Stronger together: Perham's retailers stand arm in arm against big online retailers
Editor's note: We live in a time of rapid change — change that does not entirely skip over small Minnesota towns like this one. Today, more than ever, people here in this community are bypassing our neighbors' small shops in favor of an internet search and an out-of-town buy. Consumer preference is changing; we are changing. However, we are not powerless in this evolution. We, as a community, can decide how we want to navigate these new times to create a place we'd still want to live 10, 20, 50 years from now. We can take the easy one-click step that is good for the moment, or we can step another direction where we are all just a little bit more calculating and conscious of who we give our dollars to and what we want our town to be like.
Small town retail is not dying, it's just changing. That is the message from economy experts at the West Central Initiative, an organization that works to strengthen the economy in nine west-central Minnesota counties, including Otter Tail. Small town retail has been a focal point recently for the organization, which has been holding seminars on the region's retail picture.
"We were finding the negative narration that small town retail is dying," said Jill Amundson, an associate planner with WCI. "I want to emphasize that that is not true."
Retail sales are a powerful driver of local economies. According to state figures in 2016, retail-only numbers generated approximately $737.6 million in Otter Tail County. That is a 4.9 percent decrease over what was generated five years earlier.
A solid foundation of bricks
Perham has a bit of a reputation among the region. It is known as one of those small towns with a good amount of money and a healthy business district. That's not a bad rep to have, but this is not by chance or luck. It is due, in small part, because of the natural gift of the lakes, but more so because of a series of good decisions by many people over time.
"Perham has exceptional leadership for the broad community," said Perham Economic Development Director Chuck Johnson, who says that's something that he didn't always recognize since starting in this position 16 years ago. "I didn't realize how strong and unusual that was, and it's only gotten stronger," he said. In fact, Johnson says he believes the difference between Perham and many small communities in the region that find themselves struggling, is good leadership in business, community groups and the city.
"Community leadership affects every aspect of the town, one aspect of which is retail," said Johnson. "If you have a healthy town, that helps make your retail healthy also."
But a healthy retail district needs so much more than its own shops, strong business owners and loyal customers — it needs a community full of disposable income. In Perham, those significantly less charming, job-producing businesses found on the outskirts of the downtown are a vital resource for retailers.
According to the Minnesota Department of Employment and Economic Development, there are 4,400 jobs that exist in Perham. Not bad for a town of 3,300. That cashflow generator means people from outside of Perham coming in to work are also spending some of that cash in town. And it doesn't stop there.
"Those production jobs bring money in from all over the United States, and drops it into Perham on a regular basis because those are jobs that are producing product for all over the Upper Midwest and the United States," said Johnson, who points out that new money turns around seven times before it leaves town.
Perham's current fortune in this regard is due to the foresight of city and business leaders long ago when the city's foundation was really being built ... a forward thinking style that has continued throughout the years.
"I think maybe newer business people that come into our area don't always realize how much groundwork has been laid for generations in our community to have a thriving downtown," said Katie Hennagir, who co-owns Bay Window Quilt Shop in Perham, along with her mother, Sarah Hayden. "My grandpa worked with other businesses people, and then my parents took it, and they were active on the Chamber, they volunteered for things, they talked to other business people, they started the PEC group ..." she added, referring to the Perham Events Committee, which is a group of local business owners that meets twice a month.
"I do wish there was more conversation (at the PEC meetings) about business and how we capture consumer interest and time and about how scattered and fragmented media is and where consumers' time and attention goes," said Aaron Karvonen, who owns and operates three businesses in Perham, "but at least we're getting together and having a conversation, and I think that's something that other communities can look up to." Karvonen says the group talks about what's going on around town and helps plan events designed to bring people downtown. The PEC group creates an open dialogue between stores and helps make them stronger together.
"The PEC does four promotions a year — a Spring and Crazy days and a Christmas and Harvest Fest," said Johnson, who is also part of the group. "So, it shares in the conceptualizing and the budget for those events, but it's also a sound board ... a place for dialogue for things like, 'I've got this problem' and 'oh, this works well for that.' "
In fact, Perham retailers don't just work together behind the scenes, many of them do it in day-to-day business as well. The Chamber of Commerce distributes coupon books to help encourage people in Perham to shop in Perham. And for the third summer in a row, Sarah Hayden from Bay Window Quilt Shop, got together with about 10 other businesses in town to print 2,300 coupon books that Hayden then handed out to tourists and out of town visitors.
