Rebounding from Shopko Shock

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In March of last year, earlier for some, many towns were hit hard with the reality of Shopko’s struggles. The retail company closed many of its stores early in the year in an effort to right the ship as they waded through chapter 11 bankruptsy. But reality hit and in March the rest of the stores closed. Within three months 363 Shopko stores were working through to process of closing and liquidation.

A few of these stores were in smaller towns where they had taken over for Pamida or ALCO in those locations. In many of these towns they were the last national general retailer in the community. Kmart and JCPenny had already shut their doors due to the “retail apocalypse”. Now towns were losing Shopko too.

Left behind are large gaps in the retail market of these towns, while the large buildings they were in remained. Since then, smaller communities have fought to find ways to fill the voids and to fill the buildings. This was not an easy task when “bricks and mortar” retail was going good. It’s near impossible now that the retail landscape has changed. WalMart’s large selection and low prices have massive pull that can draw traffic from neighboring towns miles away. Amazon and other online retailers are now providing free shipping with short delivery spans. Topping things off, dollar stores are popping up all over.

Being Proactive

But communities aren’t standing still. They’re striving to carry on, striving to be proactive in their recovery from the impact of these closures. Recently, the Wyoming Business Council contracted with the National Main Street Organization for assistance. Specifically, they wanted the organization to prepare a market analysis to find the gaps that were created by Shopko’s loss and how existing retailers and entrepreneurs can fill that void.

Kevin Killough of the Powell Tribune reported on the results of this analysis in a very interesting read (highly suggested). As part of the analysis, surveys were distributed throughout the region. These surveys “consistently showed that the items shoppers are most likely to shift to other local businesses in the wake of Shopko’s closure are pet supplies, wellness and hygiene items, seasonal products, lawn and garden goods, groceries, health and beauty products, and appliances. Sports and recreation items, as well as housewares, also showed some potential, whereas shoppers were most likely to go online for apparel, shoes, and electronics.”

Though each region of the country’s needs are different, this information provides some good insight into what areas are most likely opportunities for local retailers to gain some market share if they wish to invest in them. It also opens up avenues for entrepreneurs who see these gaps and wish to fill them.

Dark Storefronts

But that analysis doesn’t fix the building vacancy issue. These former Shopko stores are often too big for start-ups who wish to fill the void. National retailers aren’t really looking to fill the void. If they were, they wouldn’t likely be interested in the existing buildings. Many of these stores in smaller towns are former Pamida or ALCO stores near the end of their useful life. These aging buildings often have inefficient HVAC systems and other infrastructure that is deteriorating. With an already tight bottom line due to the issues with the existing market, the numbers on these facilities just don’t work out.

Though putting another store into these buildings would be ideal. Some communities are grasping for anything to fill the space. If they sit vacant, the buildings will continue to deteriorate, bringing down the entire neighborhood. But if they can fill the building, even with a less-than-desired use, many communities will take it, just to keep the building up and the neighborhood viable. Lincoln, Nebraska has a proposal from Menards to use a portion of a former Shopko as overflow storage, splitting off the rest of the building as mini-storage. In Sioux City, Iowa one store is being subdivided into smaller, more manageable retail spaces. In North Platte, Nebraska a former Shopko will be repurposed into Bomgaars, a farm and ranch supply store chain.

Powell’s Shopko now has “sale pending” on their Shopko building. It is unclear if the actions they took with Wyoming Business Council and National Main Street Organization helped, but it sure didn’t hurt.

Christopher Solberg

About Chris Solberg

Though Christopher Solberg (AICP) works in a suburb of a metropolitan area, his roots are in Red Oak, Iowa, a community of 5,500 persons southeast of Omaha. He has spent a significant amount of his career helping small towns. Through his time working for a regional planning association and for a private consultant Chris has helped numerous small towns throughout Iowa and Nebraska. Chris is also currently the President of the Nebraska Planning and Zoning Association (NPZA) and a member of the NE APA Nebraska Board.