Grocery wars? Not so much in Basalt and Carbondale

Retail food sales tax revenues remain strong in Basalt despite addition of new, bigger store in Carbondale

The new City Market in Carbondale opened in August 2020.
John Stroud/Post Independent file photo

When the new, larger City Market in Carbondale opened in late August, there was speculation it would eat into Basalt’s sales tax revenues, but early returns indicate grocery stores in both towns continue to flourish.

For the four full months since the Carbondale’s 62,000-square-foot City Market opened, Basalt has experienced growing rather than stagnating retail food sales. Cumulative sales tax collections from retail food sales for those four months were $890,544 — up $44,194, or 5%, from the same period in 2019.

Sales tax reports don’t identify taxes paid by individual businesses, so information isn’t available on sales by the El Jebel City Market or Whole Foods.

Basalt Mayor Bill Kane said his gut feeling is both Basalt grocers are on solid ground despite the addition of a large, new store in Carbondale. There was already a City Market in Carbondale, so it’s not like the new store is breaking ground, he noted. While some Carbondale shoppers might be more inclined to shop in their hometown now that there is a greater selection, City Market and Whole Foods in Basalt are rooted with shoppers, Kane said.

Midvalley residents are unlikely to head to Carbondale to shop when two stores are so close in Basalt and upper valley residents are in the habit of going to Whole Foods for specialty products and El Jebel City Market for staples, he said. He doesn’t see that changing.

“I think the upper valley shoppers are somewhat adverse to driving beyond the El Jebel City Market,” Kane said.

Kane and Basalt Town Manager Ryan Mahoney said more time is needed to see how the new City Market in Carbondale affects shopping patterns.

Mahoney pointed out the COVID-19 has decreased the amount of time people are eating at restaurants, out of personal choice or mandatory capacity limits. That’s driven up grocery sales because people are cooking more at home and buying prepared foods. Clear patterns of spending might not emerge until after the pandemic.

However, like Kane, Mahoney said the Basalt stores would continue to draw from Aspen and Snowmass Village.

“Upvalley folks aren’t going to defect,” he said.

Where people buy their groceries is more than a trivial point. Retail food sales tax generates a major portion of Basalt town government’s budget.

In 2019, Basalt collected a record $6.67 million in sales tax revenue. Of that, $2.34 million, or about 35%, came from retail food sales, which primarily reflects sales by the two grocery stores.

Preliminary figures show Basalt topped $7 million in total sales tax revenues in 2020. Of that amount, $2.54 million was from retail food sales.

While Carbondale might not be eating into Basalt’s grocery sales, its retail food sales tax collections are growing. The town collected nearly $1.3 million in retail food sales tax revenues in 2020, an increase of 15% over 2019, according to the year-end sales tax report. Retail food accounted for 25% of total sales tax revenues.

Carbondale Mayor Dan Richardson said none of the current council members were on the board when City Market was approved, so he couldn’t speak first hand about exact expectations for increased sales tax revenues.

“It’s always packed. Clearly it’s been successful,” he said. “Everybody I’ve talked to is giving this City Market a try.”

The town government’s 2021 budget anticipates a 3% to 5% increase in sales tax revenues, according to Richardson. A relatively new tax on online sales is fueling growth for many Colorado governments. The larger City Market also is expected to boost sales compared with the old store, he said.

Richardson said a segment of Carbondale residents will continue shopping at Whole Foods in Basalt for organic food and specialty products. How shopping patterns shake out remains to be seen.

“I’m not hanging my hat on any data yet,” Richardson said.

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