Slow recovery, online shift trouble retail

Mercedes Burkavage opened Big Horn Olive Oil Company at Mayberry Landing in Reno in the autumn of 2012 and followed with a second location at South Creek at Virginia Street and Foothill Road this October.

Perhaps needless to say, she’s bullish on the retail environment in northern Nevada.

“Reno is fertile land for entrepreneurs if you’re willing to work hard and serve the community,” says Burkavage, who employs 15 at her two stores.

But Burkavage, whose business benefits from the continued migration of Californians who are accustomed to quality specialty retailers, is on the front end of the curve as the retail recovery gets traction only in fits and starts.

In September, taxable sales in Washoe County were up 10.7 percent over year-earlier figures, and Carson City was up 6 percent.

But in August, Washoe had been up 6.6 percent and Carson City declined by more than 5 percent.

And despite the zig-zag in the recent numbers, the fact remains that taxable retail sales in Washoe County in the 12 months ended June 30 still ran 20.5 percent below the high-water mark they reached in 2005 and 2006.

That reflects both the slow rebound of consumer spending as well as the deep changes that accompany the move of retail activity to the Internet, say folks who follow the sector closely.

Many entrepreneurs, who are paying the closest attention because it’s their life savings on the line, are opting out retail entirely.

Out of the 25 graduates of the most recent class in Reno of NxLeveL, an entrepreneurial training program, not a single one planned to open a traditional brick-and-mortar store, says Kathy Carrico, training director of the Nevada Small Business Development Center.

Carrico and Rod Jorgensen, director of counseling at the small business development center, note that it’s difficult these days for entrepreneurs to tap home equity as a source of startup funding for the costs of a traditional storefront.

A fiercely competitive landscape is daunting to others.

“There are few good ideas that have not been done already,” says Carrico.

Alexia Bratiotis, general manager of The Summit, says traditional retailers large and small need to work harder than ever in the face of online competitors.

“It’s critical that they provide exceptional in-store customer service and create a shopping experience that is personal and memorable,” says Bratiotis.

But for all the challenges, the retail environment in the region is brightening.

“Things are improving, but it’s still slow,” says Roxanne Stevenson, a senior vice president at Colliers International and a specialist in retail properties in northern Nevada. “Vacancy rates have decreased for the first time since the great recession, rents have quit falling and are stabilizing, there is more tenant activity and the market posted positive absorption.”

Colliers estimates the vacancy rate in retail space late this year at 14.6 percent. Vacant big-box space accounts for a large chunk of that, and Stevenson says those likely to get back-filled only slowly.

On the other hand, she says the quick-serve and casual dining sector — both locally owned restaurants as well as national chains — continues to show strength.

Thrift stores also have been actively leasing retail space, a trend that’s running parallel with the strong return of high-end consumers to stores, Stevenson says.

While the slow recovery of retail and high vacancy rates have stifled most new development, Legends at Sparks Marina will benefit in 2014 from the opening of a 12-screen movie complex that includes the region’s first IMAX theater.

In all, Legends will have brought on about 125,000 square feet of new space in 14 months, says General Manager Dennis McGovern.

The theater complex, he says, is expected to draw big traffic to the center.

“We’ve been waiting a long time for that,” McGovern says.