Though total retail sales have increased in Southwest Colorado since 2000, business owners must rely on shoppers from elsewhere, such as tourists and online buyers, to be successful here, according to economic developers.
Both Montezuma and La Plata counties have seen total retail sales increase by about 75 percent over the past 15 years, outstripping population growth over the same period, according to a report by Region 9 Economic Development District.
Durango and Cortez in general see the largest percentage of these sales.
Sustained growth is possible if strong tourism and population growth continues and locals shop close to home, said Laura Lewis Marchino, executive director of Region 9. Her organization fosters economic development across a five-county region in Southwest Colorado.
“If the number of visitors and population grows, we should see this continue, ... but only if we are buying within our county,” she said. “Any time we buy on the internet – Farmington, Denver or whatever – we lose money.”
A dollar spent locally will circulate back into the community five to seven more times, Montezuma Community Economic Development Association specialist Chelsea Jones said. Even if a small-town resident spends as little as five more dollars this year in town than they did last year, that could make a difference in developing the economy, Jones said.
“It's important we work together as a community to support shopping local,” she said.
However, declines in the oil and gas sector that have hit the region hard could continue to ripple through the economies and trigger lower sales, said Donna Graves, the author of the report.
Tourism helps Durango and Cortez sales outpace comparable communities across the state, and shops in those towns are likely drawing business away from neighboring communities.
Durango retailers brought in $1.6 billion, or 68 percent, of the money spent in La Plata County in 2015.
In Montezuma County, 76 percent of 2015 sales, or about $523 million, were made in Cortez. Total retail sales for the county were $690 million.
In addition to tourism, Cortez draws shoppers from the Ute Mountain Ute reservation and the Navajo Nation.
Mancos and Dolores each accounted for 3 percent of the sales, with unincorporated areas responsible for the remaining 18 percent of sales.
Towaoc on the Ute Mountain Ute Reservation is home to a casino and hotel, but it was not listed in the report. It is included in unincorporated Montezuma County sales representing 18 percent of the sales in the county.
There is room for growth and more economic development in Montezuma County, Jones said.
Per-capita sales in the Montezuma County were $26,389, under the state average of $33,509.
Entrepreneurs from the Ute Mountain Ute Tribe would like to open a grocery store, laundromat and perhaps a small café and bakery on the reservation, said Liz Ross, executive director of the Small Business Development Center. However, finding space is an obstacle, she said in an email.
Among the smaller communities, Bayfield has seen the most growth, from 3 percent of the county total in 2013 to 13 percent in 2015.
Population growth, a new Family Dollar store and new restaurants have likely contributed to strong sales, Town Manager Chris La May said.
A large primary employer could have the greatest impact in boosting the number further, because many residents work elsewhere, he said.
“We suspect a number of retail purchases are made on the commute home,” he said.
Ignacio accounts for 1 percent of the sales in the county, but it exceeds expected sales by 29 percent. Many sales come from Southern Ute Indian Tribe businesses including the Sky Ute Casino Resort, which draws in tourists.
In La Plata County, per capita sales were $42,354, which exceeds the state average.
People opening new retail businesses need a customer base outside of the area to be successful. Those sales could come in the form of internet business, Jones said.
When customers stop into Honeyville, a specialty honey and jelly shop, on U.S. Highway 550 north of Durango, the staff always asks if they would like to receive emails, said owner Sheree Culhane.
The company also sends out catalogs by request and provides flat-rate shipping, she said.
The internet business and catalogs help the company stay connected to tourists and represents a substantial part of Honeyville's business, especially during the holidays.
“We do steady shipping year-round; right now it's like Santa's workshop up there,” she said.
Not expanding into online sales could be disastrous for retailers as shoppers continue to change their shopping habits, said Marty Grabijas, a Durangoan who works as an independent adviser to the outdoor business industry.
“For a retailer to not embrace e-tailing, it's a slow way of starving,” he said.
Those who produce their own products can have a bit of an edge over the competition because they can have more control over their costs and supply chain.
While per-capita sales in Montezuma and La Plata counties have seen steady growth, not all types of stores are meeting their sales potential.
In Montezuma County, lodging, gas stations, food and beverage stores, catalog and internet outlets, and building and gardening supply stores are meeting their sales potential. But electronics and appliances, cars and car-part sales, health care products, clothing, sport and hobby shops, miscellaneous retail stores and food service are all falling short.
In La Plata County, furniture, clothing, electronics, appliances, cars and car part sales are falling short of sales potential.
Big box stores, such as Walmart, likely siphon off business from clothing, electronics and appliance shops in both counties, the report said.
It is difficult to say what percentage of sales big-box stores capture in Montezuma County, because there are so few of those stores and they are not required to disclose their sales data.
Big-box stores, also known as general merchandisers, and furniture stores fit into the confidential sector in Montezuma County.
In Montezuma County, the confidential sector garnered 30 percent of sales countywide, or $106 million in 2015.
In La Plata County, general merchandisers account for 14 percent of all sales.
These stores can function as a regional draw.
For example, after the opening of Walmart in Pagosa Springs, residents likely stopped driving to Durango to shop at the Walmart, Graves said.
“Even the opening of one store can change the game,” Graves said.
The numbers show general merchandisers in Archuleta County started exceeding their sales potential and La Plata County saw some declines, following the opening of the Pagosa Springs Walmart.
In those sectors where the sales potential is not being met, such as furniture and electronics, that could show unmet demand, Graves said.
But entrepreneurs must study their prospective niche to understand where shoppers are buying those goods.
Towns with tourist attractions, such as a unique shopping district or a scenic river that give people a reason to stop are likely to see more success, Graves said.
“The brick-and-mortar stores that are downtown – they are the heart of any community,” she said.
She doesn't think the growth of internet sales should stop people from opening stores, because people like to evaluate products in person.
“I don't think the death of retail is going to come anytime soon,” she said.
mshinn@durangoherald.com
jacobk@the-journal.com
