Breaking News

GRAND FORKS — Small retail business owners have a problem. They’re competing with e-commerce and online shopping platforms that offer convenience and ease of use, seemingly endless inventories and, many times, lower prices.

More than three-quarters of consumers in the U.S. have

shopped for items on the web

, according to Statista, a provider of market and consumer data. In 2022, e-commerce in the country brought in

$819 billion

, data shows, and digital shopping is forecast to continue growing year after year.

Although e-commerce is growing, the majority of total retail sales still comes from brick-and-mortar stores. As of 2022, 14.5% of total retail sales were e-commerce, Statista reports.

But it’s the growth of e-commerce that is troubling, some local retailers say.

“There’s research about how online shopping affects the brain. It’s as addictive as anything else out there,” said Richard Dafoe, owner of See Dick Run, a downtown Grand Forks store dedicated to the sport of running.

People have come into his business and told him how they bought a new pair of athletic shoes or a hydration pack online, the very things that are offered in his store. They don’t realize how important it is for a small business that customers purchase those items locally if they’re available, he said. And if the shoe isn’t in his store in the color or style they want, he can most likely order it for them. Some area retailers are in a battle to just stay afloat and those sales can keep the doors open.

“It takes more intentionality and effort to support small business,” Dafoe said. “The bar is a little bit higher versus, ‘I can shop and not leave home’ and click a button to order.”

Retail is the nation’s largest private-sector employer,

contributing $3.9 trillion to the annual GDP

and supporting one in four U.S. jobs, or 52 million Americans, according to the National Retail Federation.

Retail sales continued to grow in June despite slower job gains. National Retail Federation President and CEO Matthew Shay said in a release that consumers remain on solid footing and are spending on household priorities.

“Back-to-class spending is one of the most important shopping occasions of the year, and NRF’s consumer research shows that back-to-school and college spending is expected to set new records,” he said.

Scott Imberi, shown here in August 2023, is the owner of Diamonds on DeMers in downtown Grand Forks.

Eric Hylden/Grand Forks Herald

Scott Imberi, owner of Diamonds on DeMers, opened his jewelry business during the pandemic and has already seen sales growth over that short time. Just about everything in his shop is made to order and people buying fine jewelry typically want to see it in person before purchasing, meaning he doesn’t see much competition from online businesses.

Although Imberi says his business is doing great, he sympathizes with other retail business owners who may be having a tougher time. He thinks the message to shop local should be amended to “shop local – it’s here right now, you don’t have to wait.”

“We should be promoting ‘buy local’ and ‘get it today,’ pushing the fact that we have it here. I don’t think a lot of people realize that,” he said.

Imberi and Dafoe are two of about a dozen small retail business owners from Grand Forks who participated in a roundtable discussion last month with the Herald. Organized by the Herald, hosted by the Chamber and moderated by former UND Center for Innovation CEO Bruce Gjovig, the goal of the meeting was to discuss the challenges their businesses face daily as well as the successes they’ve had.

The clear message from all who participated was the need to educate people on the importance of shopping local – how it strengthens those businesses by keeping people in the community employed and how it keeps tax dollars local, helping maintain a vibrant and growing community. They also stressed the importance of touting their services and what they do for Grand Forks.

Many regularly donate to benefits and fundraisers, youth activities and myriad other requests for donations or time. But, some said, it’s sometimes difficult to donate to a solicitor who has never otherwise stepped foot in their store. Groups requesting donations from small businesses may want to consider spending money at those businesses as a show of reciprocal support, several participants said.

Kay Derry, owner of Northern Roots Boutique, does a lot of online promotion for her business. From her personal account, she made a Facebook post in June asking residents to consider shopping local to support those in the community who pay taxes, give back to youth sports and donate items to fundraisers, among other things.

“Will you pay a little more to buy something locally? Maybe, but not really. The economic impact that small businesses have is more than you think,” she wrote. “Quality of the products and the one-on-one service you receive should be what you are talking about.”

In a follow-up to the roundtable discussion, Derry spoke more about the idea of donating to various causes.

“When people come in like that for donations, it’s hard to say it and hard to stick up for yourself – did Amazon donate to your child’s soccer team? When you make one purchase from me, that covers half the cost of what I’m donating to you. It’s give and take. When people don’t realize that or they take it for granted, that’s probably the hardest part,” Derry said.

