Strictly Business: High price of low-cost products

By Gordon Oliver, Columbian business editor

Published:

 
photoGordon Oliver, Columbian's business editor

As Nordstrom prepares for a dignified but disappointing exit next year from Westfield Vancouver mall, and as Wal-Mart continues its aggressive expansion in the same market area, it's time to take a closer look at what these changes in retail offering say about our community.

Nordstrom's apparel, shoes and other merchandise are a price-point or two above the budgets of most middle-income households. Wal-Mart finds its market at the other end of the demographic scale, catering to households with below-average incomes. Nordstrom is going away, leaving its loyal customers the option of shopping in Portland for its quality clothing and legendary customer service. Wal-Mart is preparing to open a smallish Neighborhood Market store in central Vancouver and a giant Supercenter in more suburban Battle Ground.

The reaction to Nordstrom's planned departure revealed a self-consciousness fear that this community is losing ground economically. "We've been taken down a notch," Risa Johnson Leverenz commented on columbian.com.

Reaction to Wal-Mart's expansion, and its hiring of nearly 400 local workers, is mixed. The Bentonville, Ark.-based retailer draws plenty of criticism for its wages and its success in dominating local markets, but also supporters who say its low prices help families who have little cash to spend on basics.

Wal-Mart's expansion likely contributes to the reshuffling taking place in the local grocery sector. This month, the Albertsons chain shut down two of its remaining Clark County stores, leaving just two Albertsons in Clark County. In Vancouver, the St. John's IGA shuttered its doors in January.

Rest of the story

Certainly, Clark County, like much of the nation, is struggling with stagnant or declining wages and uncomfortably high unemployment and underemployment, especially in lower-wage jobs.

But that isn't the full story: Nordstom says it has more success with larger stores, and the company also is closing its store at Portland's Lloyd Center. Albertsons has struggled financially for years at the national level. More important to retailers here, Clark County merchants have always had trouble competing with sales-tax-free shopping just a short drive away in Oregon. Then there's the competition that's outside the visible spectrum: Amazon and a host of online retailers that gobble an ever-increasing share of our consumer dollars.

Wal-Mart and Amazon offer low prices that allow us to stretch our tight budgets. But our gain comes at a price to the community. Even in the low-paying retail sector, Wal-Mart stands out for its low wages. One study by David Neumark, an economist at the University of California, Irvine, says that Wal-Mart's presence in a community has the effect of driving down all wages in that community.

As for Amazon, a study by the Institute for Local Self-Reliance using U.S. Census data concluded that the company needs just 14 employees to generate $10 million in earned revenue, compared to 47 employees for a bricks-and-mortar retailer.

So, enjoy the customer-friendly service of Nordstrom and other old-line retailers while it lasts. It might just become another Catch-22 victim of our necessary pursuit of low-cost goods at the price of well-paying jobs.