"We were constantly saying to them (out of town customers), 'Did you eat here? Did you try that?' " said Hayden, who says if they don't all do that for each other, they all lose a little bit again because customers get used to just getting what they need and leaving town.
"When everyone has the same goal of promoting the whole town, we all reap the benefits because they make us (Perham) their destination."
Ideas from around the region
According to the Small Business Administration, small businesses employ about half of all private-sector employees, and have generated 65 percent of net new jobs over a 17-year span.
With so much at stake, local governments employ various methods to assist businesses, from holding or promoting community events to beautifying downtowns to finding ways to create a better business climate. Within the past few years, Detroit Lakes and Alexandria have redone its downtown streets and sidewalks to make them more pedestrian-friendly, while Wadena and Park Rapids have pursued partnerships with outside groups.
The City of Wadena Economic Development Authority was created in 1991 to improve economic conditions. Toward that end, it promotes local businesses while seeking to fill empty storefronts. In 2017, it partnered with the Buxton Group, a nationwide developer that has worked with more than 750 cities of all sizes on developing retail recruitment strategies.
The business services firm has been hired to analyze how shoppers spend their money in the area and determine who is shopping at a given store. In doing so, the group says it can identify items that current retailers could be selling in their store and suggest new businesses that may do well in Wadena.
"I see this as a very great marketing opportunity for this community," WDA Executive Director Dean Uselman said.
In Park Rapids, the city's chamber, business and lodging associations, the county and two foundations banded together to fund a branding project. Working with a Dallas-based branding and marketing agency for 10 months resulted this past summer in a brand for the area: Heartland Lakes. Butch De La Hunt, president/CEO of the Park Rapids Lakes Area Chamber of Commerce, said the Heartland Lakes branding has brought new opportunities to highlight all the region has to offer.
"We've got to continue to promote the region and the great assets we have and say, 'Hey, if you live here, shop local, support your local businesses. If you visit here, support the neighboring communities,'" he said. De La Hunt points out that without that support, area businesses cannot survive. "Once they're gone, it's harder and harder to re-establish them."
The Alexandria Lakes Area Chamber of Commerce is working on raising awareness of supporting local businesses in a couple of ways. One strategy involves educating a generation that has grown up with online shopping.
During presentations to high schoolers, Executive Director Tara Bitzan said the chamber shows students "how their money turns over in a community, and if you buy local that money goes into paychecks for local people who turn around and spend their money in other local places."
Among those presentations was an educational video on the impact of doing business locally that was produced last year by the high school DECA team.
Bitzan received a lot of positive feedback and stories of how students changed their thinking and their spending behavior based on what they learned through these efforts.
"Now that we have gotten our message across on a smaller scale," Bitzan said, "we intend to ramp up that education model and move forward with a community-wide marketing campaign."
She is referring to a "Do Business Local" program designed to encourage residents to spend more of their dollars in town. The marketing program will include print and radio advertising, signs in storefront windows, social media campaigns and presentations.
"Our goal is education," Bitzan said. "Most people don't stop to think about the impact that sending their money out of the community has on the local economy. It is convenience that they think about."
While e-commerce remains a relatively small part of retail sales — less than 10 percent in 2018, according to the U.S. Department of Commerce — it is growing rapidly. National sales figures show that e-commerce sales are increasing at nearly three times the rate of total retail sales.
E-commerce sales increased 14.5 percent from the third quarter in 2017 to the third quarter in 2018, compared to a 5.3 percent gain in total sales during that same period.
However, this past June, a U.S. Supreme Court decision required sales tax to be charged on more online purchases will help brick-and-mortar retailers in their battle with online competitors.
"We've been fighting for this for 20 years," said Bruce Nustad, president of the Minnesota Retailers Association. "There's a sense that some fairness in the sales tax arena will at least level the playing field."