Shale Lures Retailers to New, Burgeoning Markets

In the midst of the American shale oil and gas boom, a curious new trend has emerged in the retail industry. As Shelly Banjo notes in her recent Wall Street Journal article, companies such as Home Depot and Wal-Mart are opening new stores in regions that were once isolated and sparsely populated, but now are home to booming oil and gas towns with healthy appetites for retail and real estate.

Whereas intense competition from online shopping platforms is pushing down in-store traffic and new store openings across much of the U.S., these new, highly concentrated markets in states such as North Dakota, Texas and Louisiana now offer retailers a timely opportunity to expand domestically and boost their brick-and-mortar sales. In turn, these companies are largely servicing those in the energy sector, while providing significant retail job growth and new opportunities for real estate development.

To provide some additional, in-depth perspective, I asked Charles Dewhurst, partner and leader of BDO’s Natural Resources practice, and Stuart Eisenberg, partner and leader of BDO’s Real Estate practice, to weigh in on this trend and its impact across industries. Here’s what they had to say:

Charles Dewhurst: “There’s a reason we think of the oil and gas industry as being an economic powerhouse: Its growth and impact is rarely limited to the energy sector. Not only has the shale boom put money back into consumers’ pockets by creating well-paying jobs; it also has helped stabilize the price of oil and natural gas, making downstream energy more affordable for Americans and freeing up discretionary income to funnel back into the economy. It’s no surprise that those industries that rely directly on consumer dollars are benefitting.”

Stuart Eisenberg: “Local real estate markets can be significantly impacted by growth in another sector. When companies in large, influential industries, like natural resources, expand into a market, jobs are created, resources are needed and other companies follow to meet the demand. This spurs both the performance of existing property assets and new property development. The positive movement will likely not just be limited to retail spaces; the residential rental and hotel real estate sectors should also experience notable improvement.”

With shale oil and gas bringing new growth opportunities across multiple sectors, what are your thoughts on this trend’s long term impact? Let us know in the comments section below.