Sarah Vogel trekked to northwest Omaha over the noon hour this week to shop at a new store in the city’s shifting retail scene.
It’s Sierra Trading Post, a discount sportswear and outdoors store at 132nd Street and West Maple Road.
In another retail era, the site was a Big Kmart garden center. Now the center draws shoppers with new stores — HomeGoods, a T.J. Maxx and Burlington — all filling the renovated Kmart space.
Vogel, who lives in Missouri Valley and works in Omaha, says the store fits her family’s outdoorsy style. She was shopping for winter coats and was impressed by the prices.
“I like this store,” Vogel said. “I’ve been here a couple times since it opened.”
The turnover at Eagle Run Shopping Center is a testament to the changes — even turmoil — in retail right now. Longtime favorite stores are shuttering and other stores are struggling as Internet shopping grows and shoppers’ preferences change.
But for all the changes, the Omaha metro area is showing signs that the retail shake-up is not the apocalypse that might be expected.
That’s good news for area city governments and their taxpayers, who would have to replace a critical source of government revenue if the spending economy dried up.
Net taxable sales at stores are up across Douglas and Sarpy Counties so far for 2018 — proof that consumers are spending the money necessary to help drive the economy.
Sales tax revenue is growing solidly in the shopping hubs of Omaha and Papillion. La Vista’s probably would have been up if not for state business incentives paid out of its sales tax revenue. Bellevue and Gretna are showing a dip in sales tax collections, according to state figures through September.
In its latest quarterly financial report, the City of Omaha reported that sales taxes are projected to be $700,000 above budget.
City sales taxes figures are through September
City: 2017 YTD, 2018 YTD, Change YTD
- Bellevue: $8,151,093, $8,014,296, -$136,797
- Gretna: $2,719,522, $2,598,920, -$120,602
- La Vista: $6,822,997, $6,514,852, -$308,145*
- Omaha: $118,835,510, $121,895,862, $3,060,352
- Papillion: $9,490,122, $11,616,609, $2,126,487
*La Vista’s revenue was affected by business incentives paid as sales tax refunds under the Nebraska Advantage Act.
Source: Nebraska Department of Revenue
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Finance Director Steve Curtiss said the city is in a good position to withstand the changes affecting the retail industry. Even so, he said he expects those changes to continue.
“I do think the model’s going to continue to evolve,” Curtiss said. “I don’t think we’re anywhere finished seeing what it’s going to look like, either.”
The changes have been undeniable.
Omaha lost its beloved Younkers stores this year.
Crossroads Mall broke down long ago, and its owners have been unable to get a renovation off the ground. Now, west Omaha’s Oak View Mall and the stores around its periphery are feeling the same loss — with Younkers, Sears, Dick’s Sporting Goods and Toys R Us among the closures.
It’s not just Omaha. Papillion’s Shadow Lake Towne Center lost Gordmans and OfficeMax, and the center’s total vacancy stood just under 19 percent at the end of 2017, according to commercial retail firm The Lerner Co.
Yet the amount of occupied retail space has kept growing in the metro area. And 2018 has been another good year overall for retail, said Jay Lerner, president of the firm.
Separate figures from Colliers International, another Omaha commercial real estate firm, show that retail space overall in Omaha and Sarpy County has grown in 2018, and occupied square footage is up, although the vacancy rate has risen from 7.4 percent to 8.2 percent.
Lerner said the retailers that have closed didn’t keep up with market demands.
Internet sales are a big influence. Lerner said stores today must offer something more than merchandise — they need to provide an experience, service and an online component that meshes with the physical store.
Stores rising in this economy tend to be smaller, Lerner said. And stores that offer value-priced merchandise, he said, are “going crazy.”
“Those retail sales aren’t going away,” said Lerner, whose firm markets Eagle Run. “They’re transferring.”
Still, an impact from the shopping shift may be apparent.
The World-Herald analyzed retail space and taxable sales in Douglas and Sarpy Counties. The numbers indicate that an average square foot of retail space in 2017 produced less in sales compared to 2005 — an age when the Internet was much younger and before the iPhone debuted. That’s in line with national trends.
If a given space has fewer sales, that means sales tax collections aren’t as robust as they used to be. When adjusted for inflation, a 250,000-square-foot shopping area, for instance, would generate some $323,000 less in sales taxes annually, according to The World-Herald’s calculations.
Lerner said the figures could reflect the national sentiment that the country is “overstored” with retail outlets.
Yet at the same time, the Omaha area is seeing sales rise and retail space turn over and expand.
As Oak View Mall changes, the West Farm development 2 miles away at Boys Town is promising highly sought-after retailers. As the old Gretna outlet mall went out of style, the popular new Nebraska Crossing Outlets took its place. Just Wednesday, it announced an expansion with a T.J. Maxx/HomeGoods anchor.
With the presence of Shadow Lake and the Shoppes at Market Pointe along 72nd Street, the City of Papillion’s sales tax collections have increased some 60 percent in the past decade.
Part of that is attributable to an increase in Papillion’s sales tax rate approved by voters. For that increase, the community will get a new $48 million community center, with a field house opening this month and the full center next fall.
Mayor David Black said Papillion’s strong sales tax collections are a factor in keeping the city’s property tax rate the lowest among metro area cities.
“Growth produces sales,” Black said. “Sales fund the growth. So it’s not on the back of the homeowner and property taxes.”
Nationally, consumer confidence has been strong as incomes grow following the federal tax cuts, said Eric Thompson, director of the Bureau of Business Research at the University of Nebraska-Lincoln.
In Nebraska, the bureau’s own survey numbers on consumer confidence have been uneven, slipping through the summer months, turning negative in September but then taking a jump higher in October. The index is based on questions such as, “Is now a good time to make a major household purchase?”
Thompson said that store closings are more a reflection of changes in the retail industry, not in consumer spending. If not for that spending, he said, the retail economy might have seen even more trouble.
Shoppers interviewed by The World-Herald this week said they are adjusting where they spend their money.
Marianne Foster of Omaha said she misses Younkers. “I am totally lost without Younkers.”
In the past, she said she never was much of a Kohl’s shopper but has been there more often, along with J.C. Penney and Dillard’s.
Marsha Wright of Council Bluffs said she focuses her shopping on two places — Target and Amazon online. She said she likes Target for items like toys, cosmetics and kids clothes, an area where she says “Target has really upped their game.”
Tracy Gosch of Waterloo, Nebraska, said she liked Younkers and Gordmans but shopped at Sierra Trading Post for the first time this week. “So far, I’m impressed. I think my husband would like it.”