Small Businesses Survive The Coming Of `Merchant Of Death' To Omak -- Living With Wal-Mart

OMAK, Okanogan County - If businesses here could dictate a memo, it might go something like this:

"TO: Business community in South King County.

"FROM: Business community in Omak and Okanogan.

"SUBJECT: Wal-Mart's planned 1995 opening in Auburn.

"TEXT: Don't lose too much sleep over next year's arrival of the country's biggest retailer. We should know. Wal-Mart's been open here for a year and a half - longer than anywhere in Washington - and we're still quite alive and quite well.

"Remember, we're small-town folks 240 miles from Seattle and 150 miles from the nearest `real' city, Spokane. We're not used to heavy-hitting competition from the outside.

"You city slickers may be used to driving through small, isolated towns and seeing vacant, abandoned storefronts, especially in traditional downtowns that have been bypassed by modern highways.

"Well, you won't find them here. Every business in downtown Omak is occupied. Downtown Okanogan, our county seat, has only one vacant storefront.

"Lots of locals used to go to Spokane for serious shopping trips to Costco and places like that. Now they stay closer to home. The same goes for out-of-towners. We don't know where they're all coming from, but we're seeing more people and more shopping traffic than we used to. We think the same thing may happen to you.

"Some of us were pretty worried a couple of years ago when Wal-Mart started building on the outskirts of Omak on a hill beside the `new' highway. The fancy new Wal-Mart store is just across the road from some other new businesses, and it looks like more new businesses are on the way.

"From what we understand, Auburn's going to have the same scenario, except for the hill: Wal-Mart is going up near two main highways and near the new Supermall of the Great Northwest.

"Take it from us: Wal-Mart is tough to beat on pure price. But it will bring more people and more activity your way. If you stay awake, you can find ways to get your share of the business."

That sums up a year and a half of experience here with Wal-Mart, the nation's largest retailer with more than 2,000 stores (adding about 100 a year) and $67 billion in sales.

Wal-Mart has its corporate eyes trained on the Seattle area, with plans to open in Auburn next year and unannounced plans reportedly in the works for possible stores in Everett, Redmond, Tacoma and Silverdale.

The Arkansas-based giant, which already has seven stores in Washington (Wenatchee and Shelton opened last month), has a reputation as the "Merchant of Death" for putting small competitors out of business. But Omak businesses think that's a bad rap.

They say the truth may be the opposite. Omak was once a sleepy backwater that would rarely attract any outside notice. Now it's showing up on developers' computer screens across the country, thanks to data banks that keep tabs on the locations of major retailers.

"Now I get a lot of calls from people who have heard we have a Wal-Mart and a McDonald's (right across the street), and they want to know what's going on," said Omak Mayor Walt Smith. "I have learned that those companies have a reputation for doing their homework and knowing what they are doing."

Omak isn't about to turn into another Federal Way or Silverdale. But several new developments are under way beside Highway 97 north of the Omak Wal-Mart. One is a new motel-restaurant combination, which Smith says will be the area's first new motel since the Cedars Inn in Okanogan opened 15 years ago. More retail space is planned nearby.

Wal-Mart's business volume has surprised Smith.

"It is unbelievable to me to see in this little town how that parking lot gets filled up every day," he said. "People ask me where all the people are coming from. Wal-Mart is a real draw."

Omak's downtown is physically quite separate from Wal-Mart and the Omache Shopping Center (including relatively new Safeway and Payless stores) directly across Highway 97.

Nevertheless, downtown merchants have noticed a higher level of business activity.

"There are fewer people leaving" to shop in Spokane or Seattle, said Mike Striggow, president of the Omak Chamber of Commerce and manager of the local J.C. Penney store in Omak's downtown. "They stay in town and that's good for everybody."

The same thing has happened in Grays Harbor County since Wal-Mart opened a store in Aberdeen last May.

"Wal-Mart, coupled with the desire by the other stores to compete, gives people a reason to stay closer to home for their shopping," said Ernie Hensley, executive director of the Grays Harbor Economic Development Council.

In the past couple of decades, Aberdeen and Hoquiam have lost considerable business to discount retailers in Olympia and Tacoma. When residents make a "Costco run" to Olympia, they often make other shopping stops on the same trip.

"People are much more mobile these days and more willing to drive elsewhere" to shop, Hensley said. "All you have to do is give people a reason to leave and they take a lot of retail dollars with them. In Grays Harbor, I believe Wal-Mart has given people a reason to keep those dollars closer to home."

In Auburn, "People here were quite concerned" when they first heard Wal-Mart was coming, said Auburn Mayor Chuck Booth. "At this point they feel they are up to the challenge."

The Auburn Wal-Mart is expected to open next fall just south of the Supermall of the Great Northwest near the junction of Highway 167 and Highway 18. Its most direct competition is likely to be the Fred Meyer store in Auburn, the Kmart in Kent and the Target in Federal Way.

The Supermall itself is expected to open next summer, though one of its anchor stores, the Incredible Universe, opened last week.

Local stores may continue to thrive despite Wal-Mart, especially if they modernize their facilities and emphasize personal service. But the giant retailer casts a long shadow, say retailers in Omak.

"We took a small loss in sales when Wal-Mart opened," Striggow said. "We can't compete with them on a price point. We added a lot of name-brand coordinates and other things that you are not going to find at Wal-Mart. Now our sales are about even" with days before Wal-Mart opened.

"Successful businesses are ones that find a niche, and that's what you have to do when Wal-Mart comes in. You have to find out what they don't carry and specialize in that," Striggow said. "What it does is make everybody better. You have to be better because there is competition."

Bill Eckstrom, owner of Anchor Printing and Office Supply in downtown Okanogan and president of that city's chamber of commerce, has found he can successfully co-exist in the shadow of Wal-Mart.

"They sell office supplies. They sell some of the same things we do, and cheaper," Eckstrom said. "But we have more specialty items. We take special orders. We have more personal customer service."

Anchor Printing also offers something that's unthinkable at Wal-Mart: local charge accounts.

Across the street, you can also sign up for a charge account at Rawsons, a clothing store that has anchored Okanogan's downtown retail core since 1950. The store specializes in shoes, boots, Western wear and name-brand items that Wal-Mart doesn't carry.

Owner Richard Rawson likes to remember his store's response to Wal-Mart's grand opening, which predictably received an enormous amount of attention.

Rawson figured that as long as people were going shopping to check out Wal-Mart, "I might as well get some of them to shop in my store," he said.

Rawson advertised "Wallet Days," offering free wallets and $1,000 cash to the first 1,000 customers who came into his store on a Saturday. Not every wallet contained cash, but many had $1, $5 and $10 bills. Five of the wallets each had a $100 bill, and every wallet had discount coupons good in the store.

Despite Wal-Mart's heavily advertised opening, its "satisfaction guaranteed" policy and its reputation for rock-bottom prices, hundreds of customers lined the sidewalk in downtown Okanogan that morning awaiting the opening of Rawson's, where a wheelbarrow filled with wallets had been conspicuously left just inside the locked door.

"We had a lot of people who shopped at our store" that day, Rawson said. "Since then we have maintained our sales and had a small increase."

Hensley in Grays Harbor County puts it this way, "To say there's no place for the small retailer in the world of Wal-Mart is like saying there's no place for the 7-Eleven in the world of large supermarkets."