Havre economy shifts from box stores to local businesses

In the past few years Havre has seen a loss of a number of businesses, such as Herberger's, Kmart and Sears, although Havre has also seen a large number of locally owned small businesses start up. 

"There certainly has been something of a resurgence in the number of businesses that seem to have started in downtown Havre, and I think that has been noticeable," Bear Paw Development Corp. Director Paul Tuss said.

Tuss said that Havre has a number of factors that play into it's economy, and although Havre's economy may not be hot it has gotten warm. He added that he doesn't know how many businesses have started in the past year, but there has been a noticeable shift from big box stores to smaller locally owned businesses.

Tuss said that the trend he is seeing is that the country as a whole is moving away from big box stores. Stores such as Herberger's and Kmart have closed not because the individual stores in Havre were doing badly, but because nationwide, people are purchasing more goods and services online.

"I don't think it's a flash in the pan," he said.

He added that people shopping online is not a short-term trend and will be something that will play into the economic future of the country.

With the click of a mouse, people are able to purchase goods and services from the comfort of their homes and could purchase goods cheaper than at the big box stores, he said. He added that this helps with connectivity. People in rural areas, such as Havre, have many more options available than they did 20 years ago, but online retail also opens doors for smaller locally owned businesses.

"People want experience," Tuss said. "They want a positive experience when they go to a brick-and-mortar place."

He added that when people go to the larger retailers it doesn't matter where they are, the businesses and the experience are generally the same. 

"(But) when you walk into a local mom-and-pop shop, a small business downtown, they can absolutely provide you with the type of customer service you're probably not going to get at a big box store and the environment which you are in is the type of environment you cherish being in," he said.

Tuss said the experience of actually going out shopping is something people can't experience online.

Local retailers embrace the notion of providing consumers with something a little bit different than what they can get at bigger box stores or online, he said. 

"I think the proof is in the pudding, and we've got wonderful examples in this community right here of local small businesses being successful, because they are offering something that's a little bit different that can't be found anywhere else," Tuss said.

University of Montana Bureau of Business and Economic Research Director Patrick Barkey said that 47 percent of holiday shopping was done online last year and the biggest factor in big box stores fading is the popularity of shopping online. But online shopping does open up a realm of possibilities for people, from people purchasing goods and services online to people being able to better operate or start their own businesses online.

The internet is a great tool for consumers, but also for entrepreneurs, he said. Someone who lives in Havre and owns and operates a business from their home can sell goods online to anywhere in the world. People can also receive accounting support, financial support and purchase products for retail online. Barkey added that the internet can, at times, make it easier for businesses to start up and be successful.

But there is a lot that the internet still cannot do, he said, which leaves opportunity for small business owners to fill niche markets. Another issue with online shopping is that online businesses such as Amazon are losing money with shipping. He said businesses such as Amazon are losing money when they ship items for free, especially in more rural communities like Havre or Montana in general. 

"At some point, customers will have to start paying for shipping regardless," he said.

Havre has a lot of economic factors playing into keeping a stable economy, Barkey said, such as the railroad, agriculture and the federal government. Havre is also a centralized shopping area for the region, with the next closest large city being Great Falls, which attracts a wide range of customers from across the area, including a number of Canadian customers.

All of these factors play a role in keeping Havre's economy stable, he said. Havre is not a big-growth area, instead it is a steady or a low-growth area. He added that any new businesses that start up in Havre have to take away from other businesses in the area. Because Havre is not growing, every business has a give and take effect on the economy.

Barkey said that one of the reasons Havre may have seen a number of small businesses open up is because of the loss of the big box stores. With the loss of the big box stores there was economic opportunity and space in Havre's economy for more locally owned small businesses to thrive.

Tuss said that another reason why Havre is seeing more small businesses start up in the area is because of Havre's stable economy. 

Havre has had a stable economy for a number of years and even with the loss of Herberger's, Kmart and Sears the people who lost their jobs were still able to be absorbed into the existing workforce, he said. 

He added that Havre, as well as the state and the country, is seeing record low unemployment. Havre has less than 6 percent unemployment.

Tuss said that a number of factors have to be considered if someone wants to start a business.

"Your community has to be attractive, you have to have solid infrastructure, you have to be a place where people want to live, you have to have a solid education system," he said. "So I think when you look at the overall economy, there are a multitude of factors that play into whether or not your economy is growing or declining, and I believe strongly that not just Havre's economy, but the economy of this region in general is, in some ways, a little bit better off than other places simply because this is a great place to raise a family, it's a great place to build a business and it's a great place to live."

Barkey said that what people have to also look at is the unemployment rate does not include people who are not looking for work, slack in the labor workforce. After the Great Recession in the early 2000s, a number of people dropped out of the work force and never came back, he said. Teenagers are also not working as much as they previously had, he added, and a number women and elderly are also not looking for as much work as previously. He said that it is great to have low unemployment, but unemployment rates are not the full picture of an economy. 

The nation has more jobs available than people who are unemployed and looking for work, which is not a bad problem to have, but it still has its own problems, he said. Barkey added that another large concern economists have is trying to determine when the next recession will be. He added that another recession is imminent but no one has determined when it will be.

Barkey said that he will be talking more about this issue in a future economic outlook seminar which will be held at Montana State University-Northern March 17.