SEQUIM — It’s hardly rocket science.
It’s not even based on logic most of the time, experts say.
The philosophy of choosing sites where national and regional retailing chains will operate comes down to a hit-and-miss, competitive game reminiscent of King of the Hill.
And in a city like Sequim, the stakes are even higher, says Paul Koenigsberg, a national retail-industry consultant based in Montville, N.J.
Koenigsberg has advised national retailing giants such as Home Depot, Federated Department Stores Inc., parent company of Macy’s — the former Bon Marché chain — and Saks Inc., which operates the New York City-based upscale chain Saks Fifth Avenue.
He and his partners help retailers decide on everything from store locations to branding strategies aimed at setting them apart from competitors.
The two major players who first came to bat in the North Olympic Peninsula’s growth-hungry city have little to lose, Koenigsberg said.
“Most consumers don’t realize it, but Home Depot is the world’s second-largest retailer next to Wal-Mart,” he said in a phone interview Friday.
Wal-Mart’s gross annual sales hover around the $150 billion mark. The Home Depot brings in just over half of that, grossing about $80 billion in 2003.
Perhaps that explains why both mega-retailers were intent on building stores in Sequim, despite court battles which have held up the developments for more than a year.
It may also answer a question on the minds of many who live and work on the North Olympic Peninsula: How much retail is too much retail in a relatively remote area?
90,000 population base
With a population base of about 90,000 — and a growth rate of between 2 and 5 percent projected over the next decade — the Peninsula is hardly a magnet for retail trades.
While not an area expert, Koenigsberg evaluated the area’s demographics and other factors retailers would tend to scrutinize.
Its ultimate population base, limited by geographic obstructions such as the Strait of Juan de Fuca, Puget Sound and Olympic Mountains might count as a negative, he said.
The downside to operating stores in remote regions center on economies of scale, since costs associated with running multiple locations are significant.
Koenigsberg said retailers prefer “cluster stores” within closer proximity of one another, allowing them less costly methods of merchandise distribution and a consolidated region in which management can more easily get involved in day-to-day operations.
Leaders of the pack?
But there are several reasons why chains may want to locate on the Peninsula — including the time-honored desire to lead the pack.
“Typically, it’s a ‘first-mover’ advantage, even though the relatively small size of the market may give you pause,” he said.
“If you’re able to get the most desirable locations and tie up the community to the exclusion of your competitors, you are way ahead of the game.”
