Downtown Nogales: When money hits the road

Sunday, 24 September 2000
http://www.azstarnet.com/public/dnews/000924retailinnogales.html

Before This is how the Boice Barbee Building,
housing retail stores, looked a year ago.
After Today it sports a 1920s façade, consistent with Nogales' effort to attract shoppers.

Photos by Sarah Prall /Staff
Diving products have helped boost sales at Alexander's by about 10 percent in the past five years. Flexibility and diversification seem to be the keys to survival.

Downtown Nogales' problem is common to many border towns: People are increasingly shopping elsewhere. Some merchants are fighting back by modernizing their looks and their wares.
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"For years we had a gold mine here, and we neglected the Arizona clientele. Now we are paying the price."
Ernesto Chavez
President of Wilde
Stationers Inc.

By Jeannine Relly
ARIZONA DAILY STAR

NOGALES, Ariz. - The downtown historic district in this border town once bustled.
Some of northern Mexico's wealthiest and most powerful residents crossed the border regularly to buy elegant Italian suits. Less fortunate families came, too, in search of cut-rate dresses and shoes.

But now downtown Nogales is struggling with a trend many border towns are facing: A growing number of shoppers who live along both sides of the border are spending their money elsewhere.

Some are choosing the expanding array of mega-stores south of the border.

Some are heading a few miles north, where local competitors showcase their wares in two prosperous strip malls on the city's northern fringe.

Others are going even farther: They're driving to Tucson or Sierra Vista, or hopping a flight from Mexico to bigger U.S. cities.

"For years we had a gold mine here, and we neglected the Arizona clientele," says Ernesto Chavez, president of the downtown store Wilde Stationers Inc. "Now we are paying the price."

Not all area retailers are suffering. The North American Free Trade Agreement has reduced import taxes in Mexico, encouraging U.S. companies to open businesses there. Hermosillo, Sonora, now has Wal-Mart, Sam's Club and Blockbuster Video.

Also, executives from American-owned factories in Mexico are building spacious homes in Nogales, Ariz., and neighboring Rio Rico - and businesses are opening to cater to them. Nogales' northern fringe boasts about 35 stores including Wal-Mart, Kmart and Payless ShoeSource.

Those major retailers have pushed overall sales in Santa Cruz County up 10 percent through July compared with the first seven months of last year. Similar figures for downtown aren't available, but retailers there said their sales are dropping.

To fight back, a few of the more than 90 downtown merchants and property owners are slowly retooling the look of this district that includes in its history a former brewery that dates to the 1800s. And a number of retailers here are reinventing their businesses - stocking their shelves with new inventory for a new era of customers.

Traditional clothing and grocery stores are giving way to cell-phone stores, check-cashing outlets and gas stations.

"We've got to rethink what we're doing with what we have," says Beth Daley, chief executive officer of the Nogales-Santa Cruz County Chamber of Commerce.

Catering to law enforcement

With the buildup of hundreds of federal agents on the border, downtown business partners Nils Urman and Jeff Stuchen have sought to diversify their inventory of branded jeans and casual clothing at Capin & Co. They now offer Border Patrol agent bike gear, Mexican police and customs officers' uniforms, bulletproof vests, holsters and magazine pouches.

Across North Morley Avenue, the two entrepreneurs have opened the first skateboarding business here inside a former grocery store. In the next month, they plan to downsize their two downtown businesses into one shop.

Up the block, longtime store owners Ana and Alex Kory have added diving equipment to their selection of elegant men's clothing that includes Italian ties, suits and shoes, which politicians and government officials from Hermosillo travel here to purchase.

"We have had to diversify," Ana Kory says of the 20-year-old business. Diving products have helped boost sales at Alexander's by about 10 percent in the past five years.

A few shop owners, such as Monica Cho, are considering leaving Nogales. After 15 years here, the wholesale- and retail-shop owner says bargain-clothing hunters have waned.

She's not alone. Since the mid-'90s, an enclave of Korean merchants, many from Los Angeles, has shrunk by at least one-third to about 27 store owners, officials say.

