The Christmas season ended with a thud in Victoria.
Will spring come again? Longtime business owner Tom Long hopes so, but he’s not sure he’ll be back until he’s dead.
Brothers Tom and Bob Long closed their store, Shop The World, on Feb. 1 after 45 years of business. They’re leaving Victoria and plan to open a store in the Hill Country for a market of shoppers who have a higher disposable income.
The brothers are leaving even though last year’s holiday season was up about $13,000. Business in 2018 overall was flat and about 15 to 20 percent lower than previous years. Long is not sure why business dropped in 2018, but he thinks the local economy is the reason.
“I don’t know what is going on in Victoria, but something is going on,” said Long, 60. “Why are all these restaurants closing all of a sudden? We have all of these (vacant) buildings on Navarro now, and it’s strange because usually there’s nothing (available) on Navarro.”
Although the Victoria County population grew by about 8,000, or 10 percent, from 2000 to 2017, the number of operating businesses in Victoria decreased by about 3 percent during about the same time period. In 2000, there were 2,620 businesses operating in Victoria, but in 2018, there were 2,540 businesses open, according to sales permit data from the Texas Comptroller of Public Accounts.
National retail declines
One national trend contributing to the business decline is that Amazon and eBay can compete with any local or storefront business, said Dave Sather, owner of Sather Financial Group, and John Kaminski, Victoria’s assistant city manager.
Many of the restaurants or retail stores that have recently closed did so because of business decisions made by those companies and not because of Victoria’s economy, Kaminski said.
Sears closed more than 180 locations, including Victoria’s. Office Depot announced in 2016 it would close about 300 stores by the end of 2018, and its biggest challenge has been online competition, Kaminski said.
Papa Murphy’s closed about 10 percent of company-owned stores in 2017 and is focused on selling other ones. The Victoria Chipotle was one of about 65 locations that shut down after a new chief executive officer was hired to turn the chain around. Falla’s also announced the closure of 182 stores, including Victoria’s, as part of a bankruptcy filing.
Montana Mike’s Steakhouse closed, along with the Laredo location, leaving only two of them in Texas. The Johnny Carino’s company has struggled for a long time with more than one bankruptcy filing, Kaminski said.
Every chain has location criteria including population, market and median income, he said. On that scale, Victoria is on the lower end on the size of markets in terms of retail trade area population.
“Since we fall into that (lower) window, there are going to be some (stores) that fall out (of Victoria) because they’re going to cut so many stores,” he said. “It’s a natural part of retail. The ebb and flow – they have margins they need to meet. It’s a business decision.”
Chains leaving Victoria do bring new opportunities to attract other retail and restaurant businesses. Commercial property along North Navarro Street between H-E-B Plus! and the Victoria Mall is highly sought after, and there’s almost no space left to develop. The most prominent vacant buildings include Montana Mike’s, Johnny Carino’s and Sears locations.
Aaron Farmer, senior vice president of Retail Coach, has worked with the city to attract retail and restaurant chains for more than five years. Between 10 and 15 high-quality commercial real estate properties are attracting attention from companies and developers, he said.
“This is nothing about Victoria. It’s really what’s happened marketwide and across the U.S.,” he said. “It’s a matter of online sales that are taking place and companies that overextended themselves; they are starting to close stores.”
Farmer said Victoria is attracting more interest from large companies now than it has in the past five years. Statistics show that in the next two years, about 45 to 50 percent of retail growth will be in the restaurant industry, he said. Residents in Victoria want to see higher-quality restaurants, so Farmer said he hopes that trend works in Victoria’s favor.
“We’ve had conversations with about 10-plus retailers and restaurants that are interested in Victoria right now,” he said. “I know there are a couple that are working out buying land or making leases.”
Local market forces
Specifically to Victoria and the Crossroads, the local economy is linked to the oil and gas industry, which saw the price of oil per barrel drop from October to the end of 2018 about $25, investment adviser Sather said.
“You get these big drops-offs in the oil field,” he said, and weaker local businesses find it hard to stay open.
When oil companies invest in the Crossroads in business and exploration, Sather said, those dollars circulate into other industries. When oil business drops, so does local consumer spending, he said.
“The oil field affects Texas more than it does the other states, and the oil field affects the Victoria County area, the Crossroads, more than Austin or San Antonio,” he said.
The Longs, who owned Shop the World in Victoria, are trying to sell their building at 6902 N. Navarro St. to have funds to buy a location in Bulverde, where they want to establish a Christmas store to be open seasonally. They also plan to start buying their merchandise from China to be able to sell high-quality unique items at a good price.
“I love Victoria,” Long said. “I love the people here. I was born and raised here. I have a burial plot here already for me. ... We’re (just) ready for a change.”
If the brothers don’t sell their building by July, they will open again in Victoria for another Christmas season.
Business went well for the comic store for the first three years it was open but dropped the last six months. Owner Bryan Scott said it seemed like customers didn’t have the disposable income needed to buy games and comics, and his revenue didn’t offset the cost of renting his shop.
Cindi Simpson owned the quilt shop and closed after about two years of business. She posted on the business’ Facebook page in late December that she tried to find a way to stay open. Her landlord was selling the building, and she wanted to find another space.
“To be completely honest, with the businesses moving out of Victoria, and people shopping online, right now might be as good as any to shut the doors,” the post reads.
Hope on the horizon
Joe Humphreys, who recently retired as director of the University of Houston-Victoria Small Business Development Center, said the fact that the number of businesses is slightly lower than what it was 18 years ago actually is a positive sign because of the national growth in online retail.
Even in 2018, when much attention was focused locally on Sears and some restaurants closing, the number of business openings outpaced the number of closings by 64 percent. In 2018, 199 businesses ended their sales tax permit, or went out of business, and 307 businesses opened, according to data from the Texas Comptroller of Public Accounts.
Humphreys said he doesn’t expect the number of businesses in Victoria to grow substantially until UHV becomes a destination university, which he predicted would happen in the next 10 years. University officials have repeatedly stated a goal of reaching 6,000 students on the Victoria campus by 2025. The Victoria campus enrollment in fall 2018 was about 1,500.
“You can almost see a renaissance of small businesses around the campus,” he said. “UHV being a destination (university) is going to change the business landscape. That’s what Austin and San Marcos have.”
Donald Jirkovsky, SBDC business adviser, said Victoria businesses also suffer from people leaving the city for day trips and weekends. Residents in the Crossroads often would rather go to one of the larger surrounding cities to shop instead of in Victoria.
Phillip Johns, 33, of Victoria, owns South Texas Fence and Deck, which has seen a 70 to 120 percent growth every year since he began his business in Victoria six years ago. He attributes his success in finding his niche market – building high-quality fences that come with a warranty.
He said business owners often don’t understand the demographics of Victoria, which are unique because it’s close to four large cities.
“A lot of business closures and things that happen in this area, people don’t take the time to understand what works and what doesn’t work in Victoria,” Johns said. “It’s a lack of clear understanding and marketing on how it works.”
Sather said local business owners need to have a sustained competitive advantage to stay in business.
“Whatever you did yesterday isn’t going to be good enough tomorrow, five years or 10 years from now,” he said. “You have to be reinventing your business and improving it if you want to stay relevant and profitable.”
This story was updated on Feb. 10, 2018 to clarify that the number of business openings outpaced the number of closings by 64 percent in 2018.