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Business Roundup | Wenatchee Staples to pull the plug Feb. 11

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The Wenatchee Staples plans to close its doors on Feb. 11 after a 20-year run.

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Wenatchee Staples to pull the plug Feb. 11

WENATCHEE — One of the largest office-supply retailers in North Central Washington has announced it will close after more than two decades in business.

Staples Inc. will shutter its store at 200 Ferry St. on Feb. 11, a company spokeswoman confirmed Dec. 27. Closure of the underperforming store, one of South Wenatchee’s major businesses, is part of the company’s overall strategy to trim its retail operations as customers shift to online purchasing.

We continually evaluate our store performance to ensure we’re operating the business in the best way,” Staples spokeswoman Kaleigh Sands wrote in an email. “As customers shift online, we are taking aggressive action to right-size our retail footprint.”

The Staples in Moses Lake, the next-closest outlet to Wenatchee, will remain open.

The company did not disclose the number of employees affected by the closure or what might happen to the building, a former location of Safeway grocery.

The Wenatchee Staples, the first of the company’s stores in the state, opened in August 1996 to great fanfare. Hundreds of residents attended the opening, and company executives were on-hand to celebrate Staples expansion into the northwest corner of the nation.

At the time, a company spokeswoman heralded an evolving computer and digital technology, as well as the jump in home businesses, as major contributors to the booming office-supply industry.

Twenty years later, those same technologies had undercut Staples’ individual store sales in the face of intensifying online and bricks-and-mortar competition, the wire service Reuters said in an August report. By September, the company suffered its 15th straight quarter of declining sales as it struggled to compete with Walmart and Amazon.com.

Closure of the local Staples adds one more empty “big box” to a string of locations in the Wenatchee Valley that, so far, still seek tenants. Leading the group are the vacant Food Pavilion building in Olds Station and the Hastings Entertainment building (315 Ninth St., Wenatchee). Grocery Outlet has announced it will fill part of the recently-closed (Dec. 3) Food Pavilion store at Wenatchee Valley Mall, but mall execs have not yet announced who will fill the remaining space.

Massachusetts-based Staples closed a total of 242 stores in 2014 and 2015 and announced earlier this year that another 50 would be closed this year across North America. In January 2016, the company had 1,907 stores.

 

Foreman Fruit buys Oregon’s largest grower

WENATCHEE — Two Northwest family-run companies have joined together to grow and sell oodles of fruit.

The Foreman Fruit Company of Wenatchee has bought Earl Brown & Sons, Oregon’s largest grower and packer of fresh apples, industry trade journals reported Jan. 11.

The acquisition gives Foreman Fruit an additional 1,000 acres of apples and 115 acres of wine grapes in the area around Milton-Freewater, Oregon.

A purchase price was not disclosed, but under the deal the Brown company will keep its name while the fruit producer’s 160 employees — including Brown family members — will retain their jobs. “We’re moving along just like we did before,” said Ron Brown, whose father Earl started Earl Brown & Sons 40 years ago.

The only big change in the Brown business model will be additional capital provided by Foreman Fruit for expansion and growth, said Brown.

Alan Groff, president and CEO of Foreman Fruit, said Brown has “excellent orchards and vineyards. There’s a nice intersection of our capabilities.”

Foreman Fruit was founded in the 1980s by Dale Foreman, Wenatchee attorney and former chairman of the Washington Apple Commission. Groff is Foreman’s son-in-law.

 

Hot housing market attracts legion of new brokers 

WENATCHEE — Listings in the Wenatchee housing market might have dwindled last year, but the number of real estate agents surged.

They see that prices and sales are up, and they want to be part of it,” said Jerry Paine, a 27-year veteran of the real estate industry and a multiple listing service committee member for the North Central Washington Association of Realtors.

Paine estimated that 50 to 60 new brokers hung out their shingle in 2016. That brings the total number of real estate agents in the Wenatchee market to around 365, up from 270 in 2008 when the local housing market began its decline as the local and national economies slowed.

I remember that sad time,” he said. “We lost one-third of our agents in a couple of years.”

Even now, the local real estate industry’s swelling sales force likely won’t last, Paine predicted. “It takes years to develop relationships in the industry, make connections with other brokers and developers and cultivate trust with your clients.”

He added, “A lot of the new agents won’t stick with it.”

 

Wenatchee named as Sunset Magazine ‘dream town’

WENATCHEE — Uh-oh. Our secret is out.

Wenatchee has been named as one of Sunset Magazine’s “20 Western Dream Towns” as part of the publication’s on-going series of Best Places to Live 2017. The 12-page spread on the 20 towns appears in the February issue.

