Laurel, MT. Small Businesses Feel the Pinch of Wal-Mart

Laurel businesses feel Wal-Mart’s effect [Billings gazette (Mont.)]

With the world’s largest retailer operating in their backyard, two longtime Laurel small-business owners said they feel the pinch of low-priced competition but are optimistic about the future.

Wal-Mart opened Oct. 24 in Laurel. In anticipation of its arrival, a bevy of new businesses were built on Southeast Fourth Street, and the town’s third stoplight was installed at Fourth Street and First Avenue South.

Existing business owners, including Laurel’s only grocery store and sole craft-and-fabrics outlet, braced for the opening.

Grocers Bob Dantic and his brother Mike, who co-manage Jan’s IGA, have reduced staff by about 40 employees since the peak summer employment in August. “It’s been an interesting ride,” Bob Dantic said. “The layoffs have been a major detriment to our family.”

Since Wal-Mart announced in late 2005 that it would open in Laurel, Dantic has told his employees that, overall, employment at Jan’s IGA is secure.

“We’ll be here next year; we’re not going anywhere,” he said.

Rod Halvorson, who owns the Ben Franklin store with his wife, Linda, said they have felt the pinch of Wal-Mart but that it is too early to tell what the impact will be.

“We’re optimistic at this point,” he said.

Dantic and Halvorson said they expect business to rebound as the Wal-Mart novelty wears off. They expect curious customers, who may have shifted to buying at Wal-Mart, to return. They said they appreciate the loyal customers who have stayed with them.

Because Wal-Mart has been in Billings for years, the Laurel store is just an added convenience for some shoppers, Halvorson said.

“Wal-Mart has always been 20 minutes from this community anyway,” he said.

Halvorson said as a small, independent business, Ben Franklin can change up its merchandise regularly to meet customers’ demands. Other than that, he doesn’t anticipate any changes in the organization, including decreases in his “good, experienced staff” of 10 employees. The Halvorsons have owned and operated the business for 17 years.

All retail businesses, regardless of what they sell, compete for business, Halvorson said. Wal-Mart is just another growth in business and another challenge, he said.

While there is definitely more traffic on the south side of town - toward Wal-Mart - downtown is in transition, too. There are some empty buildings, but there also are recently purchased buildings and a number of renovations, Halvorson said.

Laurel is growing, including the construction of several subdivisions. Halvorson ticked off what he called “so many positives in Laurel right now,” including:

• A new 92,000-square-foot middle school, which was occupied by students and staff this fall.

• A $325 million coker plant project under way at the CHS refinery.

• The Crossings, a development by St. John’s Lutheran Ministries of Billings that includes independent and assisted-living apartments and a cottage for residents with early onset of Alzheimer’s and dementia.

“I’ve always said it’s good we’re next to Billings because that’s how we’re growing,” he said.

‘Tremendous year’
The Dantics are second-generation Laurel grocers who operate the store their parents, Jan and Irene Stingley, opened in 1979.

Bob Dantic was on the board of directors for Northwest IGA stores for four years and “watched as Wal-Mart came across the prairies,” he said. The Dantics were armed with tips from other store owners around the region as they faced Wal-Mart’s expansion to Laurel.

From the time Ricci’s Thriftway closed on Dec. 22, 2006 until Wal-Mart opened in late October, Jan’s was the only grocery store in Laurel. Also this year, a Red Lodge grocery store changed from IGA to Associated Foods, which allowed Dantic to expand his advertising that direction.

The store had a “tremendous year,” Dantic said. When comparing sales with the same week in the previous year, “there’s not a store I know of that had an increase like we did before Wal-Mart opened,” he said.

The strong sales allowed the Dantics to complete several upgrades this summer, including new cases and increasing emphasis on the store’s fresh food, Dantic said. The latter includes items made daily in the bakery and deli and offering all USDA-choice meats and no pre-packaged beef, Dantic said.

“Our customers know they are going to get a good piece of meat,” Dantic said.

Dantic said the family-owned business will give the megastore a run for its money.

“They beat us on price,” Dantic said. “We compete with them on our quality, our service and our fresh products. They can’t compete with us on that.”

When Wal-Mart opened on Billings’ West End in 1993, Jan’s IGA lost more than 12 percent of its business but bounced back, Dantic said. Some Billings stores lost 30 to 45 percent, he said, “and that’s why you don’t see a lot of those stores.”

Some of the cashiers at Jan’s IGA have worked there all 28 years the store has been in business, Dantic said. However, the unprecedented labor crunch in the greater Billings area this year resulted in the biggest employee turnover the store has seen, he said.

Jan’s IGA reached a peak employment this year of 110 people in August. As Wal-Mart ramped up, six Jan’s IGA employees went to work there. Since the Wal-Mart opened and Jan’s business dipped, the Dantics have had to lay off some people, including six employees on Nov. 30.

Dantic said the layoffs were painful for the family, which likes to treat employees as their IGA family, but that the bottom line has to be maintained. That includes dealing with increasing fixed costs, such as utilities. Stock can be reduced slightly, he said, but that is offset by rising costs to keep pace with the cost of oil and fuel. Labor is the only place left to cut, he said.

“It’s sad, but it’s just a part of business,” he said. “We have to keep expenses in line.

Dantic said he anticipated that Wal-Mart would come into Laurel and “do its thing.” But it turns out, he said, that the store is meeting his prices, then slicing off a few cents.

Dantic said he got a good deal this fall on bananas and was able to offer them at 28 cents a pound, in honor of the store’s 28th anniversary celebration. Wal-Mart dropped its bananas to 26 cents a pound and left it there, he said.

“I didn’t think they were that type of neighbor,” he said. “They are actually directing a lot of things that hurt our business and hurt our employees.”

Wal-Mart did not respond to numerous calls for comment.