Derry and a group of retail owners recently had postcards made with their company names that were given out with each sale as a way to promote each other.

“We know you can’t support everyone and not everyone needs everyone’s services, but even word of mouth or sharing on social media totally helps,” she added.

Todd Feland, city administrator, and Maureen Storstad, finance director, said Grand Forks is seeing historic sales tax receipts, which can be attributed to the general growth of the city.

“We’ve had historic building and infrastructure investments. Building permits are at an all-time high, and also lots of infrastructure projects,” Feland said. “I think the other large driver, locally with the sales tax and business development, is construction itself and all of the spinoffs. There’s more construction activity and more people in our community.”

According to Storstad, sales tax collections are coming in very strong.

08xx23 SeeDickRun2.jpg

Richard Dafoe, of See Dick Run in downtown Grand Forks.

Eric Hylden/Grand Forks Herald

“Year-to-date, we like to look at a 12-month rolling period. It’s up around 6 to 6.5%,” she said. “We survived COVID pretty well. We tried to do some things to help keep those businesses going. We changed some ordinances to help keep those businesses operating and forgave some fees for a while. Through all that I think we came out even stronger.”

According to information provided by the city’s finance department, in July 2022, $2.67 million was collected in sales tax and in July 2023, $2.7 million was collected. It’s a 6.19% increase on a calendar year basis, looking at the first seven months of collections as compared to last year. Over a 12-month period, from July 2022 to July 2023, the city’s sales tax revenue increased by 6.59%, sitting at $32.39 million.

The majority of the July collections are from sales from May 2023.

“For the .25% restaurant lodging component of sales tax, $54,723.87 was collected in July. This continues to come in favorably, as this is slightly higher than the same month previous year of $50,836.61,” Storstad wrote in a sales tax update memo to city leaders dated July 21. “Overall, collections are up 8.02% on a calendar year basis, and up 5.33% on a 12-month rolling basis.”

The current sales tax for the city of Grand Forks is 7.25%, with 5% going to the state and 2.25% to the city. Of the city’s share, 1% goes to the general fund, 0.5% goes to water and roads, and 0.75% goes to the Alerus Center. There’s also a 0.25% sales tax added to restaurants and bars, and a 0.25% sales tax and 3% lodging tax for hotels.

The .75% sales tax going to the Alerus Center sunsets in 2029, and the city is considering asking voters to extend it as an economic development driver, as well as possibly adding indoor courts, turf and aquatics, Feland said.

“When Todd talks about that extension, it’s about sustaining the community and making sure it’s a place people want to live, raise their kids,” Storstad said. “That sales tax is so important for things like our roads and the water, everything we use that for. And property tax relief as well, we want to keep that stream going, it’s vital to our operations.”

Russel Crary, developer and sales manager at Crary Real Estate and chairman of the Grand Forks-East Grand Forks Chamber of Commerce, pointed out a big change to the retail landscape across the country – fewer malls. Where malls were once a shopping mainstay, the shift is moving toward strip malls. It’s been happening on the coasts for decades.

“Overall it’s changing to more storefronts. Our local (Columbia) mall ties into that – it’s an eyesore, but the owners are not local, they’re not invested in our community and it seems as though they aren’t necessarily stakeholders in the community. They don’t care, and that’s a big difference,” he said.

Columbia Mall is owned by Chicago real estate holding company GK Development, Inc., which purchased the 710,000-square-foot mall in 2004 from Met Life of New York. At the time, anchor tenants were Sears, JC Penney and Marshall Fields, and the number of mall tenants was listed at 72 with an 85% occupancy rate. Target was also previously located at the mall but had moved out prior to the sale when SuperTarget opened.

Grand Forks also has the Grand Cities Mall, which is owned and operated locally by Hope Church, and contains approximately 40 tenants. Some area business leaders credit that mall’s success with its local ownership.

“Shopping local helps create a more vibrant community,” Crary said. “Shopping local isn’t just about economic benefits. These are people who may be part of your church, serve on nonprofit boards, coach youth sports, and contribute to fundraisers. These people are our neighbors, they’re part of our community and they’re supporting everyone else in the community. It’s good to support them.”