Battle for bush business.

• Author: Woodring, Jeannie
• Position: Alaska's rural retail industry

Shopping for retail goods is a lot easier than it used to be for Billy Gilman of Atmautluak, a village of 200 Yupik Eskimos 30 miles west of Bethel.

Ordering from retail Bush catalogs and making trips to the big chain stores in Anchorage, Gilman says, "Prices are cheaper. There's a big difference from locally-bought stuff. We order all sorts of things ... winter clothing, grocery shipments, even parts for cars."

Thousands of other rural Alaskans are also benefiting from the stampede of big-time urban retailers into Bush markets. In fact, with the entrance of national store chains like Costco, Kmart and Fred Meyer into the same arena, rural Alaska has become a virtual battleground for retailers inside and outside Alaska.

You might call it "the Last Frontier for retailers." As James Clark, chief executive officer for the Alaska Commercial Co., the state's oldest Bush retailer, puts it, "There's not enough business in Alaska to keep all of these new business in a profitable picture, so they have to look at how to maximize their market shares."

"There will always be room for competition," he adds, "because it is healthy both for (the retailers') growth and for the customer."

Bush Basics

Is there really enough room in rural Alaska for such retail competition? In order to answer that question, you must first answer two basic questions: How many people live in rural or "Bush" Alaska, and what is the buying power of these residents?

Discovering answers to these questions has been part of the market research conducted by some of the state's retailers. Since no company wants to part with that strategic marketing information, you can also turn to statistical data from the state and federal government to piece together a picture of rural Alaska residents and the money they spend on retail goods.

The Alaska Department of Labor (DOL) in its January 1994 Alaska Economic Trends defines rural Alaska "as those boroughs and census areas not connected to the road system or the marine highway."

Working with such a definition, the DOL counts 67,589 Alaskans as rural residents. Median household incomes for these residents are listed by region in the same issue of Alaska Economic Trends. The highest income-earning region, the Bristol Bay Borough, finds the average household bringing in $51,112 a year. By contrast, the lowest income-earning region, the Wade Hampton Census Area in southwest Alaska, pulls in an annual average $20,586 per median household.

Determining what percentage of these rural wages are spent on rural goods is more difficult. One attempt to find such information appears in the "Alaska Geographic Differential Study" prepared by the Juneau-based McDowell Group and Anchorage-based Alaska Attitudes Inc. for the State of Alaska in April 1985. Though a decade old, this information still gives a glimpse at the dollar power potential of rural Alaska.

In 19 different regions of Alaska, the study measures the percentage of household income spent for housing, food, transportation, clothes, recreation and entertainment, medical, and miscellaneous goods and services. To determine what rural residents spend on retail goods, you can analyze the expenditures on food, clothes, recreation and entertainment, and miscellaneous goods and services.

Under such scrutiny, the report reveals differences between rural and urban Alaskan retail spending patterns, mostly in the category of food -- which constitutes a large percentage of what statewide retailers ship to the Bush. The report states, "For rural districts, housing and food costs, especially food costs, contribute heavily to living costs significantly higher than in Anchorage. Seven rural districts have food price differentials between 38 percent and 67 percent higher than in Anchorage."

For example, in Anchorage, 22 percent of the average income is spent on food items. In Bethel, 36 percent of the median household income is spent on food. In Nome, 33 percent. In Barrow...