Buying underwear, and the store, in Saranac Lake

SARANAC LAKE — The residents of Saranac Lake are a hardy lot — they have to be to withstand winter temperatures that can drop to 30 below zero. But since the local Ames department store went out of business in 2002, a victim of its corporate parent’s bankruptcy, residents have had to drive to Plattsburgh, 50 miles away, to buy basics like underwear or bed linens. And that was simply too much.

So when Walmart Stores came knocking, some here welcomed it. Others felt that the company’s plan to build a 120,000-square-foot supercenter would overwhelm their village, with its year-round population of 5,000, and put local merchants out of business.

It’s a situation familiar to many communities these days. But after Walmart decided against opening a supercenter, rather than accept their fate, residents of Saranac Lake did something unusual: They decided to raise capital to open their own department store.

Shares in the store, priced at $100 each, were marketed to locals as a way to “take control of our future and help our community,” said Melinda Little, a Saranac Lake resident who has been involved in the effort from the start. “The idea was, this is an investment in the community as well as the store.”

It took nearly five years — the recession added to the challenge — but the organizers reached their $500,000 goal last spring. By then, some 600 people had chipped in an average of $800 each. So, on Oct. 29, as an early winter storm threatened the region, the Community Store opened its doors to the public for the first time. By 9:30 in the morning, the store, in a former restaurant space on Main Street opposite the Hotel Saranac, was packed with shoppers, well-wishers and the curious.

The 4,000-square-foot space was not completely renovated — a home goods section was to be ready for the grand opening Nov. 19 — but shoppers seemed pleased with the mix of apparel, bedding and craft supplies.

“Ooh, that’s nice,” said Pat Brown, as she held up a slim black skirt (price: $29.99). She and her husband, Bob, a former professor of sociology at North Country Community College, live in town in an early 1900s home furnished with deer heads and other mementos from Bob’s hunting trips. The couple — who were voted king and queen of the village’s annual Winter Carnival in 1999 — bought $2,000 worth of shares in the store early on and later bought a few more during a fundraising drive.

“It’s been a long process for all of us. We’re very proud to have it finally become a reality,” Brown said. Her husband added, “This is a small town trying to help itself.”

Think of it as the retail equivalent of the Green Bay Packers: a department store owned by its customers that will not pick up and leave when a better opportunity comes along or a corporate parent takes on too much debt.

Community-owned stores are fairly common in Britain and not unfamiliar in the U.S. in the West, where remote towns with dwindling populations find it hard to attract or keep businesses. But such stores are almost unknown on the densely populated East Coast. The Community Store in Saranac Lake is the first in New York, its organizers say, and communities in states from Maine to Vermont are watching it closely.

Indeed, community ownership seems to resonate in these days of protest and unrest, when frustration with Wall Street, corporate America and a system seemingly rigged against the little guy is running high. But rather than simply grouse, some people are creating alternatives.

“It drives me crazy when people criticize how our system works, but they don’t actually go out and try anything,” says Ed Pitts, a lawyer from Syracuse who with his wife, Meredith Leonard, is a frequent visitor to the area and has invested in the store.

Saranac Lake is known more for its natural beauty and clean air than for experimenting with new forms of commerce. Today, many of the village’s onetime “cure cottages” are filled with tourists who come in the summer to hike, canoe and unwind, swelling the population threefold.

Come winter, though, Main Street quiets down and local residents reclaim places like the Blue Moon Café, which dishes up food and gossip. So when the local Ames store closed, few major retailers were interested in taking its place, despite the town’s efforts to woo them.

Walmart was the exception. But its interest in building a supercenter larger than two football fields sharply divided villagers. Signs for and against Walmart sprouted on front yards. At heated town meetings, people would shout: “You can’t buy underwear in Saranac Lake!”

In the end, Walmart decided not to pursue the store; a spokesman said that “no single factor” contributed to the decision. But the tensions the debate stirred up only made the lack of shopping options more glaring.

That’s when a group of residents exploring retail alternatives heard about the Powell Mercantile, a community-owned store in Powell, Wyo., that was born of a similar dilemma. The Merc, as it is known, was established in 2002 after the town’s only department store shut down.

