The Sonora Plaza on Mono Way will lose another major business with the impending closure of Cost-U-Less at the end of March, leaving some of the other tenants concerned about what the future holds for the city’s second-oldest shopping center.

A press release was issued last week by the parent company of Cost-U-Less announcing the Sonora store will close after 25 years in business at the location. It will be the second of three anchor tenants in the plaza to go out of business over the past six months.

“This store is no longer economically viable, which resulted in the decision to close the store,” stated Dan McConnell, president of the international retail division of the Canada-based North West Company, which purchased the Cost-U-Less chain of stores in 2007.

The store’s 18 employees, all of whom worked full-time schedules, were notified about the company’s decision at a staff meeting Wednesday morning before the press release went out.

Derek Reimer, the North West Company’s business development director, stated in an email that each of the store’s employees has been offered a severance package, though he didn’t provide further details on that.

The other 11 warehouse club-style Cost-U-Less stores will remain open, according to Reimer. All of the stores are located outside of the mainland United States in foreign countries and U.S. territories in the South Pacific and Caribbean islands.

Reimer said the recent expansion of Walmart in the Crossroads Shopping Center, less than a half-mile from Cost-U-Less, and an “increase in other grocery options” hurt the store’s economic viability.

Walmart, which Fortune Magazine lists as the world’s largest company by revenue at over $500 billion last year, completed a 27,000-square-foot expansion of its store on Sanguinetti Road in 2017 after years in legal limbo.

A citizens group called the Tuolumne Jobs and Small Business Alliance filed a lawsuit against Walmart and the City of Sonora in an attempt to stop the expansion that went all the way to the California Supreme Court, which ultimately sided with the megaretailer and city.

Tom Berry, manager of the Cost-U-Less in Sonora, said the store also saw a decline in sales from the development of more similar discount grocery stores throughout Tuolumne County that targeted a similar market.

Dollar General has opened stores over the past five years in Jamestown, Soulsbyville and Lake Don Pedro. The company attempted to build one in Columbia as well, but the proposal was denied by the Tuolumne County Board of Supervisors amid strong opposition from residents.

A 99 Cents Only store also opened in the Sonora Plaza shopping center after being approved by the Sonora Planning Commission in 2014. It will be the center’s only remaining “anchor tenant” after Cost-U-Less closes.

Berry said some of the employees at Cost-U-Less who will lose their jobs have been working at the store for more than a decade, including one who has been there since the day it opened in 1994.

“They’ve done a good job keeping this place rolling for as long as it has,” he said of the longtime employees. “Nobody’s panicking, but some people are sad.”

Berry said he’s worked for the company for 26 years and helped open the Sonora store, which he has managed for the past 15 years. He plans to stay in the area because he has two daughters in Sonora High School and is considering starting his own business.

‘Never a good situation’

The closure of the Cost-U-Less threatens to impact more than just the employees who work there.

Tim Newhoff, who manages the Sonora Plaza, said it can affect other businesses in the shopping center as well because customers of Cost-U-Less might have patronized some of the others out of convenience.

“It’s never a good situation,” he said.

Both the closure of Orchard Supply and Cost-U-Less will leave about 87,000 square feet of vacant retail space in the plaza out of about 154,000 square feet, or about 56 percent.

Newhoff, who also manages the Downtown Plaza on Stockton Road, Timberhills Shopping Center on Mono Way and a portion of the Crossroads, said other problems when a major tenant goes out of business include vandalism, keeping the vacant building presentable and a loss of revenue for the owners.

The Sonora Plaza has been owned since the early 2000s by Argonaut Investments, a commercial real estate firm based in Larkspur that has more than 30 properties in the western U.S. under management with more than $450 million in assets and 3 million square feet of retail space.

Argonaut Investments is the longest running owner of the plaza since it was constructed in the early 1970s, according to Newhoff, who has managed it for more than 20 years.

Newhoff said they’re talking to different businesses about moving into the vacant 58,000-square-foot space formerly occupied by the Orchard Supply store, though he declined to reveal any names.

Even if a deal were reached tomorrow, Newhoff said the space will likely remain vacant for up to a year for renovations before a new tenant can move in and open.

“One of the good things is that gets people excited about something new going in there,” Newhoff said of the length of time before the space is filled.

Filling the vacancies

One of the rumored potential tenants for the former Orchard Supply location is the Calabasas-based discount tool and equipment retailer Harbor Freight Tools.

Larry Cope, executive director of the Tuolumne County Economic Development Authority, said he’s been in contact with the company about the Orchard Supply location and plans to reach out again about the 23,000-square-foot Cost-U-Less space.

Cope said Harbor Freight Tools has been interested in opening a store in the area for the past two years.

“We kind of act as a referral agency,” Cope said of the TCEDA’s role in helping to fill vacant commercial properties.