On the list, Wenatchee joined high-profile cities such as Reno, Nevada; Santa Rosa, California; Ventura, California; Provo, Utah; Boise, Idaho; Scottsdale, Arizona; and others.

Actually, Wenatchee is one of three runners-up in the article’s list of towns in the Northwest that offer the best bang for the buck in housing, lifestyle and salaries. Wenatchee joined Coos Bay, Oregon, and Anchorage behind Vancouver, Washington, which took first place in the category.

Sunset’s other top Western “value towns” included Nevada City in Northern California; Ventura in Southern California; Boise in the Mountains category; and Prescott, Arizona in the Southwest.

In listing Wenatchee, the magazine noted the region’s growing number of vineyards and wineries, its proximity to the Columbia River and the presence of retail-restaurant hub Pybus Public Market. Of course, the city is also a gateway to outdoor recreation and the center of a mega-sized fruit industry.

 

Wenatchee whiz has ‘Perfict’ app to keep you fit

WENATCHEE — Cory Faulkner’s efforts to muscle into a very crowded fitness market have begun to pay off.

Last month, the former Wenatchee resident launched his Perfict Fitness App, a smartphone application and website that tracks workouts and, more importantly, coaches fitness buffs in the exercise routine that’s right for them.

He’s got nearly 120 certified fitness trainers from across the U.S. presenting videos that cater to all levels of fitness and motivation. The free app includes a fitness tracker and journal, but individual workouts cost $1 to $20, depending on complexity.

The launch for iPhones (with an Android release arriving in coming weeks) is the culmination of nearly 18 months of struggle to raise money, design the app and — over the last four months — test that baby and get it right.

It’s probably the most stressful undertaking I’ve ever had to do,” said Faulkner, speaking Tuesday from his home and business headquarters in Cheney. “It’s one thing to have the idea for an app. It’s a whole other ballgame to actually make one work. It takes hundreds of hours. It takes learning new skills. It takes believing in what you’re doing.”

As it turns out, he’s not the only one who believes in the Perfict app. Hundreds of backers have donated nearly $23,000 as part of Faulkner’s campaign on Kickstarter, the fundraising website. Other contributors have donated even more — raising Perfict’s seed money to over $50,000.

And Faulkner is hoping that amount will grow. This month he’ll polish his pitch to the Spokane Angel Alliance, an investors’ group, to raise $250,000 to produce a more advanced version of his fitness app.

So what’s this 23-year-old gym rat learned from piloting a new start-up tech company? “Oh, geez, where do I start?” he said. “How to design and build an app. How to finance and run a business. How to enlist high-powered trainers and video their workouts.”

He added, “It’s been an uphill battle, that’s for sure. But it’s been worth it. This app is something that will help people get and stay fit. I’m biased, of course, but I think it’s a winner.”

Info: ow.ly/XRsr307Hptp.

 

Home sales jump in 2016 despite low inventory, higher prices

WENATCHEE — Low inventory and higher prices did little to slow 2016 homes sales in the Wenatchee market. Expect the same in 2017.

A good year could have been incredible if we’d had more houses to sell,” said Jerry Paine, real estate broker for Windermere Wenatchee. “But many homeowners were staying put. They just weren’t ready to put their home on the market.”

Active listings in December fell 41 percent from the same month in 2015 — to 120 from 205 — as the median price leaped 8 percent to hit $269,900, market consultants Pacific Appraisal Associates reported Jan. 18. Averaged across 2016’s last quarter, the median price hit $275,500.

Despite those factors, sales closing in December were up 21 percent from one year prior — 92 vs. 76 — and up more than 8 percent for the year at 1,121. That’s nearly twice the number of houses sold in 2010, when the region’s depressed market began its slow recovery.

Market observers agreed that interest rates hovering at historic lows, just above 4 percent, continued to bolster buyers’ optimism. “Buyers weren’t spooked by higher selling prices,” said Paine. “All year long, low interest rates kept sparking sales.”

But even with houses selling on average at around 50 or more per month — monthly sales peaked in September at around four homes per day — some homeowners have been reluctant to jump into the market. “Don’t forget that they likely love the Wenatchee area and want to continue living here” said Paine. “The prospect of buying another pricey home might not look all that attractive.”

Shrinking inventory and the resulting higher prices, along with a steady influx of new residents, means that “it all adds up to a sellers’ market,” Paine said. “Generally, we’re seeing that there’s not much difference between the listing price and the selling price. In most cases, homeowners are getting the price they ask.”

