Retail sector in Fairbanks is off and running


Workers put the final touches on Fairbanks’ Home Depot sign as it prepared to open in 2002. Once Home Depot set up shop, Fairbanks officials said several other national retailers followed, sparking an expansion in the sector and upping the number of retail jobs in the Interior city.
For nearly a decade, retail employment has been on the rise in Alaska while leaving Fairbanks in the dust. Now the state’s second largest city is playing catch-up, with the development of its northeast corner expected to bring in at least 400 jobs during the next two years, according to Neal Fried, an economist with Alaska Department of Labor and Workforce Development.

While the state gained 4,500 retail jobs between 1994 and 2000, Fairbanks lost 150, Fried said. Fried noted, however, that numbers before 2001 include employment associated with eating and drinking, while later years only include retail employment.

Between 2001 and 2003, retail jobs across the state continued a slow and steady rise, increasing from 33,200 jobs in 2001 to 34,100 in 2003.

At the same time, retail employment in Fairbanks sagged, gaining 200 jobs in 2002 and then losing 150 in 2003, according to Fried.

Big box stores, like Wal-Mart and Lowe’s Companies Inc., began building in Alaska more than a decade ago, bringing hundreds of new jobs to Anchorage, Wasilla and Kodiak, among other urban areas.

But the well-known retailers in large part stayed away from Fairbanks.

"It was something we couldn’t explain," he said. "Fairbanks is the second largest market in the state, and (big box development) wasn’t happening there."

National retailers were actually moving out Fairbanks, Fried said. J.C. Penney Co. Inc. closed its doors in 1998, and Kmart Corp. pulled out of Fairbanks in 2003, as it did throughout Alaska.

"It is just mysterious why the trends are so different," he said. "It wasn’t like there were any fundamental things going on in Fairbanks that were different from fundamental things going on along the Railbelt. We looked for some, but couldn’t find anything."

Fairbanks no longer left behind

The retail trend in Fairbanks, seems to have taken an about face.

Big box retailers have begun to set up shop in the city’s northeast corner, said Kara Moriarty, president of the Greater Fairbanks Chamber of Commerce. "That has proved that the retail market in Fairbanks is starting to expand a bit," she said.

Once Home Depot Inc. opened in early 2002 along the Johansen Expressway in northeast Fairbanks, other national chains began to follow.

Wal-Mart opened in late April, hiring more than 450 people, according to assistant manager Marcellne Deering. "The people here in Fairbanks have been asking for a Wal-Mart for years," she said.

While Deering declined to say how much revenue the new store has brought in since opening, she did report that the store’s sales are doing very well.

Construction of a 116,000-square-foot Lowe’s store began in June, spokeswoman Jennifer Smith said. She added that the retailer expects to invest about $18.5 million in Fairbanks and hire some 175 people by the time its store opens in early 2005.

Fred Meyer is also building a new store in northeast Fairbanks at the cost of $29.2 million, spokeswoman Mary Loftin said.

The new 175,000-square-foot store currently under construction is scheduled to replace the company’s 80,000-square-foot store on College Road in spring 2005. The replacement store will add a grocery division and an additional 150 to 175 new jobs, Loftin noted.

City welcomes development

The development of new retail is bringing hundreds of new jobs and millions of dollars in revenue to Fairbanks.

"We have had quite a building boom going on," Fairbanks Mayor Steve Thompson said. "Our biggest year prior to this one was in 1985."

About $150 million is slated to be spent by the end of 2004 in new building construction, primarily within the city’s northeast corner, he said. "We will have a substantial increase in our property tax - more than $1 million."

While the big box retailers are bringing new jobs and revenue to the city, they are also putting pressure on the small, local stores to find their niche in the changing retail market, Thompson said.

Moriarty hasn’t heard of any local business closing among the chamber’s more than 750 members despite the recent infusion of large discount retailers. "All of the new chains have joined the chamber, and they are getting involved in the community," she added.

For the first six weeks after Wal-Mart opened, revenue at the locally owned and operated Hallmark store was down, said Cynthia Henry, who has owned the store with her husband for the past 25 years.

"But we rebounded," she said. "Our small business has survived and thrived."

The store’s summer sales have increased by about 5 percent each year for the past three years, Henry noted.

Jinx Whitaker, owner of New Horizons Gallery and Arctic Travelers Gift Shop in downtown Fairbanks, also reported an increase in sales over the past couple of years.

Whitaker purchased more merchandise for each of her retail stores last year, she said, and other small retailers in town have followed suit.

"Other retailers I have talked to have expressed the same thing," Whitaker said. "They were a lot looser in what they order."

In addition to an increase in purchasing and revenue, Whitaker also increased the size of her staff. Customers, however, were careful not to break the bank.

"This particular year of all years, we noticed that the average customer was pretty tight on what they spent," she said. "Even when we got those high rollers, they were really watching their pennies."

The city’s recent development has made Mayor Thompson optimistic about what lies ahead. "I am just excited about the prospects for a bright future for Fairbanks."

10/02/2004 - 8:00pm