Editor’s note: This article originally appeared in the summer issue of Business Leader, a quarterly magazine produced by the Leader-Telegram. View back issues of Business Leader and other magazines at leader telegram.com/magazines.
Retailers had long been the most plentiful kind of businesses in Eau Claire County, but their dominance of the local private sector has been usurped by the growth of health care and social services.
County Business Patterns statistics from the U.S. Census Bureau showed the two big pieces of the area’s economy had been headed toward an intersection for years.
In terms of employment, they already crossed paths in 2002 when health care and social services surpassed retail as the county’s No. 1 sector.
The Census Bureau’s latest batch of data — 2016 business trends were released in April — showed the two business sectors were nearing the same intersection for the number of establishments.
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But the falling number of stores seems at odds with the knowledge of local business experts.
“It doesn’t feel like we’ve seen a decline in our retail sector,” said Scott Rogers, the Eau Claire Area Chamber of Commerce’s governmental affairs and workforce director.
He noted that the chamber’s membership — though he acknowledges not all businesses join the local group — has been steady for several years. Polls of members taken twice a year also have also shown a rise in confidence, with 91 percent of respondents to January’s survey assessing the local economy as “moderately strong” to “very strong.”
County sales tax collections — fueled primarily by retail — continue to grow. In 2015, the county broke a milestone — passing $2 billion in taxable sales — and continue to rise.
Another way of looking at the local retail sector’s health is the overall number of people employed at those businesses in the county.
Retail jobs in the county declined after 2007 — falling in line with the onset of the recession — but settled around about 7,000 for several years before trending upward in 2016, based on the Census Bureau’s statistics.
But the Census Bureau’s business trend data from 2008 to 2016 shows there has been a decline in retail establishments, losing an average of about five annually in the county.
The reason why the declining number of retailers isn’t plain to see is the ones that declined the most were very small businesses, based on Census statistics that group workplaces based on their number of employees.
Retailers employing less than 20 people went from 372 in 2008 down to 319 in 2016 — and those with only a handful of workers accounted for much of that.
And in some of those cases, it could’ve been businesses growing instead of closing their doors.
Retailers that employed between 20 and 99 employees proliferated — going from 46 in 2008 to 58 in 2016.
Even larger businesses also have seen changes in their ranks during the past decade.
There were 19 stores with 100 to 249 employees in 2008, but that had gone down to a baker’s dozen by 2016.
But while the county long had one store that employed more than 250 people, a second retailer with that employment level was recorded in 2013.
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There have been some recent instances of large stores on major Eau Claire thoroughfares that closed and have remained empty — Kmart in 2015 and the Mega East grocery store in early 2016. But there also have been other retailers that departed only to be replaced within months by a newcomer.
Macy’s closed in March 2017, but Hobby Lobby will occupy about 70 percent of that anchor store in the Oakwood Mall, opening later this year.
Younkers, another anchor store at the local mall, began its going-out-of-business sale in April, as did other locations in the bankrupt Bon-Ton Stores chain. But just about two miles away, a large new Mills Fleet Farm store is under construction.
And in the case of the four Gordy’s Market locations in Eau Claire that closed last year due to receivership, a pair of them reopened in December as Festival Foods and Gordy’s plans to reopen one of the other stores.
“Retail is always changing,” said Stuart Schaefer, president of Commonweal Development in Eau Claire. “There’s always retailers coming and going.”
Commonweal studies the local real estate market for retail and office space. Their 2017 market report had a 12.3 percent vacancy rate for retail space in the Eau Claire area, which was up from the prior two years. Factors going into that include newly built commercial space without tenants and the impact that large stores like Kmart, Mega West and Gander Mountain (which reopened as Gander Outdoors in June) have on the total figure when they close.
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Some of the high-profile store closings of recent years in Eau Claire don’t necessarily reflect on the local economy or consumers, local chamber president and CEO David Minor said, because they’re based on calls made by CEOs and other executives.
“Those decisions were made somewhere else where we can’t have an effect on them,” he said.
For some of the retailers departing Eau Claire, such as Macy’s and Younkers’ owner Bon-Ton Stores, Schaefer said they’d run into problems due to tougher competition.
“You can blame Amazon or the Internet, but these are retailers that probably weren’t long for the world,” he said.
Traditional retailers seeing single-digit growth can’t ignore the double-digit growth of e-commerce, Schaefer said.
His colleague, Jamie Radabough, Commonweal’s commercial leasing director, noted the new trend for retail is to become “omnichannel” — growing an online presence that complements physical stores.
Schaefer used a more pragmatic term — “keeping up with the times.”
