Audio Wal-Mart worries replay the past (story audio) Photos The Retzlaff store in New Ulm was built more than 100 years ago. Mark Retzlaff Retzlaff Hardware Your Voice Join the conversation with other MPR listeners in the News Forum.

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Wal-Mart worries replay the past
by Mark Steil, Minnesota Public Radio
September 28, 2004

The Retzlaff Hardware store in New Ulm has been located in the same building for more than a century. (MPR Photo/Mark Steil)

Wal-Mart is the biggest retailer the U.S. has ever known. For many small businesses, it's also the biggest threat they've every known. Wal-Mart is looking at New Ulm in southern Minnesota as a potential store site, and many business owners there are unhappy. It's not the first time they've faced corporate competition, for some it's been going on more than a century.

	Retzlaff Hardware

New Ulm, Minn. — It's a story played out in many communities and cities. A major corporate retailer arrives in town. It sells clothes, cleaning supplies, tools and other things so cheaply it's driving stores out of business.

This may sound all too current. But it's not about Wal-Mart. This story is more than a hundred years old. Hal Barron teaches at Harvey Mudd College in southern California.

"The local merchants were extremely uncomfortable about the rise of mail-order businesses," says Mudd.

He's talking about mail order companies like Sears or Montgomery Ward which changed the retail landscape a century ago. They offered low prices and threatened family businesses.

Wards and then Sears would send their merchandise in a plain brown paper wrapper. No one knew they were patronizing mail order houses so they were safe from social ostracism. - Hal Barron, professor at Harvey Mudd College, CA

The stores fought back. One group of merchants in Kansas collected, then burned, the catalogs major stores mailed to thousands of small town customers. Newspapers whipped up "buy local" campaigns, calling Sears and other stores "mail order leeches". Hal Barron says the social pressure was extreme.

"Wards and then Sears would send their merchandise in a plain brown paper wrapper. No one knew they were patronizing mail order houses so they were safe from social ostracism," says Barron.

For the most part, the high pressure tactics did not work. People bought where they found the best deal.

"Ultimately the local merchants who succeeded were the ones who changed the way they did business," says Barron. "And modernized their operations and met the competition. Whether that's still possible against a Wal-Mart or not is hard to say."

Hard to say because businesses in towns like New Ulm have never faced the sort of competition Wal-Mart brings. If Wal-Mart does locate there, expect New Ulm stores to fight hard to stay in business.

	Mark Retzlaff

One of the town's brightest lights is almost 120 years old. Retzlaff Hardware is still in the same downtown building where it began. The store's current president, Mark Retzlaff, is only the third family member to run the place. At 76 years old, he's been on the company payroll since he was 14. Every day when he sits down at his desk, the store's history stares him in the face.

"It's a roll-top desk, very unique. It's been used since 1887. It's my grandfather's and my father's," says Retzlaff.

Retzlaff says there are many reasons why the store is still in business, including good workers and loyal customers. He says the biggest reason may be the store's wllingness to change. One of the most significant adjustments came in 1915. Like now, the hardware business was pressured by low price chain stores. Retzlaff's grandfather and some other Minnesota retailers formed a purchasing cooperative.

"They banded together with the hardware dealers, there were 10 guys," says Retzlaff. "They decided if they bought as a group they could buy better. And they eventually opened a warehouse in Minneapolis."

The buying coop lasted into the 1990's, when privately owned hardware distributors became a cheaper alternative. Now most of the goods at Retzlaff's store in New Ulm come from the Ace Hardware product line.

Mark Retzlaff regularly compares his prices with those at corporate retailers. Right now he says he can sell light bulbs cheaper than anyone. He also stocks items the bigger stores don't have.

"We almost have to," says Retzlaff. "With the large boxes coming in and they're zeroing in on our everyday business, our hardware business. So we have to go out and have things they do not have or can't have."

Even with over one hundred years of success, Retzlaff is concerned about the future. He and othes worry Wal-Mart will drive small stores out of business and send the town into a downward spiral. Wal-Mart's John Bisio says the company's plans for New Ulm are on hold, Wal-Mart is still looking for suitable land. Bisio says Wal-Mart would be a net plus for New Ulm, by attracting new shoppers to town.

"We are not interested in driving others out of business," says Bisio. "In fact, it's not uncommon for our stores or our stores' managers to engage local merchants and work with them and even provide resources and funds for economic development."

Small business owners hear Wal-Mart's soothing statements but fear they'll be the unlucky one, the store that doesn't survive. They've seen a general decline in family owned businesses in rural areas and wonder if they're next. It's similar to 100 years ago. Historian Hal Barron says much of the concern about Sears and other mail order stores was about dollars and cents. But underneath there were deeper worries.

"There was this undercurrent of anxiety," says Barron. "Because the basic structure of society was changing. The centrality of the local community in that society was declining. And you know a lot of the opposition to mail order is a kind of reflection of these broader anxieties."

Barron says some of the same things are going on today. A tightly knit farm based society has fragmented. Rural areas are losing population. Often there's a sense of irreversible decline. Wal-Mart is seen as a final blow, a huge economic and social wedge disrupting small town life, like the long-standing tradition of buying local.

But even if Wal-Mart comes to New Ulm, small stores will always have certain advantages. Mark Retlaff smiles when asked if he can beat Wal-Mart on customer service.

"Nothing to it," says Retzlaff. "Having staff that know what they're talking about instead of just saying hello is very important to the people."

The Retzlaff business touch has been impressive. In nearly 120 years of business, the store only once failed to turn a profit. That was 1929, the year the stock market crash signaled the start of the Great Depression. Compared to that, Wal-Mart might seem like no big deal. Retzlaff says it will be a struggle, but he's ready.

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