While Paine expects the Wenatchee market to maintain this pattern in 2017, particularly if interest rates remain low, the market could loosen as new housing developments near East Wenatchee take shape through the year. A number of multi-phase housing developments — upward of 350 homes built over the next few years — are currently in the works, the Douglas County Land Services office confirmed.

We should begin to see at least some new inventory on the market as spring approaches,” Paine said. “It’ll be most welcome.”

The Wenatchee market includes Wenatchee, East Wenatchee, Malaga, Orondo and Rock Island.

Other highlights of Wenatchee home market in December:

  • The number of building permits for single-family homes in 2016 fell 15 percent from the previous year to 217, while permits for duplex and triplex units fell 27 percent to 16 and permits for apartment units tumbled nearly 73 percent — to 22 from 81 in 2015.
  • The rental market continued to tighten for the sixth straight year. Compared to 2015, overall vacancies in 2016 dropped 50 percent. For the year, condo vacancies were at zero, single-family homes at 2 percent, duplex vacancies at 1 percent and apartment vacancies also at 1 percent. (Rental vacancies are compiled from info supplied by eight rental companies in the Wenatchee market.)
  • The fastest-selling homes continued to be in the price range of $200,000 to $300,000 with around 44 sold per month. Higher-priced homes of $650,000 and more sell at a rate of around 0.5 to 1 per month.

Craft Warehouse to liquidate, close after 21 years 

WENATCHEE — More than two decades of selling sequins, beads, fabrics, foam balls, picture frames, and other design doodads will come to an end in coming months as Craft Warehouse in Wenatchee sells off its inventory and closes for good.

We’re sad to announce the closing of our store in Wenatchee,” stated a press release from the Jerry and Sonja Williams family, a group that owns and manages nine Craft Warehouse locations in Washington and Oregon. “We will miss you all and are sad to have been forced to make this decision.”

The closure follows unsuccessful negotiations for a new lease, said John Mack, spokesman for the Camas-based chain. “This is not an aggrieved situation,” he said. “The landlord was flexible and has allowed us to leave on our own conditions.”

Shuttering of the store adds to the Wenatchee Valley’s growing list of notable business closures: Staples, Haggen grocery, Hastings Entertainment, Food Pavilion, Mills Bros., Palmer Shoes, Academic Toolbox and others. A year ago, Alcoa Wenatchee Works began layoffs of more than 400 employees in a move to mothball its Malaga smelter.

Packed with tens of thousands of craft and decor items, the 21-year-old store in Valley North Center (1370 N. Miller St.) closed for two days to prepare for a liquidation sale that began Jan. 6.

The close-out sale will run until inventory is gone, said store manager Paul Radcliffe, who’s been at the Wenatchee location for two years. The store must be vacant by April 15, the last day of the store’s present lease.

The sale will include all items in the store, including art and scrapbooking supplies, lighting, shelving, tables and display fixtures. “Every item in the store will be discounted,” said the press release.

Thirty-one employees will be affected by the shutdown. As yet, any accommodation of workers have not been hammered out. “Everything has happened so fast” since finding out the store’s lease will not be renewed, said Mack. “We are currently working on these matters.”

Mack acknowledged that Craft Warehouse has felt increased competition from online craft retailers and bricks-and-mortar stores such as Hobby Lobby. “But this December, we launched sales of gift cards online and have plans to further our online presence,” he said.

As for Hobby Lobby, “they have moved into several of our markets, and we have felt their presence,” Mack said. “But we have always bounced back by sticking to our core beliefs. We value inspirational merchandising, customer service and depth of stock to serve our customers.”

Craft Warehouse entered the Wenatchee market in 1995 with the purchase of Crafti’s Craft Supply at 1202 N. Wenatchee Ave. Craft Warehouse moved to its current location in 2006 when art-and-craft store Michael’s departed Valley North Center.

 

Fruit markets blossom as wheat profits fall in 2016

SPOKANE — Crops and products of the region’s agricultural industries ended 2016 with mixed results in production, demand, inventory and — ultimately — profits.

New apple varieties were in high demand, cherry profits surged and smaller pear crops meant strong returns for growers, Northwest Farm Credit Services, a leading ag lending cooperative, reported Jan. 10.

In 2017, management of costs, increased efficiencies in production and pinpoint timing in marketing will be critical factors for success, the credit service said in a press release.

