Sunday, January 8, 2012

More on monopoly issues at the Trinity Site

It seems my previous post on the Trinity Site redevelopment generated more interest than I expected; somehow it found its way to the attention of the site's citizen advisory committee. Three members proceeded to write thoughtful comments on the post. I suspect they may have useful things to say here as well.

First, I want to emphasize that my critique should in no way diminish my appreciation for the effort members of the advisory committee and other project folks have put in. Clearly, it's been a massive amount of work. I am also on board with, in principle, the desirability of the project and an expanded Smith's across the road.

That said, based on what I've seen, I'm still not convinced the monopoly/conflict of interest issues have been adequately mitigated. In addition to the Gibson editorial, I've read through the newsletter sent to all residents on Friday as well as poked around the county's project website. I confess I have not read all 100+ pages of the (non-searchable) proposed ordinance nor all the documents on the site. (Frankly, it's rather poorly organized, in my opinion, and I couldn't find an objective summary or FAQ.) However, I believe I know enough to have a meaningful opinion. (And if I have missed something substantive, please do point me to what I missed.)

An obvious potential tenant for Mari-Mac is the co-op. I realize that given the fact that we (I am a co-op member) just spent a pile of money on a brand new building, we are obviously not moving any time soon. But we might want to do so sometime in the next 73 years, which is how long the Trinity Site agreement appears to run.

Also, the reason we (I am a co-op member) are out past the airport -- frankly, a rotten location -- is that after years of trying, the membership was unable to secure a better location. In fact, if I recall correctly, the membership did pursue a location at the Trinity Site, but this did not work out for some reason. This difficulty is clear evidence that retail real estate in Los Alamos is quite limited. The membership at the time decided, essentially, that a rotten location was better than no co-op at all.

Anyway, Kroger being landlord at Mari-Mac as well as a diverse anchor tenant at Trinity Site is a clear conflict of interest. An independent landlord at Mari-Mac would evaluate potential tenants based on their ability to provide revenue for the landlord; a landlord that also owns a large retailer itself will additionally consider whether tenants will compete with its own retail operation. This is a conflict of interest and a worrisome monopoly situation.

The new Smith's will be a "Smith's Marketplace", which has a much more diverse product offering than the existing Smith's grocery store. Based on the Smith's Marketplace in Salt Lake City, where I've been a couple of times, possible offerings include the following:
  • Clothing. Is Beall's at risk?
  • Shoes.
  • Liquor.
  • Books.
  • Furniture.
  • Drugs, cosmetics, and other pharmacy items. (The proposal is explicit that a pharmacy would probably be excluded.)
  • Plants, flowers, and other garden stuff.
  • Hardware.
  • Produce. Would a farmer's market be excluded from the parking lot?
  • A butcher's counter.
  • Electronics.
This is a wide variety of retail that could potentially be excluded from Mari-Mac, one of the premier retail locations in town. It would be wonderful to have independent retailers in many of these categories in town, and it would be a shame to keep them out of Mari-Mac.

Commenters on the previous post assure me that the monopoly issue was considered at length, but all I could find on the county's website was a couple of fairly vague paragraphs in the "NADG Written Response to TSRPAC Questions" PDF. So it's unclear to me what the result of this consideration was. If there was some concrete outcome, I'd love to see it.

Conflicts of interest aren't necessarily deal breakers, but they need to be mitigated. For example, is Kroger expected to sell Mari-Mac within a few years? Great -- put it in writing. Do we expect that these conflicts of interests will not in fact result in problematic limitations for our community? Again, great -- put it in writing. Give us some recourse if this expectation turns out to be unfounded. I'm sure that there are opportunities to write the necessary protections into the agreement in ways that also satisfy business realities.

I can assure you that Kroger, like any large corporation, does not care one whit about our community. Their sole purpose is to make money. This is how American capitalism works these days (withholding further comment on this matter for now). And if for some reason Kroger is exempt from this critique, they, like any company, face sale to a different company with fewer scruples. We should recognize this and write appropriate protections into the agreement.

