Written by Don Ratzlaff Wednesday, 12 December 2007 13:23
Following a familiar business adage, the Hillsboro City Council has decided to spend some money in order to make some money.
The council agreed at its Dec. 4 meeting to sign a one-year, $50,000 contract with Buxton, a retail research company based in Fort Worth, Texas, to help the city recruit new stores and strengthen existing retail businesses.
City Administrator Larry Paine said through its CommunityID program, Buxton uses sophisticated databases to evaluate the retail market of a given community, then uses that information to identify companies in its business database that might have an interest in opening a store in the community to meet the market need.
Paine said the kind of information Buxton acquires about a community is detailed and specific.
“In the case of Hillsboro, they know how many TVs we buy, how many stereos we buy, how many computers we buy, how many pairs of black socks we buy,” he said.
“So there is this body of information about who we are, what we do and how we spend our money that we can turn around and capture. Then they go out and find a retailer that matches what we do and who we are. We can then go out and say, ‘We are your customers, you need to be locating in Hillsboro, Kan.”
Paine said Buxton is contracted to identify up to 10 potential retailers whose goals complement the community’s market profile.
The 10 potential retailers are categorized by type of business, Paine said. If one specific retailer declines to locate in Hillsboro, the city can use the same data to approach a different retailer specializing in the same kind of products.
Paine said he and Clint Seibel, the newly appointed executive director of the locally based Ventures Inc., will work with the local retail community to select the kind of business leads the city should pursue.
“I’m telling the retail sector that I’m not going to exclude them and try to find somebody who will compete with them and make their life miserable,” Paine said. “We want someone who will be a complement to their business and help strengthen their business.
“If I go out and find a new retailer, and then I kill one in town, I haven’t gained anything.”
Information used locally
Paine said another way the city’s relationship with Buxton should help the local retail community is that the city will be sharing the collected data with local retailers without charge, so store owners can use it to strengthen their businesses.
Paine said he hopes local retailers will use the information to shape their marketing approach, or perhaps to add new product lines that appear in the local market need.
“Some folks have suggested that we sell that information to the retail market here,” Paine said. “Well, that’s probably shortsighted, because if I give it to them, and if they use it to develop their business, I will see that (financial return) in sales-tax increases—and that’s what we’re about.”
Paine said increasing sales-tax revenue could help the city avoid increases in its utility rates, for instance.
“If I can build up the sales-tax revenue and not have to do a utility-rate increase, then I’m doing my job,” he said.
The other thing bringing new retail businesses to town would do is generate property-tax revenue from the additional buildings, Paine said.
Fueled by a need
Paine said he and Mayor Delores Dalke had been aware of Buxton from the company’s presentations at various city-government conferences.
The impetus to pursue a contract with Buxton now was the recent establishment of Hillsboro Business Park along North Ash Street and U.S. Highway 56, Paine said.
“We’ve developed this business park, and our initial estimates are that it will cost somewhere from $800,000 to $1 million to develop this piece of property,” he said. “In order to do that, I need cash flow coming in so I don’t have to charge (residents) additional property tax to get that done.
“Development’s not free,” he added. “If I just build this (business park) and let it sit, nobody’s going to come here. I’m going to have to do something proactive.”
Paine said hiring Buxton is like a local business creating a newspaper ad to reach potential customers with a product.
“I’m creating an ad that says, ‘Hey, retail market developers, here are your customers; come get them. We’ve got cash we want to spend, and we want to spend it locally as opposed to having to drive to Wichita.’”
Paine said Great Bend, Newton, Arkansas City and Junction City are current clients of Buxton. Even though Hillsboro is considerably smaller than those cities, the company does work with communities that have a population of 3,000 and less in other states.
Having said that, Paine said there are no guarantees that new retailers will actually open stores in Hillsboro. Even if that turns out to be the case, he said that doesn’t mean the money was poorly spent.
“It’s possible that we can get 10 leads that run into 10 duds,” Paine said. “But if we take all the information we’ve gathered, and I give it to the local market place—that’s got value.
“If they use it to expand their businesses, even if I don’t get a hit out of these 10 (leads) I really haven’t lost much. I’ve made the business community stronger, and a stronger business community in this town is not bad—it helps everybody.
“We’ve created some jobs that are important for the people who live here.”
Paine said he realizes $50,000 is a lot of money, but it represents a mere 5 percent of what the city will have to invest to develop the infrastructure in Hillsboro Business Park.
Paine said one retailer has already expressed interest in opening a store on a lot in the new park because of the conversations the city has been having with Buxton prior to signing the contract.
“They came in and said, ‘Buxton has recommended that we talk with you—we’d like to find out what we can do to make a deal,’” he said.
Paine said there are no guarantees that this contact, or any other in the future, will turn into a done deal.
“This is a significant risk that could go bust,” he said. “On the other hand, it’s a risk that could shoot the stars. The alternative is to do nothing and die.”
City could involve Tabor business students in program
City Administrator Larry Paine hopes the city’s contract with Buxton will have at least an additional benefit for Hillsboro that is less tangible than additional sales-tax revenue.
Paine sees advantages to forging a connection between the city, Buxton and the business department at Tabor College.
“We haven’t got that worked out yet, but I want (business) students involved in that process,” he said of the business-recruitment effort. “It’s a laboratory they’re not going to get any other way.
“It will be a real-live experience that folks from the business department can look at, feel, touch. Our potential business leaders of the future will get some insight into what it will take to recruit a business, develop a business and all those sorts of things,” he said.
“They can see that from the inside out.”
Paine envisions the city will benefit as well as business students as professors contribute their expertise.
“I think I can get a little bit of help out of the college to think through some things that, as a public administrator, I wouldn’t think of,” Paine said. “Coming from a business paradigm, they could say, ‘Larry, you need to think about such and such.’”