Here are a few 2016 snapshots from Northwest FCS of the region’s key ag industries:

Apples — The industry produced a near-record crop that topped 137 million boxes, the second-largest harvest ever, but faced quality and size issues on some of the older varieties (Red Delicious, Granny Smith). However, prices for newer varieties (Honeycrisp, Fuji) remained strong as consumers responded to fresh marketing strategies. Profits were solid for those producers who met those consumer demands, while margins were tighter for growers with dated varieties.

Cherries — Market timing, available varieties and crop sizes drove returns for cherry growers in 2016. As supplies rose and fell, prices were volatile and sometimes changed day to day. A spring flash bloom reduced yields for early varieties, but expectations for an overall smaller crop didn’t materialize. Instead, the cherry industry reported its third-largest crop (20 million boxes) on record and overall industry profitability.

Pears — Although the crop was 6.5 percent lower than the 5-year average, 2016 pear prices remained stable as the smaller crop shipped to meet strong domestic demand and relied less on export markets.

Wheat — With wheat supplies surging in both the U.S. and around the globe, wheat producers’ margins were tight. Overall, U.S. wheat production increased 12 percent despite fewer harvested acres and global production is forecast to be a record haul for the fourth straight year. Efficiency in production is key to profits, with low-cost operators at or above the break-even point and high-cost operations showing losses.

Wine/vineyards — A robust harvest, high-quality grapes and strong consumer demand supported continued profitability in the wind and vineyard industry. Washington had a record grape crop and Oregon and Idaho produced moderate-sized harvests. Although global wine consumption is down slightly, consumption in the U.S. continues to grow, driven by the millennials’ taste for premium, super-premium and luxury wines.

Hay — Northwest hay markets and grower profits continued to be weighted down by strong inventories and challenging export conditions. Feeder markets had a surplus of weather-damaged hay, and dairies had inventories of 12 months or more. Although alfalfa exports increased in 2016, continued strength in exports is uncertain. The U.S. dollar remains strong and freight prices are rising due to shipping company consolidation.

Nursery/greenhouse — Low inventories and sales growth are fueling nursery and greenhouse growers’ profits. But lessons learned over the last decade, along with a tight labor market, deter any overexpansion by producers.

Northwest FCS is a $10.9 billion financial cooperative providing financing and related services, including crop insurance, to farmers, ranchers, agribusiness, fishermen, timber producers and rural homeowners in five Northwestern states.

For more info, visit northwestfcs.com.

 

Shift in shopping | Business closures the result of changing consumer patterns

WENATCHEE — No one’s arguing that the local business community took some hard hits in 2016 from a string of closures by stores and companies both big and small.

The shutdowns of Alcoa, Haggen, Hastings, Sassy’s Diner, Palmer Shoes, Mills Bros., Cafe Rio and, most recently, Food Pavilion, Academic Toolbox, Staples and Craft Warehouse add up to a puzzling loss of millions in revenues and scores of jobs.

So what the heck is going on? How bad are these closures for the local economy? And why are they all happening now?

The retail landscape is shifting right before our eyes,” said Steve King, the city of Wenatchee’s Community and Economic Development Director. “Many industries — retail in particular — have entered a dynamic period of change all brought on by advances in technology. It’s been coming for years, but now it’s coming faster than ever. And it’s coming right here to the Wenatchee Valley.”

Call it “the Amazon effect,”said King. “As malls, big retail chains, even mom-and-pop neighborhood stores see consumers buying more and more online, they’re trying to figure out a new business model. Trying to figure out what works and how to survive.”

For many retailers, weeding out underperforming stores and downsizing what’s left have been initial tasks in redefining how they do business.

For instance, in just the past week once-powerful Sears announced closure of 41 of its namesake stores, Kmart will shutter 109 locations and Macy’s listed 68 stores for closure this year. In September, Fortune Magazine reported that the nation’s six major department store chains had closed more than 700 locations in the U.S. since 2013.

It’s true that internet shopping has sped up the life cycle of retailers,” said Dan Barr, lead broker for commercial real estate firm Center Investments in East Wenatchee. “But this is a national trend — no city or town is immune — and doesn’t necessarily indicate that our (local) economy is slowing down or faltering in some way.”

In fact, noted King, local store closures have come as revenues from taxable retails sales have surged. Total revenues from taxable retail sales in 2015 increased by more than 90 percent from a decade before to hit $543 million — and the surge has continued. In the first two quarters of 2016, Chelan County’s taxable retail sales had increased (on average) 65 percent over the previous year.

Much of the climb in tax revenues has been from major construction projects, said King. “New schools, some housing developments, office buildings and renovations to existing structures — it all adds up and does so quickly.”

