Shaky economy shakes up retailers in Perry, Iowa

PERRY, Iowa -- The global economic crisis slipped into Arlene Garrett's hair-styling shop almost unnoticed last year.

First, customers began waiting longer between haircuts at It's Hair, her corner store on Second Street. Or they'd time visits to coincide with other errands to save gas. Then Garrett saw business start to fall after some of her regular clients were laid off at Citigroup, which said in November it would cut 53,000 jobs nationwide.

"I think all small towns are struggling right now," Garrett said. "We're all in the same boat."

Yet, along Second Street in Perry's tidy, historic downtown district, many business owners say they've felt only tremors of the economic crisis so far.

In fact, Jenny Eklund of Perry Paint and Design says her business even benefited from high gasoline prices last summer: People shopped locally instead of driving 40 miles to Des Moines.

Pat Joebgen, who owns Joebgen Shoe Store, agrees. "We did really well when gas prices were high," Joebgen said.

"Knock on wood, we haven't felt this too much. We've been really lucky."

'Closed' signs

But not all is well on Perry's "Main Street." A local coffee shop, a clothing boutique and several storefronts along Second Street sport "closed" signs with offers to sell or rent the empty space. As in many small Iowa towns, Perry's population of 7,600 is aging, and competition from nearby big cities draws customers, said Liesl Eathington, an assistant economics researcher at Iowa State University.

"The notion of small-town Iowa as we used to think of it hardly exists anymore," Eathington said. "There really aren't any communities that are immune to what's going on in the state economy, the national economy, the global economy."

Perry, a 139-year-old town founded as a stop on the Des Moines and Fort Dodge Railroad, now relies heavily on business from a Tyson Foods meat-processing plant and the Hotel Pattee, a historic luxury inn in downtown themed around small-town America.

Some parts of the Perry economy, such as food production at Tyson Foods, may fare better during a recession, Eathington said.

But the economic health of Des Moines still touches Perry. A decline in local Des Moines spending could trickle to outlying towns such as Perry, said Eathington. In a 2007 study of five central Iowa counties, Eathington found strong evidence that Jordan Creek Town Center — a 14-year-old suburban megamall in West Des Moines — has sucked business out of nearby towns like Perry.

Perry lost $16.1 million in retail business from 2004 through 2006, while sales in the area around the mall in Dallas County increased 500%, the study found.

Even though Dallas County is experiencing record population growth, that growth hasn't reached Perry, she said. Towns in the less-developed north and western parts of the county are "not yet enjoying the fruits of that change," she said.

Some in Perry are starting to worry.

Sales have dropped at Parker's Flowers & Gifts, a 57-year-old shop on Second Street, said owner Brian Parker, even though he has been able use personal service to tap a loyal base of people from surrounding towns.

"Under the circumstances, we've been holding on," he said. "We've been successful with specialty items. But we're a luxury dealer. We aren't a necessity. People are figuring out that it's not wise to be indebted to the hilt with loans, with credit card debt. I don't know what might be in store down the road."

Perry also has experienced a culture shift, as scores of Hispanic workers arrived in the 1990s to work at the Tyson Foods plant. One-fourth of the town's residents identify themselves as at least partly Hispanic or Latino, according to the 2000 U.S. Census.

Among them is Humberto Hernandez, owner of the Panaderia Mexico grocery and pastry shop on Second Street. Hernandez, a Mexican immigrant, traveled to Iowa from Houston to work at Tyson Foods. He left the plant and opened his shop in 2001 with little more than a glass case for bread and pastries.

Still a struggle

Keeping the store afloat remains a struggle even with a loyal Hispanic customer base, Hernandez said. He would like to expand his operation to sell meat, but those niches are filled by the larger Hy-Vee and Fareway stores in town.

Hernandez said his business declined as gas prices rose.

And customers were frightened away by a federal immigration raid this year in the northeast Iowa town of Postville, he said. The raid — one of the largest in U.S. history — resulted in the arrest of nearly 400 illegal immigrant workers at a kosher meat plant. About 270 of those arrested were charged with identity theft or other fraud-related crimes and given five-month prison sentences.

A similar drop in his business occurred in late 2006, Hernandez said, when agents raided the Swift & Co. meat plant in Marshalltown, Iowa, and detained hundreds of illegal workers. "Customers stopped appearing," Hernandez said. "In those times, we lose business."

In recent months, Eklund of Perry Paint and Design said, she's started to pray for Perry to thrive.

"We are all in this together," Eklund said. "We're all going to rise together, and we're all going to fall together."