Friday, July 11, 2008

Gas prices keep rural shoppers local, help stores

Here's the first upside we've seen to high fuel prices in rural areas: Rural residents, who often travel great distances to shop, are staying closer to home and thus helping local stores, Anne D'Innocenzio and Kate Brumback report for the Associated Press. "Many stores in rural towns — from small independent shops to local chains — are starting to enjoy a little life after years of seeing customers bypass them for distant malls," they write. "While it may not reverse the decades-long decline of small-town shopping, it could lead national mall developers and merchants to rethink where to build and challenge a basic tenet of retailing: Build, and shoppers will come from miles away." (AP photo by Dave Martin)

The surge in shoppers has increased traffic in Thomasville, Ala., which is 100 miles from Mobile or Montgomery, which is home to the nearest malls. Thomasville, population 5,500, small shop owners report more customers who instigate local options prior to heading further away. "If you are looking to buy the basics, then you do most of your shopping at home," said Thomasville Mayor Sheldon Day. Tax revenues are up 5 percent in Thomasville for the fiscal year that ends Sept. 30, and Brewton, Ala., 80 miles southeast of Thomasville, population approximately 5,000, reports an increase in sales tax revenue of 6 percent in recent months. While many rural retailers are benefiting from increasing fuel costs, city officials in Mobile and Montgomery report shortfalls, which is due partly to out-of-town shoppers staying close to home.

Experts say applying sales tax data nationwide is difficult because individual states define sales tax in various ways. Family Dollar, Inc., a discount chain that operates 30 percent of its retailers in rural areas, reports its rural locations are outperforming the chain as a whole. The Piggly Wiggly Carolina Co. franchise, which manages 113 supermarkets in South Carolina and Georgia, reports some rural stores have experienced recent sales increases despite recent struggles. "Rural retail centers are likely to see a lot more traffic as consumers are not willing to make the long commute to the big city," said Michael Hicks, an associate economics professor at Ball State University.

The demise of rural communities has been influenced by closing manufacturing plants, young adults fleeing in search of better job opportunities and the expansion of discounters such as Wal-Mart Stores, Inc., which often force small businesses to close, including grocery and hardware stores, reducing the diversity of shopping options. "But gas prices could be playing a bigger role in changing people's habits," D'Innocenzio and Brumback write. "The high cost of gas takes a tole, especially on rural Americans, who are already struggling with lower average incomes than the overall U.S. population, fewer employment options and a heavy reliance on gas-guzzling vehicles... Higher traffic in rural town centers like Thomasvile may be a sign of what's to come."

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