Shale Development Boosting U.S. Retail Sector
The model for a successful business has always famously been: “location, location, location.” And according to a recent Wall Street Journal article, “location” is now synonymous with drilling permits.
Thanks to advancements in hydraulic fracturing and horizontal drilling, shale development is on par with well-known economic indicators such as job growth and new home construction.
Take Home Depot Inc., for example. Recently, the home improvement retailer had put the brakes on opening new stores in the United States, and instead has been looking abroad. However, the company broke this trend and decided to open one new store this year. The 100,000 square-foot store was not destined for the retail areas of Boston or Los Angeles – Home Depot chose Minot, North Dakota, as its sole U.S. new business initiative. Chief executive Frank Blake said:
“If you had said to me seven years ago, you’ll be opening a store in Minot, North Dakota, I would have asked, Why? One of the great stories of the U.S. is the shale oil development, and it’s happening in areas where we don’t have a lot of stores now.”
Home Depot isn’t alone, either. Other retailers are targeting towns surrounding shale plays in Louisiana, Texas and North Dakota. These store openings are even more remarkable as retail real estate purchases are on the decline due to increases in online shopping. In Williston, N.D., hour-long lines at Wal-Mart led the retailer to bring in staff from nearby stores as well as bump wages for stock clerks and cashiers to $17 an hour. Since then, Wal-Mart has hired locally to fill needed positions.
Other retail outlets are discovering a similar fortune. Stage Stores Inc. has two hundred and fifty stores in Texas as well as locations in Louisiana and Oklahoma. These store fronts, located in some of the nation’s most productive shale fields, outperformed the rest of the company’s store base in both 2012 and 2013. CEO Michael Glazer had this to say on the exciting activity occurring alongside America’s energy revolution:
“There’s a correlation between the energy boom and county employment rates. And wherever energy comes in, jobs follow and people spend more at our stores.”
Stories such as these highlight the power of shale. Formerly sleepy or sluggish areas are being revitalized overnight thanks to shale oil and gas development. The Utica Shale in Ohio is boosting record increases in sales tax revenue, and the Marcellus has created over fifteen thousand direct jobs in Pennsylvania. On the west coast, California State University, Fresno, conservatively predicted that by 2030 the development of the Monterey Shale could lead to 195,000 new jobs in the San Joaquin Valley and an additional twenty-two billion dollar increase to personal income.
Stay tuned for the next story on shale changing the United States for the better… you won’t have to wait long.