Why doesn’t Rio Rancho have a Trader Joe’s?
How well a community fits a company’s location criteria and whether the business knows about the city’s strengths determine whether a store opens in that town, according to people involved in retail recruitment.
“The city does not stand at the city limits and say who can and can’t come into the city. And we certainly don’t turn people away,” said Mayor Gregg Hull.
He’s been pursuing Trader Joe’s, a popular grocery chain, for five years, among other business recruitment efforts.
“If you could wave a magic wand and get something, I would’ve done it already,” Hull said. “… We have to create the right environment for them to be successful, as a city. And 90 percent of that environment is not within the city’s control.”
Hull said local wages, controlled by companies; real estate prices, dictated by private landowners; and loan availability, determined by banks, have a lot to do with whether retailers come to town.
What companies want
Amy Clay Goldfarb is an asset manager for TDA Inc., the real-estate loan and investment company that took ownership of the Plaza at Enchanted Hills in lieu of foreclosure in March 2018. TDA could have sold it, but saw value in keeping and improving the property, she said.
Because a loan default led to its ownership, TDA didn’t use statistics in the decision to stay in Rio Rancho as much as it might have normally.
“Sometimes it’s a little more organic than that,” Goldfarb said.
She said conversations with local business people, the city and so forth can show a community’s business climate.
“For Rio Rancho, we understood it to be a growing area outside of a major metropolitan area of Albuquerque,” Goldfarb said.
The Plaza at Enchanted Hills’ national-chain anchor tenants, existing permits and proximity to Albuquerque and the types of jobs in the area encouraged TDA to keep the property. Also, housing development and job growth indicated the region would support retail, she said.
Rio Rancho Regional Chamber of Commerce president and CEO Jerry Schalow said brick-and-mortar stores are still viable.
“Even though internet sales continue to grow, it’s only 14 percent of local sales,” he said.
Schalow said large retailers look at population density, distance from their other stores and income.
Different companies have different criteria. For example, Ikea considers only markets with at least a million people, Hull said.
“You have to look at the business model of the companies you want to come here,” he said.
He said dozens of businesses have, in fact, moved to Rio Rancho in recent years.
Most companies want a location that’s highly visible, in the center of population and with a high traffic count. Hull said Unser Gateway, roughly the area around the intersection of Westside and Unser boulevards, has a traffic count of 40,000 vehicles a day on top of a dense population.
Schalow said the NM 528 and Southern Boulevard areas also have enough rooftops to draw retailers. Parts of Rio Rancho have high-enough median incomes to interest retailers, especially with incomes in Corrales, he said.
As for types of retailers to target, the City of Vision needs more shopping and restaurants options with unique concepts and multi-part experiences, Schalow said. An example is Brew Lab 101, which has a unique theme, hosts live entertainment, makes specialty beers and works with nearby restaurants and food trucks to offer meals.
The fastest retail growth is in small-format grocery stores, including Trader Joe’s, Sprouts and others, Schalow said. Rio Rancho is under-served in grocery stores.
He said small-format grocery stores attract businesses that fill demands outside of groceries.
Schalow said other growing retail types are fast food, especially “fast casual” restaurants like Flying Star, and off-price apparel outlet stores.
Schalow believes Rio Rancho needs better analytics to show its strengths for retail locations and better communication with retailers.
“We need to have a marketing plan and target,” Schalow said.
He wants to work with the city to create such a plan. The city has been more focused on recruiting economic-base businesses, which bring in money from outside the community, than retail, which captures gross receipts tax (GRT) revenue quickly, he said.
GRT is levied on businesses based on the sale of goods and services, not just at the retail level but at every transaction in the process of making goods and getting them to consumers. Businesses typically pass the cost on to customers.
Schalow recommends showing franchisers why they should locate in Rio Rancho and going to conventions to meet retail-chain representatives. Hull said he’s attended the International Shopping Center Conference every year but one since he’s been mayor.
Schalow believes sharing that many Southern Boulevard businesses are surviving or even thriving during construction will help retail recruitment.
“By telling the story of how the community will rally around businesses, that will help us attract new businesses,” how said.
Rio Rancho also needs more retail space, he said, because existing facilities are old and demand is higher than supply.
“From the city standpoint, we need to be able to get shopping centers and build-out done quickly, efficiently and easily,” Schalow said.
Hull said the city is working to make regulations more business-friendly.
Rio Rancho has a Gross Receipts Investment Policy that allows the city to refund part of GRT or fees to a business as an incentive to locate here.
In some places, Schalow said, a city and business enter an agreement in which the city ensures a certain amount of revenue to the company. If the business doesn’t get all that revenue, the city will provide tax breaks or other reimbursement. Rio Rancho doesn’t have such a policy, but Schalow thinks one might help retail recruitment.
What you can do
Schalow said Rio Ranchoans need to shop in town before going to Albuquerque. As GRT revenue from local shopping rises, businesses see increased demand and are more likely to locate here.
“By choosing to go to Albuquerque, that hinders our business growth in Rio Rancho,” Schalow said.
Hull said retailers track shopping habits via use of credit, debit and rewards cards.
“Shop local, shop local, shop local,” he said.