Cincinnati: many discounters say it's a 'blue chip' investment

Discount Store News, May 23, 1988

Cincinnati: Many Many Discounters Say It's a `Blue Chip' Investment

CINCINNATI--The locals have nicknamed Cincinnati "The Blue Chip City" for its quality of life, but the label may more accurately describe the city's business climate, particularly its retail trade.

Discount store retailers apparently think Cincinnati is a "blue chip" investment, since the industry has outfitted the city and surrounding suburbs with more than 50 discount department stores plus a broad selection of specialty retailers.

For a population of just 1.6 million in an eight-county area covering 2,620 square miles in three states--Ohio, Indiana and Kentucky--Cincinnati is probably a city that is as close to being overstored as a city can get. But that hasn't slowed the pace any.

K mart has about 15 locations here; Gold Circle, six; Zayre, nine; locally-based Swallen's and Van Leunen's, nine and seven, respectively; and WalMart, one. Makro, which is headquartered here and operates membership warehouse clubs in this market, will expand the five-unit company from this city.

Price Savers Wholesale Warehouse Club, which is owned by locally-based Kroger, a food retailer, will add two units here this summer for a total of three. Biggs, also based here, operating the city's lone hypermarket, has one more hypermarket on the way plus its first grocery-only location now under construction.

Other Discounters in the Market

Marshalls, Service Merchandise, Toys "R" Us, Children's Palace, T.J. Maxx, Value City and a host of others also have multiple locations here.

The city, according to local observers, is no longer a well-kept secret.

"I don't know what it is, but it [Cincinnati] is a hot bed people come to," observed Stan Johnson, president of Van Leunen's, based here since 1954.

Van Leunen's has contributed substantial excitement to the local retail scene. In recent years the seven-unit discounter has spun off two specialty store operations: seven-unit All About Sports and six-unit Pets and Such. Another specialty operation is "a possibility," Johnson said. "Cincinnati," he added, "is a city of great opportunity."

Located on the Ohio River in southwestern Ohio, the Cincinnati metropolitan area has a diverse economy. It is so diverse, in fact, that regardless of what people buy throughout the nation, Cincinnati claims to have made some part of the finished item.

Cincinnati has a labor force of 677,100 people, 19 percent of which are employed in the retail sector. The unemployment rate was 5.9 percent in 1987 compared to 7 percent for all of Ohio.

Cincinnati is home to 13 of the nation's Fortune 500 companies, including General Electric Aircraft Engine and Procter & Gamble, the city's top two employers.

Described locally as a "conservative" city, Cincinnati also is a fairly young and prosperous community. The median age is 31.5 years; average household income is $33,116; and the cost of a median-priced home is $80,900, according to the most recent statistics available from the Greater Cincinnati Chamber of Commerce.

Department store sales for the area rose 4.3 percent last year, to $1.192 billion from $1.143 billion in 1986. Based on sales percentages of national discount department stores, which accounted for 45 percent of department store sales in 1987, discounters tallied about $536 million in 1987, up from $514 million in 1986, according to the Census Bureau's "1987 Monthly Retail Trade Report."

A Cincinnati shopper profile based on the Census Bureau's "1985 Diary Survey" of average weekly expenditures revealed that: . 62 percent of Cincinnatians own their own home, 19 percent without a mortgage; . 56 percent are high school graduates, and 38 percent finished college; and . 85 percent own at least one vehicle. These same consumers, who averaged 45 years of age, spent: . $1,125 on apparel, nearly one-third of which was spent on women's and girls' fashions; . $744 a year on household furnishings and equipment, including furniture and appliances; . $55.77 a week on food; . $20 a year on jewelry and watches; . $14 a year on small appliances and miscellaneous housewares.

"We're a steady, dependable, high-quality kind of a city," said Roger Ruhl, vice president, communications of the Chamber of Commerce. "We're not a boom or a bust city. We have no high-highs, or low-lows. We're the kind of place where people wear navy blue pin-striped suits and white shirts."

More than 30 new companies located or relocated their business in Cincinnati last year, and over 120 local businesses expanded their operations in this metropolitan area, including Delta Air Lines.

Cincinnati also has successfully absorbed the 4,200 people who were laid off when a local General Motors auto assembly plant closed recently. Chamber of Commerce officials also expect the community to be able to do the same if GM follows through on its threat to idle another 2,000 workers at another plant, said Ruhl.

Chamber of Commerce officials also expect that if locally based Federated Department Stores, recently bought by the Campeau Group of Canada, is streamlined, the city will be able to handle that setback, too, albeit unhappily. Federated employs 530 people at its headquarters facility.