He noted that traditional retailers that did boost their online shops, namely Walmart and Target, are now runners-up to Amazon when it comes to Internet retail sales.
Amazon’s purchase of Whole Foods Markets also showed that online sales don’t work for all goods, such as perishable foods.
At the same time, Schaefer said retailers such as Fleet Farm and Menards don’t face the same pressure to compete with online stores because their products — especially bulky items — would be difficult to deliver.
“The things you buy there are not all that typical of things you would buy over the Internet,” Schaefer said.
Professor Thomas Kemp, chairman of the Economics Department at UW-Eau Claire, said that there has been historically more shop space per capita in the U.S. than comparable nations, which he feels will decline due in part to competition from e-commerce.
“I would say that retail never goes away fully, but the amount of space we devote to retail currently is probably not sustainable,” he said. “We have more shop space per person than most other developed nation has.”
Minor said he’s seeing the national trend of retail growing, but through smaller specialty stores rather than new superstores.
“I’m starting to see more niche places,” he said.
The chamber had a record 65 ribbon-cutting ceremonies last year, Minor said, and it was for the usual variety of businesses seen in the Eau Claire area.
“We are pretty much spread across all pieces of the economy,” he said.
And health care companies are among those clipping ribbons in recent years and they plan to cut more in the near future.
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Heath care provider Prevea Health didn’t have a presence in western Wisconsin before July 2015.
But the Green Bay-based organization now has seven health centers, two urgent care facilities and multiple services available at two area hospitals in the Chippewa Valley.
And Prevea isn’t done yet with construction under way on health centers in Ladysmith and Rice Lake, plus planning for a Menomonie health center and a medical office building in Eau Claire.
“The kind of growth we’re seeing all over America today and especially the Chippewa Valley is a different kind of health care growth,” said Dr. Ashok Rai, president and CEO of Prevea.
The focus is in outpatient care — clinics in areas, including smaller towns, where patients get treatment and leave the same day — instead of hospitals.
“We like to keep care local and convenient,” Rai said in a phone interview.
The number of ambulatory health care services has grown in Eau Claire County from 155 in 2013 to 168 last fall, according to the Bureau of Labor Statistics.
Prevea came to the Chippewa Valley via its partnership with Hospital Sisters Health System, which owns Sacred Heart Hospital in Eau Claire and St. Joseph’s Hospital in Chippewa Falls. Prevea is half owned by its doctors and half owned by HSHS.
The newcomer to the local market arrived roughly as Marshfield Clinic, which previously had ties with local HSHS hospitals, planned its own new facilities.
In June 2016, Marshfield Clinic Health System announced it would be building a hospital and cancer center next to its existing main campus in Eau Claire. The cancer center opened in fall and the hospital will welcome its first patients later this month.
Scott Polenz, chief administrative officer of the new Marshfield Clinic hospital, said the company’s growth in the Chippewa Valley is to create an “integrated system” — hospital care, clinics and a health plan.
“We believe health care, like all things, needs to continually evolve to meet the needs of the patient and the communities we serve,” Polenz said in an email.
For example, two years ago Marshfield Clinic entered an agreement with Grace Lutheran Communities for its new skilled nursing facility beds to its Eau Claire campus. That addition let Marshfield Clinic do hip and knee replacements in an outpatient setting, which has a lower cost than a hospital stay.
There also is a growing variety in the kinds of business models in health care too.
“People are trying different things,” said Rogers of the chamber.
Direct-pay medical practices of ReforMedicine and Joyful Doc opened in recent years in Eau Claire, he noted.
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While new clinics and hospitals add to the growing number of health care and social assistance establishments in Eau Claire County, it was much smaller workplaces that pushed the sector’s total beyond the ranks of retailers.
Caregivers that provide in-home services such as homemaking, general support, day care and nonmedical services for the elderly and disabled have multiplied in recent years in the county.
Between the start of 2013 and last fall, the number of those businesses grew by about 270 percent, according to the U.S. Bureau of Labor Statistics. There were 48 of those in-home care businesses at the start of 2013, but had grown to 177 by last fall in the county. However, the average employment is a little above three people per establishment.
The sector that employs the most nationwide is health care and social assistance, which had 19.7 million people working at 890,519 businesses in 2016, according to the Census Bureau.
The bureau’s April 19 release of the 2016 County Business Patterns data highlighted recent growth in construction.
Employment in construction grew 5 percent nationwide between 2015 and 2016, leading all other sectors for job growth. While construction had an impressive 12.7 percent job growth in Eau Claire County between those two years, it was beaten by the nearly 20 percent job growth in the local arts, entertainment and recreation scene.
County Business Patterns do not include self-employed people, railroad employees, agricultural workers and most government employees.
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