J. Michael Turner: Big box realities


— An article about the Steamboat 700 project recently contained a statement that has been repeated several times in various articles concerning future growth of our community. It said, "City planners recommend big box retail be accommodated in West Steamboat with conditions," and they noted an economic study that predicted a store such as Target or Lowe's would increase the city's sales tax revenue by $1.1 million.

What has not been reported are any studies showing exactly what percentage of that presumed $1.1 million actually will be new sales tax as opposed to what percentage of that sales tax will be cannibalized from existing businesses in our community. That dollar amount needs to be subtracted from the estimated $1.1 million to reach a realistic net increase in potential sales tax revenues, which some in our community continuously salivate over without any thought of net impact to our existing friends, neighbors, businesses and community character.

There also are questions about the potential for new job creation and keeping the money in Steamboat. How many new jobs would be created by the existence of a new "big box" retail at the expense of jobs lost because of the economic damage done to local retail businesses? We know that some residents do make trips to Silverthorne or Denver just to shop. But a "big box" retail outlet here won't accommodate everyone's desires. People still will go to Denver for other reasons and most likely will do some shopping while they are there. So, it only stands to reason that not all of the money currently lost to Silverthorne or Denver would stay here in Steamboat.

When reading about the benefits of "big box" stores, I've not seen any mention of market research in which large retail entities such as Target or Lowe's, along with Costco, Home Depot or several others that have been the subject of speculation, actually have been contacted. Those corporations have defined population to square mile, or "roof top" to square mile ratios that have been developed throughout time to determine in which markets they can be profitable and where they locate their franchises. There seems to be an assumption by some that Target, Lowe's or others automatically would locate here if we welcomed them with open arms. Yet, I have not seen any verifiable data or research to show that our population base even comes close to meeting the criteria any of them use to determine where they place their outlets.

Another factor to consider when attempting to lure a "big box" retail outlet here can be read in the Wall Street Journal almost every day. Almost all of them - Target, Lowe's, Home Depot - are suffering enormous losses and are closing outlets. Costco's profits declined 27 percent in the latest quarter. Is that incentive to open an outlet in Steamboat? The outlets that are being closed are in metropolitan areas that have markets consisting of more people within a few square miles of a store than we have in Routt and Moffat counties combined. It most likely will be years, possibly decades, before many of them again enter into an expansion mode, especially into an area with a population base such as ours.

So, before we work ourselves into a frenzy about "big box" stores and the potential mythical sales tax revenues we stand to gain, how about we have some factual economic and market research into the true potential for any of those stores to realistically open here.

J. Michael Turner

Steamboat Springs


Scott Ford 8 years, 2 months ago

I think the reality that a "big-box" is coming anytime soon is a bit of a myth but, I think at some point in the future one will come. So for me it is not a question of "if" it is a question of "what" and "where". I think it will likely be a Home Depot / Lowes or some similar format. Their market will not only be the retail consumer but they will try to capture a segment of the construction building trades business.

Best guess (as good as anybody's) using both Moffat and Routt household income data on spending the value of the consumer leakage that is currently occurring is about $8 to $10 million dollars. That is not enough for a Home Depot or Lowes to make it. They need annually sales of $275 to $300 a sq/ft to be viable. Assuming that the smallest format store for them is typically 100,000 sq/ft they would need about $30 million annual in sales. To meet that target revenue they are going to need a share of the construction trades businesses to make it.

The area is going to grow. (I know that some think that the current economic situation will change that but it is in the cards based on our natural beauty, recreational opportunities, health care and telecommunication and transportation infrastructure.)

I think it was the right move for Planning and City Council not to preclude the possibility of a "Big Box" on the land west of Steamboat Springs. Our challenge is not get involved in silly things on the government policy level trying to attract a "big-box" in the hopes of increased sales tax revenues. If they come, (and they likely will in the next 10 years) why not have them locate on the land west of town?


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