Havre economy shifts in modern shopping world

Experts and local retailers say the closure of three major stores in Havre is not a sign of an economic failure, and, in fact, the local economy is not doing badly.

In the past year, small businesses have opened all over Havre. The reason for the corporate stores' closures, University of Montana Bureau of Business and Economic Research Director Emeritus Paul Polzin said, is because of the effects of online shopping.

"In many ways, mom and pop operations are the way in which you can compete against the internet," he said, adding that smaller businesses are able to provide hands-on service that online can't.

In the past year Havre has seen three major stores announce that they were closing, while small business are beginning to pop up all over town. Economists, development groups and many Havre business owners agree that this is not a sign that the local economy is in peril, but rather that it is changing and adapting to the modern world.

Herberger's, Sears Hometown Store and Kmart announcing they are closing is more of a reflection of what is happening nationwide and not Havre's economy, Polzin said.

The big thing nationwide for retail is internet shopping, "the Amazon phenomenon," Polzin said. That is probably the single reason why large department stores are shutting down, he added.

Bear Paw Development Corp. Executive Director Paul Tuss said the economy is indeed in a shift from classic large brick-and-mortar stores to online shopping - but that is giving small, local stores an opportunity.

"This isn't just for Havre, it's not just for north-central Montana, or even the state, it's a nationwide global phenomenon when it comes to the transition from a retail perspective," said Tuss, who is challenging state Sen. Russ Tempel, R-Chester, in the race for Senate District 14. "I think, as we look at this evolving economy, we also need to look at similar trends that occurred in the past."

Local businesses and local economy

Scott Young, who has owned Norman's Ranch and Sportswear with his wife, Kaye, since 1982, said they have seen the economy change several times over the past 36 years.

"We've seen some different years," Young said, "Very good ones, very slow ones and now we're hoping it picks up again."

Young said that in the past couple of months business for him has increased. He said with online shopping customers cannot receive the personal service offered by his store and cannot personally select what best fits them, adding that, sometimes, people order items online and they are not always what they think.

"I think the people are realizing, yes, we are losing three major stores, but now they are looking other places, too, to get merchandise, and I think that is just making a big turn," Young said.

Tuss said it is a transition Havre is seeing from large department stores to hometown small businesses, but people should not see it as a struggling economy but a change within the community.

Large corporate stores' closures, he said, are completely divorced from the reality of local economy.

These are decisions being made hundreds of thousands of miles away and, although the company may have gone bankrupt, the individual stores were doing fine, Tuss said, adding that those decisions do not reflect the health of Havre's economy.

Cavalier's Manager Joe Ross said, although Havre's economy is having some challenges, overall the community is fine and corporate stores are leaving but Havre is not. Cavalier's is celebrating its 60th year in Havre, he said, and remains a stable business.

He added that Cavalier's has seen pretty consistent business over the year and overall Havre's economy has been stable.

Online shopping can't really compete with Cavalier's, Ross said, because the store is so specialized.

"Online shopping is not always the best thing to do because stuff doesn't always fit," Ross said, "We pride ourselves that, if you get it at Cavalier's, it fits and it's how it's supposed to be.

"With the closing of Herberger's, Sears and Kmart, it's bad for our community because there are going to be some services that aren't available for our community, right now," Ross said, "but the businesses that have supported and have been in the community ... are still here and still strong and viable and still supporting the community. We are a community with many shopping options."

Tuss said people need to look at the long-range view.

"So sometimes we need to look further on the horizon to realize that these trends really are trends and have nothing to do with the reality of the health of our local economy," Tuss said. "We shouldn't be concerned about some of the difficulties with the retail economy, with regards of these three closures, that we don't celebrate the other side of the equation, which are the grand openings that are occurring."

Tuss said the growth of small businesses and other stores is clearly a positive sign for the economy.

"Those are all signs that people have faith in this economy. You don't stick your neck out and put your life savings on the line if you think things aren't going well," he said. "Obviously, you don't open a new business, like Burger King, unless you've done some level of analysis that tells you that it's going to be successful."

Havre Home and Hardware Manager Scott Stockdill said, for the most part, smaller businesses are able to provide personal service that online shopping cannot provide.

The biggest thing with shopping local, he said, is that it is community-based.

"We're a local hardware store, which helps because when your water heater goes out or your plumbing pipes break, you're not going to Amazon for that," Stockdill said, adding that hardware stores are able to provide immediate service.

People who aren't in retail might get discouraged and lose faith in the local store, he said, but the local stores still are strong.

Stockdill added that the community wants to support community businesses and buy local, and that is a something that he appreciates.

Job losses and unemployment rate

The lost jobs and the loss of convenient larger stores are clearly a negative, Tuss said, but it is also important to look at the families and the individuals most impacted by the closure.

"Any time that you have one job lost, in my opinion, it's serious and you can never take even one job loss for granted," Tuss said.

But, he added, Havre has a low unemployment rate and he hopes that the people affected can find work elsewhere.

"I hear every day from employers that are having a difficult time finding employees," he said, "so I am hopeful, obviously, that those who want employment or want to continue to work can find employment locally through those positions that are open."

Havre's economy, as well as the state's and country's, is full of employment opportunities, Tuss said, adding that the people impacted by the closure will hopefully be able to be absorbed in other markets.

Tuss said he doesn't think Havre has a "hot" economy but a "warm" one. Havre never gets a huge economic boom but remains constant for the most part and remains stable, he said.

He added that when people think of some of Havre's foundational components to the economy they think of agriculture, railroad, health care facilities, the college and other retail components - the area has many legs of economic stability.

"We have a pretty solid foundation," Tuss said.

Strengths: railroad and agriculture

Polzin said Havre's economy is well-mixed and the best news right now locally is that BNSF traffic is up on the Hi-Line.

"I think this bodes very well for the Hill County economy," he said.

The question is, though, how the agricultural prices are going to go, Polzin said.

"We don't know yet," Polzin said, "that's still a little uncertain."

Part of the question there is the impact of tariffs being set by and against the United States, he said.

Tuss said the forecast that he sees, relative to harvest, is that locally it will be a plentiful harvest, although the prices may be uncertain.

There are many entrepreneurial farmers and ranchers in the area, Tuss said, adding that in a short time Montana went from not being on the radar for pulse crops to becoming the No. 1 producer in the nation.

Tuss said the industry has its eyes on the future economic trends concerning commodities. He added that pulse crops have become very profitable in this area, along with organic crops.

The farmers and ranchers themselves have diversified the economy to a point that it is positive for the community, Tuss said.

Economy

Tuss said Havre has always had a pretty stable economy. He added that a few years ago he was doing an analysis for a group he was speaking to and looked at one factor in particular, which was population statistics. For the population, Havre's economy is very stable, he said.

Sometimes people look and point to a community where the economy is flourishing and say Havre is worse off. But many of those communities are reliant on the ups and downs of the national economy and trends, Tuss said, adding that many times this can create a "bubble."

In an economy like that, he said, "you can drop like a rock" once the bubble pops creating a crash or a recession.

Tuss said that the big picture of Havre is not just one thing, but many small things. There will always be some bumps in the road, Tuss said, but that is true anywhere.

"A strong economy is a diverse economy," Tuss said, adding that Havre has it.