Local Grocers Face Toughest Competition from Target, CIR Says

Grocery and drug stores would experience the most competition should a new Target be built at Shoreline Center in East San Rafael, according to the community impact report released today.

The community impact report, requested by the San Rafael City Council in December 2010, stated that the proposed 137,000-square-foot complex would result in 200 new jobs (164 of them retail jobs), a net increase of 3.6 percent total retail sales in San Rafael and a total $646,000 in revenues for the city.

The study, conducted by research and consulting firm AECOM in San Francisco, used Davis, Livermore, Napa, Novato, San Mateo and Walnut Creek as case studies for the possible effects of introducing a Target.

Target’s main competition would be local grocers and drug store owners, as opposed to home furnishing, electronic or home improvement stores, the report said.

AECOM estimates that Target’s competition with independent groceries would cause a 2.9 percent decrease in local sales by 2015. Facing the decrease, local storeowners could layoff 36 people, according to the report.

“That is way off,” said Bill Daniels, owner of United Markets in San Rafael and San Anselmo. “In groceries there’s no margin, so even a 2 percent decrease is tremendous.” But Daniels estimates that the decrease will really be around 8 to 10 percent.

United Markets, which specializes in local and organic products, employs 150 people, most of them full-time.

Despite the hit local grocers would take, AECOM said that overall local retail sales would increase by $44.5 million if a Target is approved. Currently, general merchandise stores are in short supply and many customers travel outside of southern Marin County to shop. A Target would fill this hole, according to AECOM.

At $646,000 in revenue, Target would also be in the city’s top five producers of sales tax, according to Economic Development Director Stephanie Lovette. Approximately 29 percent of the city’s budget relies on sales tax, and 24 percent on property tax.

Despite the impact on local businesses, many San Rafael, Fairfax and San Anselmo residents oppose a Target because of low pay compared to other local stores. Many believe that the corporate chain would not offer livable wages for locals and would instead attract employees from outside San Rafael.

“[Target] has to be competitive with other retail businesses,” Lovette said. “As far as commuting, that’s happening all over Marin.”

The report says that in 2009, 13 percent of local jobs were held by local residents, and 62 percent of San Rafael neighbors travel more than 10 miles to get to work.

Target employees without a benefits package would receive an annual salary of $18,000, eight percent less than similar businesses in San Rafael. Of the total employees hired by Target, 55 would be ineligible for benefits.

“What does that do to the community?” San Rafael resident Louise Yost at a rally on Monday. “When an employee [without benefits] is sick, they go to the county sponsored health clinic…so that county ends up paying the tab for health care. Now that’s not right.”

The City Council will review the community impact report and make a decision on April 21. Until then, Daniels hopes that council members will do a lot of “soul searching.”

“We’re not going to take this laying down,” he said.

Editor's note: In an earlier version of this article it stated that Target would employ 164 retails jobs, which is true To clarify, the new Target will hire a total of 200 jobs, and 164 of those jobs are in retail.