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2008-11-23
New Prague, MN. Wal-Mart Walks Away

New Prague, Minnesota is a community with roughly 7,000 people. New Prague is located 45 miles southwest of Minneapolis/St. Paul, straddling the two counties Scott and Le Sueur. The city's Main Street divides Scott County to the north, and Le Seur County to the south. According to the city's economic Development Administration, "New Prague has the reputation of being a vibrant, growing community. This is a good place to start and grow a business." Wal-Mart agrees, and the giant retailer had big plans for locating a 159,639 s.f. superstore on 34 acres of land in New Prague. Only 8 acres of the site was zoned for commercial, the balance was for residential uses. The closest Wal-Mart superstore, after all, was 18 miles away in Shakopee. But according to the Minneapolis/St. Paul Star Tribune, Wal-Mart has left the building in New Prague. The newspaper says that Wal-Mart's demise in New Prague was due to the "national throttling back of expansion plans." Almost quoting the city's motto, a Wal-Mart spokesman told the Star Tribune their pull out "should take nothing away from New Prague as a good place to do business." The upbeat Mayor of New Prague, Bink Bender, admitted Wal-Mart's decision was a "great disappointment." But the Mayor, whose term ends next month, said his small city was still a "strong, vibrant community." There were many people in the New Prague community who felt that a Wal-Mart supercenter was not going to keep their city strong and vibrant. There was vocal opposition to this store dating back to its first appearance in 2007. The Mayor had an economic impact study done in March of 2008 of Wal-Mart's likely impact on New Prague. That report found that the city's trade area would expand across the county. "The existing New Prague trade area had a 2007 population of 22,483," the report found. "The After Wal-Mart Supercenter trade area had a population of 48,897, 117 percent larger than the Existing New Prague trade area. Wal-Mart Supercenter will draw customers from a larger area, attracting a greater number of shoppers that will have the opportunity to shop at other businesses in New Prague." But the report also found a darker side to Wal-Mart presence. "There is a possibility that Econofoods or ALCO may choose to close their stores due to the impact of sales transfer to Wal-Mart," wrote the McComb Group, the author's study. "The new Coborn's store, which will open before Wal-Mart, will capture transfer sales from Econofoods that are independent of Wal-Mart. If Econofoods closes, it will be because of sales transfer from Coborn's and Wal-Mart." The study also said other smaller merchants could fold. "Sales transfer of the smaller businesses (drug, liquor and hardware) in New Prague is estimated at about 11 percent of sales. Over the next five years, sales potential for retail stores in New Prague increases by about 27 percent. This increased sales potential can offset the sales transfer effect on smaller New Prague businesses. It is possible that smaller retailers that do not have the financial strengths to withstand a sales decline or the ability to adjust their merchandise mix to compete with Wal-Mart may close." The consultant also found that Wal-Mart would increase the city's costs for general government, public safety, and public works by about $51,409 in the first year -- which eats into half of the property tax revenue of $108,742. The consultant also concluded that Wal-Mart would help the city's downtown, using this line of reasoning: "Many Wal-Mart shoppers would also visit the East Side shopping area and pass through Downtown. Wal-Mart shoppers from the eastern portion of the trade area would also pass through Downtown. Downtown retail stores are well positioned to capitalize on this increased customer traffic. Most Downtown businesses are not head to head competitors with Wal-Mart. They carry, or should carry merchandise that is complementary to Wal-Mart." But the competitive store with Wal-Mart, like Econofoods, Coborn's, ALCO, Snyder's, Drug Express, Trailside and West End Liquors, and Ace Hardware -- would take a direct hit. The study says that sales at competing merchants would fall from $43.48 million before Wal-Mart, to $35.38 million after Wal-Mart -- a loss of nearly 20% of their total sales. The proposed Wal-Mart Supercenter could also potentially increase the commercial vacancy rate in New Prague, the study said. In a consumer survey conducted as part of the study, the most common negative responses about Wal-Mart were that some existing retailers could suffer after Wal-Mart entered the market or, that possibly, some existing retailers may close. Additional comments regarding negative impacts include: They will demand favors from the City; They will take the labor pool; It will bring undesirable people into town; Tax issues from closed businesses; More traffic; It will impact the pharmacies; It will bring in low income housing; They will be open 24 hours; Loss of jobs from closed businesses; Loss of business support for charities (from closing some businesses). The city's study is now moot, since Wal-Mart won't be coming to New Prague anytime soon.

What you can do: Wal-Mart issued this quote on November 19th regarding their withdrawal from New Prague: "While this decision is certainly an appropriate one from a business standpoint, it takes nothing away from the fact that New Prague is an attractive community for retail and a good place to do business. We thank local officials and staff for their diligent work on behalf of the community. They have been very professional and helpful throughout this process and we have enjoyed working with them." With that, they were gone. New Prague Mayor Bender describes his small city as "sort of a little mini-trade area." It is clear that in many ways, the city of New Prague has just dodged a bullet. Many existing merchants in the city would have struggled, or gone under, if the supercenter had been built. The economic impact study did not look at the quality of life issues facing this tiny community. People who want discount chinese retail do not have to drive the 45 miles to the Twin Cities. There are Wal-Marts and Targets and Home Depots nearby. Many of the people who choose to live in New Prague were probably thankful that the suburban problems of traffic and crime were not part of the lifestyle in New Prague. Readers are urged to call Mayor Bink Bender at (952) 758-4287 with the following message: "Mayor Bender, Your small city is fortunate to have escaped the grip of a Wal-Mart supercenter. You know there is one thing you can't buy on any Wal-Mart shelf -- small town qualify of life. But once they take it from you, they can't sell it back to you at any price. Now that you have a reprieve, it's time for New Prague to pass an amendment to your zoning code that limits the size of retail buildings. As another Minnesota Mayor once said: 'It's not how big you grow, it's how you grow big.'"










 
 
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