The announcement that Cost-U-Less would be closing caught Cope by surprise last week because, he said, the decision was made at the corporate level.

Cope plans to attend either a regional retail show in Monterey in March or a national retail show in Las Vegas in May to promote vacant retail spaces in the city, which also includes a 15,000-square-foot space in East Sonora across from the Aladdin Inn.

Cope said he’s read recent articles in trade magazines that stated shopping centers and retailers across the U.S. are struggling in part due to the growth of online shopping through websites like Amazon, which saw its stock value recently reach $1 trillion, as well as the development of more retail space than an area’s population can handle.

“In other words, the amount of retail square footage per resident in areas throughout the country was too high for the number of residents,” he said.

The oldest shopping center in the City of Sonora is the Downtown Plaza on Stockton Road, which was constructed in 1965. It was followed by the Sonora Plaza in the early 1970s, The Junction in East Sonora in the 1980s, and the Timberhills and Crossroads shopping centers in the early 1990s.

There’s a total of more than 900,000 square feet of commercial space between the five shopping centers, equalling about 17 square feet per resident based on the county’s population of roughly 53,000.

Cope said the county’s population wouldn’t be able to sustain the number of retailers in the area without the influence of tourism, which typically generates more than $250 million in visitor spending per year.

“Every community is individual and unique,” Cope said. “Even Calaveras County is different (than Tuolumne County), because they don’t have as many tourists.”

In 2009, Cope reached out to contacts at Kohl’s whom he had previously worked with in Gilroy to fill a large vacancy left by the closure of Gottschalks at The Junction shopping center in East Sonora.

Cope said he also worked with the owners of the Crossroads Shopping Center and connections he had at Big Lots and Jo-Ann Fabrics to fill a 62,000-square-foot vacant retail space in the center that was formerly occupied by a Mervyn’s department store, which shuttered in 2009 as well.

Big Lots, Jo-Ann Fabrics and PetSmart eventually reached an agreement with the property owners at the time and opened in late 2011.

Sonora Plaza tenants hope for quick turnaround

Some owners of smaller businesses in the Sonora Plaza shopping center say they are worried about the closure of Cost-U-Less, while others are confident they will be able to weather any potential impacts.

Kelly Mel, owner of the Donut Factory at 734 Mono Way, said she’s already noticed a decline in business from the closure of Orchard Supply and is concerned about what will happen now.

Mel opened the business in 2006 and has been at her current location for almost seven years. She moved from a location in the plaza when Orchard Supply expanded the nursery area about 20,000 square feet to allow for outdoor sales and storage.

Moving to a different location outside of the plaza would be difficult, Mel said, because of the kitchen that’s required to run her business and need for nearby parking due to many of her customers being seniors.

Bill Lane, 77, of Jamestown, was having coffee at the Donut Factory on Friday and said he used to go quail hunting in the area before the shopping centers were developed.

The Sonora Plaza was previously a dairy farm that Lane recalls being surrounded by weeping willows, with a barn situated about where Perko’s Cafe is now located.

Ricky Pinocchio, owner of Pinocchio’s Italian restaurant at 736 Mono Way, said he and his family have seen a lot of fluctuations over the past 40-plus years they’ve been in business.

Pinocchio said they have been in the Sonora Plaza since 1997 and saw a rush in business when the 99 Cents Only store opened after years of sitting vacant. He also believes they’ve increased business in recent years by expanding their menu.

Bryan Adcox, manager of the Wells Fargo Bank in the plaza, said he hasn’t seen a change in business since the closure of Orchard Supply and doesn’t yet know how Cost-U-Less closing will affect traffic, though he hopes the plaza owners will be able to get the vacancies filled quickly.

Ralph Lopez, 76, of Columbia, was getting a pedicure on Friday at Lisa’s Nail and Spa, located inside of the plaza, and said he sees the closures as bad for consumers due to shrinking competition.

The U.S. Navy veteran who served in Vietnam said he sees it as part of a larger trend in which major outside corporations edging out smaller and locally owned businesses in the county.

Lopez pointed to the closing of Andy’s True Value Home Center in 2011 across from the plaza on Greenley Road after more than 50 years in business. The former owner cited the opening of Lowe’s in 2010 less than half-mile away as a contributing factor.

The construction of the Lowe’s was also held up for years after the city approved it in 2005 due to a lawsuit filed by a group called Tuolumne County Citizens for Responsible Growth, which has also sued over other development projects.

Adventist Health Sonora’s $36 million cancer center opened last year on the site of the former Andy’s hardware store.

“Look what’s happened to this area,” Lopez said. “Big Interests from outside our community and even outside of Cali are coming in here to consumer dismay and disadvantage.”

Contact Alex MacLean at amaclean@uniondemocrat.com or (209) 588-4530.

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