Gold in Them Thar Hills

So-called ‘micropolitan’ areas have long been passed over by businesses, but population shifts are attracting fresh development. Brad Edmondson identifies 101 regions around the country where growth and healthy communities are opening new markets for retailers of all channels.
Brad Edmondson
October 2018
 
Forty-six million Americans live outside of a metropolitan area.  Businesses often skip these folks because they believe rural areas are declining markets or are simply too small.  But Wal-Mart built a vast empire by focusing on these overlooked markets.  These 46 million Americans are great customers for private label.
 

Nonmetropolitan America is diverse. It is true that many rural areas are not doing well economically, but this category also contains small cities that have dense neighborhoods and thriving business districts.  The Census Bureau calls these places “micropolitan areas.”  They have a downtown with at least 10,000 but fewer than 50,000 people.  There are 536 micro areas in the US, with a population of 27 million.  

We identified the 101 micropolitan areas that showed population growth in both the first half and the second half of this decade.  We found that the healthiest small cities have several things in common. 

First of all, most of them are in the Sunbelt.  Almost half of the fastest-growing micros are in the South and another thirty-five are in Western states. Second, a healthy small city is usually not far from a jet airport and a big hospital.  Seventeen of the 20 top performers on our list are adjacent to a metro area.  The ones that are not adjacent are Steamboat Springs, Colorado, a world skiing capital; Kalispell, Montana, gateway to Glacier National Park; and Newport, Oregon, on the wild Pacific coast.  The third thing the top small cities have in common is scenery and shorelines.

People move toward jobs, and the cities on this list are growing because they have thriving industries.  Many of them are winning with retirement and tourism.  The huge baby boom generation is between the ages of 54 and 72 this year. Boomers are moving to retirement homes near mountains, lakes, and beaches that are also reasonably close to a good airport and a big hospital.

Some thriving micro areas are in an economic sweet spot, where a low cost of living combines with lots of jobs.  You can get a nice house near Jefferson, Georgia for less than $200,000, and you can get a good job there in food processing or small manufacturing.  Other healthy micros are home to state colleges, like Bozeman, Montana and Cedar City, Utah. In general, the higher a city’s educational attainment, the healthier its economy.

Healthy micropolitan areas are the exception. Most of rural America is losing population. It’s a big challenge for traditional retailers – supermarkets, drugstores, mass merchandisers – who need critical mass to sustain stores. On the other hand, it is an increasing opportunity for dollar stores and small box formats which can better reflect the shopping needs of rural towns, especially micropolitan areas. I guess the lesson is that when you look closer, you can find gold in them thar hills.

For PLMA Live, I’m Brad Edmondson.

 

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