Downtown property owner Chavez's two sons phased out their office-supply shop when their cellular-telephone sales became a hit. And the family will build a gasoline station up the road on Grand Avenue, largely to sell gas to Mexican nationals.

Lost boom

Border towns such as Nogales, Ariz., were hit in the mid-1990s with a peso devaluation that caused shopping to dip. The city's retail sales have progressively climbed ever since, but downtown merchants insist they haven't come close to recapturing the boom times of the 1980s and early 1990s.

Urman, board president of the Historic Nogales Main Street Association, says businesses took their most recent hit from a pilot program set up by the U.S. Immigration and Naturalization Service. Since December, Mexican nationals may travel 65 miles north of the border without filing exhaustive paperwork.

The policy makes it easier for Mexicans to shop far from home, Urman said. The INS hasn't determined whether it will extend the program beyond one year, officials said last week.

Sales increase

In Santa Cruz County, of which Nogales represents about 90 percent of the retail sales, shoppers spent $133.93 million through July, a 10 percent increase from the same period last year, sales tax revenues show.

About two-thirds of the city's stores are in the downtown area, and one-third are on the outskirts, officials said. But revenues are just the opposite: downtown stores account for about one-third of sales, while outlying stores boast the remainder.

Most of those outlying stores are on Mariposa Road, where a regular stream of shoppers jams the parking lots of about 35 chain and locally owned stores.

"Business is steady, brisk," says Joe Morris, store manager for Wal-Mart in Nogales. "My observation is, the restaurants and retail in the strip are all busy."

Sales are so good that Wal-Mart may build a bigger store down the road, he says.

Business officials say many shoppers choose the convenient parking at the retail strips over the quaintness of downtown, where customers can still climb the stairs to the mezzanine of J.C. Penney's, watch window-shoppers from a shady spot under the Morley Avenue park's gazebo or visit a third-generation business such as Bracker's Department Store.

Bracker's still has its original fixtures and wooden display cases. The staff has built its reputation on services such as calling New York to find just the right size or tracking down the perfect outfit for customers who bring in magazine photographs of what they're looking for.

Luring shoppers

Three years ago, downtown merchants and property owners banded together to form the Historic Nogales Main Street Association and set out on a mission to attract shoppers and day-trippers to the historic area. Also, a state-funded project allows downtown property owners to have their buildings redesigned by architects who draw up plans to return storefronts to their original fa?ades.

So far, workers have pulled down numerous aluminum fa?ades plastered onto buildings in the 1960s era of "modernization." With hundreds of thousands of dollars in renovations, they've managed to restore a select few to their 1930s classical revival appearances.

A recent survey suggests even more changes. Consultants advised merchants to target a market they might have missed: tourists traveling south into Mexico.

"I've seen German, Japanese and French tourists stand in front of my store and stare over at the border," says Urman, of the Main Street association. "This could be a whole new set of opportunities."

It takes a village

The report, by Phoenix-based McClure Consulting, concluded downtown Nogales could create a "North of the Border Mexican Village." Offerings would include Mexican food and crafts shops, specialty restaurants, book and music stores, art galleries, a theater, an Old West nightclub and an interactive museum focused on the border region.

The city's property owners admit doing all this might take awhile. About $600,000 in federal and state grants is available for better parking, street lights and benches, but individual businesses would have to refurbish their own properties.

Longtime business owners aren't holding their breath. After all, the city of 22,000 hasn't yet seen investors who want to erect a movie theater.

But Andrea Paredes' newly opened Main Street Cafe has inspired hope.

During lunch, the cafe's workers deliver soup and sandwiches to U.S. Customs agents and serve espressos and cafe lattés to judges, attorneys and government workers. Individualized mugs wait for regulars.

On Friday nights, there are mariachi performers, comedy, and guitar and rock bands. Paredes, 23, is looking for a jazz ensemble.

Tony Martinez, a Nogales police officer, stopped by one recent afternoon for an apple pie break with associates. "There aren't many other places like this here," Martinez said.

* Contact Jeannine Relly at (520) 573-4213 or by e-mail at jrelly@azstarnet.com.

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