Community-Owned Department
Stores Replace Chains

More and more, communities are finding new ways to change the trend of corporatization and maintain their base of independent, locally (or community) owned businesses. Here's one encouraging recent example.

"It's been a remarkable success," says Ken Witzeling, who helped start a community-owned department store in the small town of Powell, Wyoming. Known officially as Powell Mercantile and more informally as The Merc, the store is the third community-owned department store to open in this region of the country since 1999.

It is unlikely to be the last. Witzeling has received numerous inquiries from small towns throughout Wyoming, Montana, Utah, and Idaho.

The idea originated in Plentywood, a town of 2,000 people in northeastern Montana. A few years ago, the Houston-based Stage Stores chain (formerly Anthony's) pulled out of Plentywood and dozens of other small towns in the northern Rockies, leaving residents with little choice but to drive long distances for basic clothing and housewares.

"We thought about contacting a national chain," says Ann McKenzie, the former manger of Stage and the current manager of the community-owned Little Muddy Dry Goods store. "But we realized, if we get another one, they'll probably pick up and leave in a few years too."

McKenzie proposed a community-owned store. Residents stepped up and purchased 18 shares in the venture for $10,000 a piece. (Many single shares are owned by groups of five or six people.)

Little Muddy Dry Goods opened a few months later. The 10,000-square-foot store has two full-time and four part-time employees, and sells clothing, shoes, linens, and housewares. Although not particularly profitable, the store does break even, while filling an important community need.

Plentywood's success inspired residents of Malta, Montana, to open their own department store, called Family Matters, shortly thereafter. Malta organizers took a slightly different approach, selling shares for $500, which allowed more people to get involved. According to Malta Chamber of Commerce Director Anne Booth, Family Matters has been profitable. But its real value has been as an anchor for the downtown and a draw for other local businesses.

Organizers in Powell, a community of 5,500 people in northwestern Wyoming, likewise chose to sell shares in The Merc for $500 each. More than 800 shares have been sold to approximately 500 investors. Shareholders are limited to no more than twenty shares in order to prevent any one shareholder from gaining too much control.

The 10,000-square-foot store, which sells mostly mid-range clothing and shoes, opened in July and has turned a profit ever since. Key factors behind its early success, according to Witzeling, include the store's lack of debt, a board of directors made up of local merchants, and a manager who is a veteran buyer in the industry.

Unlike Plentywood and Malta, where residents must drive at least 100 miles to find significant shopping options, Powell is just 22 miles from a Wal-Mart store in Cody, Wyoming. Some residents initially argued that The Merc was a sure failure with such a powerful competitor nearby. But, as it turns out, plenty of residents prefer shopping at the local store.

Part of the reason is undoubtedly the sense of ownership, say Witzeling. Before opening The Merc, he and other Powell residents visited Little Muddy Dry Goods in Plentywood. "We went up and down the street and talked to different people," says Witzeling. "They all referred to it as 'our store.' Not 'the store,' or 'that store.' It was 'our store.'"

Another community-owned department store is now opening in Glendive, Montana, and a fifth has started selling shares in Worland, Wyoming.

This article is reprinted with permission from The Home Town Advantage Bulletin, a free email newsletter published by the Institute for Local Self-Reliance. To read back issues or join the mailing list, visit NewRules.org.

If this article interested you, please the Independent Business section of our site for more related material, including a piece co-written by Ms. Mitchell and ReclaimDemocracy.org director Jeff Milchen--Littering Americ(with Dead Malls and Vacant Superstores).

See the American Independent Business Alliance and The New Rules Project for much more on what communities and independent businesses are doing to halt the displacement of local businesses by corporate chains.