Historic store closure echoes struggle of many

SAN JUAN — When Valley Hardware Store opened in 1924, the business’ main concern was to supply the rush of settlers coming into the then-booming town with the basic materials to start a home.

The vintage 1920s cash registers in the store quietly keep the tabs of the decline of Valley Hardware.

Today, the owner’s main concern is to cut his losses by Jan. 1, before another quarterly tax cycle begins.

A dramatic drop in business led store owner, Mike Hempel, to liquidate his store’s inventory after an 86-year run in the San Juan community.

The 60-year-old bought the store at 606 S. Nebraska Ave., a staple in the now-sluggish San Juan downtown, from his father-in-law 17 years ago. Since September 1993, he’s seen the store lose customers for many reasons.

“Five or six years ago, (the city) re-did the street and we were basically shut down for six months,” Hempel said about Nebraska Avenue. “A lot of people thought we were closed…They told us that we would lose some of our customers, and they were right. It’s been going steadily downhill ever since then.”

“Every time you think it can’t get worse, it does get worse.”

Although the ordeal might have contributed to the loss of customers, other factors also came into play, including the retail expansion of the surrounding areas, a change in shopping habits and, most recently, the economic recession.

‘OUTDO AND OUTPACE’

Roy Garza, 48, has been working at the store for 31 years — even before Hempel purchased it. He believes Valley Hardware began to lose its customer base when the bigger home-improvement stores, such as Lowe’s and Home Depot, moved into the surrounding cities.

“There’s a lot of competition, and you can’t really compete with those big guys,” he said.

Cities have to strike a balance between bringing in big retail stores while keeping in mind the existing small businesses and how they would be affected, said Miki McCarthy, executive director for the San Juan Economic Development Corp.

 “It’s important to have the larger retailers for the sales tax revenue,” she said. “However, the downside is that it pushes out the smaller mom and dad companies. Big box stores are large enough to sustain such high volumes of inventory that the smaller businesses just can’t compete. They outdo and outpace these stores.”

Last month, the city of Pharr recorded four consecutive months of sales-tax growth. Their main revenue generators: the home-improvement stores.

SHOP SAN JUAN

Shopping habits for San Juan residents have also changed as more people travel to other cities to meet their needs, McCarthy said. In 1924, the hardware store was selling starter kits — a stove, bed, dresser, dining room table and four chairs — to meet the needs of the growing community.

Owners offered credit to the residents and the residents shopped there because many didn’t have the means to travel to McAllen or Brownsville, the only two cities who had retail stores.

“The shopping habit of buying from small town shops is no longer the case,” McCarthy said. “It’s more convenient to shop at Walmart or Target or Home Depot.”

As a result, many small businesses have closed their doors throughout the years. That adds up to less revenue for the city. The most recent victims of the change have been Cherrie’s Grill, Unique Creations & Gifts and Mexico Lindo restaurant, she said. To remediate the problem, the EDC launched the Shop San Juan campaign, which educates the community about the benefits of shopping within the city.

“Every time that we travel into a neighboring city (for business), we’re affording that city and those residents that live there that growth, rather than investing in our own,” she said. “Those sales tax dollars then afford the city and the EDC to create more projects and provide more services to the community.”

ECONOMIC DOWNTURN

This was also another detrimental factor for the business.

 “In the recessive time, a lot of companies went out of business,” McCarthy said. “Even some of the larger ones filed bankruptcy, so you can imagine the toll that it takes and the debt that’s incurred on a smaller company.”

Valley Hardware rang up 1,454 purchases last month, with an average total of $8.35, Hempel said. But it’s not enough to pay many of the hidden taxes and fees business owners have to pay.

The city’s EDC offered him a loan, but he refused it.

“I don’t want the loan because I can’t pay the loan back,” he said. “I just need to get rid of everything. I need to come out on top at least $50,000 to get out of debt.”

Between what’s left of the inventory and the fixtures in the establishment, Hempel believes he has about $150,000 worth of assets. He has been weighing options about what to do with it, including auctioning it off. He was waiting for a phone call Tuesday from a potential buyer who was interested in purchasing all of it, but he hadn’t heard from him late in the afternoon.

“This might be our last day,” he said Tuesday.