A total of 164,000 square feet sits unused in the former Kmart and Shopko buildings. With little activity and movement around the buildings since the closure of Kmart in April 2016 and Shopko in June 2019, questions surround potential prospects to fill the vacant locations.
Mitchell Area Development Corporation Executive Director Mark Vaux and Mitchell Development Corporation Board President Jeff Logan said it is not always what can be seen, but rather what can’t be seen -- the work going on behind the scenes.
“Filling those two buildings and all our buildings is a priority,” Vaux said. “It’s something we think about and work on everyday. To the general public it many not appear that way, only because they don’t know what they don’t know.”
Since the closing of both big-box stores, the Mitchell Development Corporation has been working to analyze the town’s needs, recruiting local and national businesses and learning about other options to fill the vacant buildings.
“We’re looking at all options,” Vaux said. “Our preference in a perfect world would be retail in both of those big boxes (stores) so we can continue to generate sales tax revenue.”
He said because the face of big box retail has changed drastically, it’s difficult to replace one box store with another. Instead, many communities look at alternative and creative ways to utilize the space.
“There are a number of examples across the country where a large former big box retail is now a rec center or a mixed-use type of operation where it’s got some residential apartments along with coffee shops, boutiques and office areas,” Vaux said. “It’s really customized to what the community needs.”
Mitchell Main Street and Beyond Board President Emma DeVos didn’t have a preference to what entities would fill the vacant buildings, but was excited to see what businesses would make its way into the city.
“I’m not sure we have a particular preference as to what would come,” she said. “Obviously, we’d like to see those places filled.”
This year was one of the first years Vaux and other members of the Development Corporation represented Mitchell at retail conventions making connections with and recruiting potential big retailers and developers.
“I think it’s a really positive move to send them out there to tell Mitchell’s story and have face-to-face meetings with these retailers,” Logan said.
Box store challenges
Unfortunately for the Development Corporation, there is no magic number they can call and in a day have a new retail store move to town. Instead, Vaux and the Development Corporation act as salesmen, selling out-of-town businesses the story of Mitchell.
“Every retail prospect we talk to, they all have demographic benchmarks they need to hit that they base their locations and corporate decisions,” Vaux said. “Oftentimes we hear from them that Mitchell as a community of just under 16,000 doesn’t fit their demographic.”
The two points Vaux stresses to potential prospects is the size of Mitchell’s trade area and the large tourist traffic the city sees every year, which he says makes Mitchell the third largest market in the state.
“That captures their attention,” Vaux said. “In addition, our trade area is much larger and our trade area is 50,000 people.”
Vaux and Logan said many times the out-of-state companies use their standard circle and radius to measure the trade area. According to Logan, South Dakota’s trade radius is twice the trade radius of many of the surrounding states.
“People from out of state don’t always understand our part of the country where we have larger trade areas because we’re used to driving 45 miles,” he said. “(45 miles) it’s nothing to us.”
Part of the challenge for Vaux and the rest of the Development Corporation is to tell out-of-state businesses the economic realities and benefits of the city.
For Kmart and Shopko, both stores played a role in bringing sales tax revenue to the city. However, sales tax revenue for the two specific businesses are not available due to the sensitivity of proprietary information.
Although the buildings stand empty, Vaux and Logan said there has been interest in both properties.
“It isn’t because we haven’t had interest,” Logan said. “We’ve had people look at (Kmart) and some were close.”
Vaux said the committee does have prospects for both Shopko and Kmart, but couldn’t share more details. He said there’s “a good blend of local interest” for expanding companies and national stores considering Mitchell.
Both he and Logan were pleased with the amount of local interest, especially since the majority of dollars from local companies stay in the city compared to national companies.
“If you can help them grow and expand, that’s your best deal,” Logan said. “They want to see the quality of life improve and they contribute more.”
“Without question, they are the fabric of the community,” Vaux agreed.
From time to time rumors are often heard around town as to what company may be filling a vacant location, and although a few rumors may have some truth behind them, often they are just speculation.
Logan said most companies prefer to keep their negotiating confidential for a number of reasons. Because of this preference, the work and negotiation are done behind the scenes. Many factors affect whether companies pull the trigger after finishing their analysis.
The announcement of a company’s arrival to town is made by the company itself. Vaux said he’s seen early announcements sabotage business deals in other communities. Because of this, the public isn’t always aware of every inquiry the Development Corporation receives about the former Shopko and Kmart buildings.
“We’re still optimistic and we believe we have a good product in the facilities and in the town,” Logan said. “There is nothing the mayor can do and there is nothing we can do except what we’re doing.”
The Development Corporation and the city are working to fill the vacant buildings and the community’s needs. In the meantime, they ask for patience.
“Because it might appear that nothing is happening, doesn’t mean nothing is happening,” Vaux said. “I try to clear that up as good as I can.”