Following the Powell model, the Saranac Lake organizers put together a business plan and assembled a volunteer board of directors.

The board then approached a local lawyer, Charles Noth, who created a prospectus and filed it with New York state authorities. By limiting the offering to residents of New York, in what is called an intrastate offering, the organizers were able to avoid more complex and costly federal securities regulations. (The Powell Merc also raised money through an intrastate offering.)

“I had done a lot of investment proposals but nothing quite like this,” said Noth, who recently moved here full time and whose family has roots in the area. “The idea of a community store is pretty unique.” He became an investor, as did his brother, the actor Chris Noth (best known for his role as Mr. Big in “Sex and the City”).

“We didn’t want it to be a cooperative or nonprofit,” explained Alan Brown, a former banker and the board’s treasurer (and no relation to Pat and Bob Brown). “We wanted it to be just another business on Main Street.”

It was also important that it be widely owned, so the shares were priced at $100, and the amount any one person could buy was capped at $10,000. Shares can be bought and sold or willed to future generations. The store’s projected near-term annual revenues of $350,000 to $400,000 will most likely be eaten up by operating expenses, said Melinda Little, the store’s interim board president, but in the future, investors could receive dividends.

Many residents, and even board members, were skeptical that the store would ever open. “We had our dark hours,” said Alan Brown.

Those have been dispelled, for now. The first day, the store rang up $7,000 in receipts. Not surprisingly, underwear was a big seller.

“This is cool,” said Diane Kelting, who was waiting in line to buy a gray poly-rayon cardigan ($36.99) and a “hard to find” bra. “I have two young daughters and I can bring them in here now rather than shopping online,” added Kelting.

The Saranac Lake Community Store and others like it reflect a growing shift among some communities to lessen their dependence on global businesses and invest their resources in homegrown enterprises that contribute to the welfare of the community. These efforts flow from studies showing that, dollar for dollar, locally owned companies contribute more to local economies than corporate chains do.

Cooperatives — nonprofit businesses like food stores and credit unions owned by and run on behalf of their members — are one common manifestation of the trend. In a co-op, each member gets one vote, and excess revenue not reinvested in the business is distributed among members either as rebates or, in the case of credit unions, lower fees and better interest rates.

Community-owned stores are not as well known and are structured as profit-making corporations, but the aim is the same: to keep ownership and control in the community, and to share the prosperity.

The Saranac Lake Community Store is a corporation, the typical big business form, but the resemblance ends there. If and when there are profits that are not plowed back into the store, they will be distributed to investors — many of whom are also the store’s customers. The store’s three employees are paid a modest salary, but one that is above average for the area, and receive health benefits and paid sick days. “That was very important to us,” said Little, the board president.

The store’s planners sought advice from residents and merchants to determine what was most needed — an effort that continues. Under the title “product offering suggestions,” on a notebook placed near the store’s checkout counter, shoppers had scrawled “larger hats and gloves,” “watchbands” and “women’s flannel-lined jeans.”

“I’m of the belief that if you have more offerings in the community, more people will view it as a place to shop,” said Pete Wilson, owner of Major Plowshares, an Army-Navy store in town. “It’s giving people more reason to stay downtown, and that should benefit other retailers.”

There is no denying the challenges of competing with mega-retailers whose scale and clout give them enormous cost advantages. Craig Waters, Saranac Lake Community Store’s general manager, has had to be creative, stocking American-made products as much as possible and paying reduced prices for merchandise that has not sold at brand-name stores.

The Saranac Lake store is off to a strong start, although the trick will be to keep people coming back after the holiday season — and the novelty — have worn off. “We had a lot of people saying it wouldn’t work — and it might not,” said Wilson. But its existence could set an example for other disenfranchised communities and perhaps prompt shoppers and residents to think about where their dollars go.

“Most people are coming in to pick up some thread or clothing. They’re not coming in to get a political lesson,” said Pitts, the Syracuse lawyer. “But it’s nice to have a place that you can point to as an alternative.”