer and other retail shops along the Indiana 46 corridor on Terre Haute’s east side, as well as some “new eateries” along South Third Street.

However, the stores “may represent little more than a shuffling of previous restaurant spending,” the outlook report states. And the report states that the “single largest concern for regional retail centers like Terre Haute (which heavily rely on local sales) is that web retailers are not finished gobbling up market share.”

Christ said the “point in our outlook is that we wouldn’t look to this sector for any significant growth. New retailers might come into the market, but we suspect they will just cannibalize other retailers’ sales, and thus replace other retailers’ employment with their own,” he said.

“As a retail hub, Terre Haute will probably stay in the game, but retail is not likely to be an engine of growth,” Christ said.

Changing business models

One Terre Haute store owner is an example of a shuffling of community spending, but not for restaurants, instead in sporting goods.

Brent Compton, owner of PaceSetter Sports, has been involved with the sporting goods store, established in Terre Haute in 1982, for 26 years.

Compton said his business’s biggest test came within the last year, when it was challenged from big box retailer Academy Sports.

“We had never, for 30 years, faced that kind of adversity, that kinda challenge that gobbles or takes up that kinda market share,” Compton said. “The retail market now has more avenues for people to buy things, which is part of the problems for Sears and HHGregg. People can go online for items and services and more and more people, especially young people, are more comfortable doing that,” he said.

That has forced PaceSetters to recreate its business model, Compton said, focusing on the grassroots investment of the community, he said.

“The biggest engine for us is probably being involved in the fabric of the community, with local soccer leagues, with little leagues and travel teams and school teams,” Compton said. “That service with leagues, especially in our running community with the Wabash Valley Roadrunners and Trained in Terre Haute, is important.”

“There is a value in being able to touch, see and try it and have someone who has knowledge, first-hand knowledge” of sporting equipment, Compton said. “It is people who know where Linton is at, where Casey, Illinois, is at, where North Vermillion is at and where Clay City is at and we have employees from all of those communities. We make sure we show we are really invested in the fabric of the community.”

Compton said the store has held special events, such as a baseball day, offering discounts to high school, club and community teams coinciding with the first day of practice. It has also held a softball day and a track and field day “where we reach out and personally and individually invited (coaches and teams) creating a relationship with them. For stores like PaceSetter, that is the only way to survive. You have to have relationships not only with leagues but with local athletes to give them a reason to want to come inside the building,” Compton said.

Last week, the Terre Haute Chamber of Commerce celebrated National Small Business Week, which Chamber President David Haynes said demonstrates how important small businesses are to the economy. Small business accounts for nearly 80 percent of the chamber’s membership, Haynes said.

A coming adjustment

It’s small business, Haynes said, that provides a boutique-like experience.

“I think that while many people have gone to online shopping, there are still those who go for face to face conversation, for counsel or direction on styles and utility,” Haynes said.

“Service after the sale may ultimately be the difference” between small businesses and big box stores, each selling similar items such as appliances, Haynes said. “Knowing that when you walk into the store, the owner is in the back office, instead of in New York or Los Angeles, I think there is some comfort in that.

“I think there is an adjustment occurring in retail, but brick and mortar will not go away entirely,” Haynes said. “It will be the survival of the fittest and communities such as ours are going to have the stores necessary to support the populous, but it may not allow for the competition like between HHGregg and Best Buy, but stores such as Central TV or Ace Washer may be what people will want,” Haynes said.

Related Stories:
• OPINION: Retail apocalypse or business as usual?
• Are retail stores going away? At least 3,591 are closing their doors:
• Missteps, market shifts bury once-thriving HHGregg
• More than 1,900 layoffs announced in 2017 at Strack & Van Til, Central Grocers
• Marsh Supermarkets closing nine more stores this month
• What's next for brick & mortar retailers?
• Indianapolis Circle Centre reports record revenue on strength of new restaurants

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