It does seem the process has considered the monopoly/conflict of interest issue, but it's not clear what, if anything, has been done about it. The proposal needs to be more accountable to the community on this issue and how it is being mitigated.


  1. So what is going to happen to the current Smith's? Will we now just have a big vacant building that cannot house a grocery store due to competition?

    I really don't like the idea of a big box store at all, so I am completely opposed to the Trinity Site plan. I like to support our local stores, such as Metzger's hardware, CB Fox, and the Los Alamos Co-op. I see no need for any Target-like store in Los Alamos. I wish I had been here a few years earlier to vocalize my objections at the time.

  2. Amanda,

    I don't know. Kroger does have a strong incentive to rent the space, since otherwise they will lose a ton of rent and a vacant space will be a drain on their other tenants.

    My guess would be that it would be subdivided and have multiple smaller tenants.

    FWIW, even if there wasn't the conflict of interest issues, it seems there really aren't any other grocers to take the space at the moment.

    I'd encourage you to come to one of the public meetings that's coming up and voice your concerns. The one in Los Alamos is January 18th at 5:30pm, Fuller Lodge.

  3. Hi Reid and Amanda,
    For the record, the Fox family is in favor of Trinity Site.

    Currently the town spends 70% of the money is spends, off the hill. The basic things most families need to run a household are not available. It's not a matter of choosing to support local for most families here. What the existing stores know is that, if we could meet our general merchandise needs here, we would actually spend MORE money at the other stores on the hill rather than less. This is why it would be an "anchor" store - rather than a "big box" store which is different.

    I know plenty of people don't mind going to SF to shop or don't have kids in the house but young families find it very hard to live here.

    The new Smiths would be beautiful and if you never go in the general merchandise section, the grocery would be a huge step up.

    I believe the only type of store it wouldn't backfill with is a grocer.

    I hope for the rest of the town that needs the better retail, you won't fight it just because you don't need it. The schools need the revenue and a lot of the town (a lot of who's paying 70% off the hill) would have a nicer life here if they didn't have to leave so often. Thanks for thinking about it.
    -Kristin Henderson

  4. Also - plenty of people objected - mostly those old enough that kids were grown. There were two public votes and it passed.

    The old Smiths would definitely be rented out. There are tons of businesses we could use there. Smiths said in no uncertain terms it would be rented.

    If we had an anchor store here, it is likely the other empty retail stores here would be filled. Most are owned by one man who basically doesn't care. Perhaps he would finally get enough from interested parties to be bought out - if we had an anchor store to keep us up here.

    I have tried to shop only up here. The lack of selection and lack of many types of products make it impossible. If you don't have to buy socks for kids (beals and fox have some, not all sizes, not many styles), coats, sports equipment, craft supplies - there are a ton of things. Again, 70% spent off the hill. A few prefer that. Most do not.

  5. Hi Kristin,

    Your comments about competition being enhanced rather than restricted are encouraging. Why can't similar assurances be written into the deal? Why doesn't the material the county is putting out address these problems in more detail?

    The exclusion list (i.e., stores that wouldn't backfill) is quite unclear to me. Grocery and pharmacy are mentioned explicitly in what I saw. But I think it is fair to ask for more details on this.


  6. I just came upon this blog, and I'm astounded to think that people think it's hard to live up here with kids, when families have been doing it for more than 60 years. And now you can get anything on the Internet if you can't find it up here.

    A new Smith's Marketplace is not really going to improve the availability of things, except for adding more poor quality Kroger products. And now with a monopoly (will they really rent out MariMac space to anyone who competes with them?), Kroger has free rein to raise prices.

    When that happens, and it's too expensive to go off the hill because of high gas prices, that will be a real reason for Kristin and those other mothers to cry about the shopping up here.