Local Kmart still unaffected by bankruptcy

Anna Holland

Cars fill the parking lot of the Ames Kmart. Customers run in and out, carrying packages and towing children.

Nothing has changed here yet. But soon Ames resident Quincie Cooper may have to find a new place to shop.

The Troy, Michigan-based chain filed Chapter 11 bankruptcy Jan. 22 in order to reorganize the company. As of now, all 2,114 Kmart stores, including the 30 in Iowa, will remain open, according to a company spokesperson.

Brad Hurd, replenishment manager for the Ames store, 1405 Buckeye Ave., said the local store has not been affected.

“It’s business as usual,” he said. “We’re open and serving customers.”

Cooper said she would probably go to Target if the Ames store closes.

“[Kmart] still has decent prices,” she said. “They’re just a confused retailer. Target has more style, and Wal-Mart has lower prices.”

Ken Stone, extension economist and professor of economics in agriculture, said the closure of the Ames Kmart would cause several problems in addition to inconveniencing customers.

One problem, he said, is the big, vacant building that will be difficult to fill.

“I like to call them `white elephants,’ ” Stone said. “Wal-Mart has run into a similar problem as they’ve built their supercenters. So few types of buildings can fill that amount of space.”

Also, he said, if the building remains empty for an extended period of time, the landlord can ask the tax assessor to reduce the property taxes because the building is not creating revenue.

The result would be reduced tax revenues for the city of Ames and Story County, ultimately reducing available funds for local schools.

Closing the doors on a store like Kmart, while helping competitors such as Wal-Mart and Target, also would hurt surrounding stores like Staples to some extent, Stone said, because consumers tend to shop at places close to each other, creating a “spill-over effect.”

Stone said the effect would be worse in smaller towns, such as Webster City, where Kmart is the only option for local shoppers.

“In small towns, one main discount store is the anchor store for a mall,” he said. “It keeps people in town.”

Stone said shoppers would have to go to nearby larger towns, such as Ames or Fort Dodge, and hurt businesses in Webster City.

The company has yet to announce which stores will close, but Stone said “underperformer” stores that bring in the least business are the first ones to go.

“[The corporation] has to have some sort of plan,” Stone said. “As to whether or not Ames is one of the weaker stores, none of us know anything yet. We’ll have to wait and see.”