Nashua, N.H; chains seek sites as megalopolis edges North - New Hampshire, discount store chains

Discount Store News, May 23, 1988

Nashua, N.H.: Chains Seek Sites as Megalopolis Edges North

NASHUA, N.H.--Spotlighted by newspaper, magazine and television reports of its scenic beauty, evolving high-tech businesses, and a 40-mile commute to Boston, Nashua, N.H., may soon be known for its gold mine of retail sales opportunities.

Notwithstanding projections about how Nashua could evolve into a business center in its own right, the current population of about 77,000 already has more than its share of the nation's wealth, and is generating disproportionately high retail sales levels.

The challenge for the Nashua retailer is to find store sites before real estate costs go much higher, or to locate new stores in towns 10 or 20 miles further north than Nashua to get a jump on what has become a steady Northern creep of urbanization radiating from Boston.

Shortage of Workers

Retailers who are looking to open shop in Nashua have found that their only stumbling block besides high real estate costs is the shortage of minimum wage-level employees, a trend which is rampant throughout the New England region and along most of the East Coast.

While the Manchester/Nashua area is only the 138th largest city by population in the country, it is 85th in terms of the number of households that have an effective buying income (EBI) of $50,000 or more, according to Sales & Marketing Management's 1987 report. More importantly, it is 16th in terms of its median household EBI, which is $32,617--$8,000 over the average--and ranks ninth in the country in per household retail sales.

The state of New Hampshire has the lowest poverty rate in the country, 6 percent, and has one of the lowest crime rates in the country, according to The 1988 Development Report Card for the States.

Manchester/Nashua is also considered to be the metropolitan area with the largest percentage of fast-growing companies in the country (nearly 6 percent), and second only to Austin, Texas, in terms of new jobs growth, according to Inc. magazine's Metro Report, 1988.

Unlike most boom towns, however, Nashua is not yet overstored. Bradlees and Zayre both operate two stores. Rich's, a regional discounter based in Salem, Mass., which presently has one store in Nashua, plans to open a second next year. K mart has a store just outside the Nashua city limits. Stuarts, with one store open, does not currently have any plans to open any others in the town. The only catalog showroom operator in the area presently is Treisman's.

Lloyd Wickett, K mart's director of operations in the Eastern region, said the real magic of the area is not the town itself, but its proximity to Boston that is propelling growth. He said that it is just a matter of time until Nashua's real estate costs catch up with Boston's, driving Boston commuters further north where more property can be bought with less money.

Very Close to Boston

"It's not that Nashua is where the goose laid the golden egg," said Wickett. "It's the city's proximity to Boston. Property values have gone so high in Boston, and they are rising in Nashua as well. People are putting priority on having more property and better housing, and are willing to sacrifice travel time and the money it takes for an extra tank of gas to get it."

While the latest figures suggest that high property costs have not diluted the strength of the area's retail sales, professor Lawrence Wortzel of the Boston University School of Management believes it could be just a matter of time.

"There are very high housing costs, which has had an impact on discretionary income. We're getting ripples of high costs even as far north as Southern New Hampshire. It does hurt disposable income."

Retailers can work around high real estate costs, Wortzel suggested, by considering second-use or "old space." "There is some old space around, like former grocery stores. They are not the best locations in terms of traffic or access, but it is cheap space. If an operator can find a creative way of using small areas--25,000 square feet--then it could be profitable," he explained.

Howard Rich, president of Salem, Mass.-based Rich's discount stores, believes the labor and real estate problems in Nashua pose real threats to the future of the local economy.

"Our Nashua store is doing quite well, and we plan to open our second store there next year," he said, but then acknowledged that, "the tight labor market combined with the rising costs of real estate--both in homes and businesses, even as far north as southern Maine--might discourage outside companies from coming in."

He further described the labor situation as the worst he has ever experienced in more than two decades with the chain.

Wickett at K mart said the chain has decided not to fight a wage war with other retailers for hourly employees, but will keep pace with the overall market rate. "Otherwise wages are like playing checkers; you only go in one direction. Competition won't let us raise wages. We need to keep costs down in order to keep prices down, so that isn't the tactic we're taking."