Retail invasion.

• Author: Richardson, Jeffrey

Some Say Alaska's Economy Is Just Growing Up

The dramatic entry of several national "big box" retail chains into the Alaska market has left many not knowing whether to laugh or cry. For a while this year, it seemed that every week brought word of another new store or expansion in Anchorage, Fairbanks or Kenai from some familiar and not-so-familiar players: Kmart, Fred Meyer, Costco, Eagle Hardware, Toys R Us, Pace, and finally Wal-Mart.

Following a year of national recession and the jolting news of oil company layoffs, residents were ready for some good news. But the news is so good, people aren't sure they can believe it -- and they're wondering why the companies are coming now, when the local economy is so sluggish.

Understanding why the retailers are coming now is not as hard as it might seem, local economists say. While Alaskans lament the decline of the oil industry, corporate planners for the retail giants are more apt to note the growing strength of other industries. They find in the state's leading indicators and demographic profile clear signs of a promising market. "We have a lot of positive demographics for retailers," says state labor economist Neal Fried.

High disposable incomes, a low tax burden, overall employment trends, a growing and youthful population acquiring material goods, a high percentage of children and relatively low freight rates all attract the attention of retailers. And while there certainly have been some ups and downs in the state's economy, one sector has been especially stable.

"I'm sure retailers look at the military as a very important part of the market. They have a large turnover, so when they get here, they buy a lot of things. Young families buy more. I think they salivate over the military populations to some extent."

Although there are great deals for military personnel on base, observers note that choices are limited. Off base, military families are generally viewed as a good credit risk, since commanders frown heavily on bad checks and credit abuse.

In addition to local factors, the big retailers are riding the crest of national merchandising trends. Growing disparity between leaders and the laggers in the retail industry has resulted in consolidation and shakeout. The companies breaking ground in Alaska are among the leaders, and Alaska was one of the few remaining retail frontiers available to them in. Experts say their initiatives have taken full account not only of local economic conditions...