Civic leaders and business managers also pointed to the natural cycle of commercial enterprise — stores open, stores close — and argued that this isn’t always a bad thing. And some businesses — for instance Mills Bros., Palmer Shoes, Sassy’s Diner — close because owners are ready to retire. 

Deals are nearly signed to bring new tenants to at least two spaces where stores are closing,” said commercial developer Rory Turner. New businesses are in line to fill the Staples building (closing Feb. 11) in South Wenatchee and, in quick turnaround, the Craft Warehouse space (closing by April 15) at North Valley Center in Wenatchee.

Both Turner and Barr, individual leasing agents for dozens of spaces around the Wenatchee Valley, declined to name the new tenants. But both agreed that local consumers would welcome the incoming businesses. “In many ways, these are improvements over what we had before,” said Turner. “The local business mix should be improved.”

Another major shift, said local civic and business leaders, is the move away from suburban malls and big-box stores to the more personal and intimate shopping experience found in a quaint downtown.

The retail experience, not price point, is the lure for many younger consumers,” said Turner. “You look at a thriving downtown and see the opposite of buying on Amazon.com. Real people helping you make buying decisions on items that are often unique, not found everywhere. Look around Wenatchee’s downtown — you’ll find that kind of experience on every block.”

Add up all the factors — downsizing of chain stores, shift in consumer shopping patterns, the search for authentic experiences — “and you can see less of a need for a big, fancy storefront,” said Shiloh Schauer, executive director of the Wenatchee Valley Chamber of Commerce.

So, many of these (local) store closures come as no big surprise,” she said. “Business owners and consumers alike are witness to a new economy taking shape right in front of us. In many ways, it’s incredibly exciting.”

 

East Wenatchee Macy’s survives as retailer closes 68 stores

EAST WENATCHEE — Breathe easy, shoppers. The Macy’s in East Wenatchee has survived another round of closures by the national retailer.

The 12-year-old department store at Wenatchee Valley Mall was not on a list released Jan. 4 of 68 Macy’s stores set to be shuttered across the country. Not so lucky were Macy’s stores in downtown Portland and malls in Kelso and Everett.

The 68 closures are an initial 2017 winnowing of Macy’s locations as the the company battles slowing sales and growing online competition. The company announced in August it would close up to 100 of its 730 stores this year as same-store revenues continue to fall.

Up to 4,000 Macy’s employees could be affected by closures that took effect last year and for those in 2017, wire services have reported. Most stores will be closing in early 2017.

Also surviving this round of closures are Macy’s stores in Union Gap (Yakima), Kennewick, Walla Walla and a furniture gallery in Richland.

Of the 68 closures in 26 states, the most were in Texas (8), Pennsylvania (6) and Florida (5). Oregon had two — one in downtown Portland and another in Salem’s Lancaster Mall — and Idaho had one closure in Nampa’s Gateway Center.

In Washington, the retailer will close its outlet in Everett, a 133,000-square-foot store (opened in 1977) with 109 employees and in Kelso’s Three Rivers Mall, a 51,000-square-foot store (opened in 1987) with 57 employees.

Final clearance sales at all stores on the closure list will begin Monday and run for about eight to 12 weeks. Sales at the Salem store are already underway.

Plus, the retail giant said in its press release that it will cut “layers of management” at its central operations in Ohio and at selected stores — a move that could affect another 1,500 employees.

Reasons for the closures vary by location, retail industry observers said in various wire stories. Declining revenues at underperforming stores, linked to a global switch to online shopping, is a top factor. Too many stores in close proximity is another. And rising property values in commercial districts — such as downtown Portland and Spokane, where Macy’s stores are closing — call for denser development than a multi-story department store.

We continue to experience declining traffic in our stores where the majority of our business is still transacted,” Macy’s CEO Terry Lundgren said in the news release. “We are closing locations that are unproductive or are no longer robust shopping destinations due to changes in the local retail shopping landscape. These are never easy decisions.”

Last month, Macy’s also announced the sale of three stores the company will lease back and continue to operate. Those are located in California and Virginia.

The company also unveiled plans to open new stores in Los Angeles and Murray, Utah, and two Bloomingdale’s (Macy’s sister retailer) in San Jose, California, and Norwalk, Connecticut. The company also plans to open three stores in Kuwait and the United Arab Emirates by 2018.

In addition, the company said it has plans over the next two years to open around 50 Macy’s Backstage off-price locations inside existing stores and about 50 Bluemercury beauty specialty kiosks, also inside existing stores.

Macy’s entered the Wenatchee Valley market in 2005 when it replaced The Bon at the mall location.