Watertown City Council Approves $135,000 Agreement to Recruit New Retail Businesses

Northeast Radio SD News – Watertown, SD - The Watertown City Council voted unanimously on Nov. 2 to approve a three-year partnership agreement with Retail Strategies at an annual cost of $45,000, totaling $135,000, to analyze the local market and recruit new retail businesses to the city.

City Manager Alan Stager told the council the national consulting firm will help the city analyze retail trends and actively recruit prospective businesses to protect and expand Watertown’s sales tax base.

Past Retail Recruitment Results and Current Sales Tax Data

Stager noted that Watertown has used retail recruitment consultants twice over the past two decades with measurable long-term returns:

·         2004 (Buxton Group): Attracted seven retail businesses to Watertown, six of which remain open today. The only closure was OfficeMax, which exited as part of a national corporate downsizing.

·         2017–2018 (Retail Strategies): Recruited eight businesses to the community, all eight of which remain open and continue generating municipal sales tax revenue.

Presenting data from a city dashboard built with South Dakota Department of Revenue figures across 337 Standard Industrial Classification (SIC) codes, Stager reported that Watertown recorded $879 million in taxable transactions over the first nine months of the year, generating $17.6 million in sales tax revenue and maintaining year-over-year monthly growth above 4.5 percent.

Despite strong overall numbers, Stager highlighted shifting consumer habits and regional competition. Online shopping transactions in Watertown rose 14.5 percent over the first nine months of the year compared to the prior year, while eating places increased 9 percent year over year. Stager also pointed out that several large retailers have recently opened locations within a 45-minute drive of Watertown.

"While this is helpful to help us understand what has happened, what we don't have is a firm such as Retail Strategies who can help us understand what is going to happen," Stager said. "We can sit back and wait to see what is going to happen or we can engage with firms that can help us with the data analysis to determine where do we go next and how do we ensure that we maintain the sales tax base that we benefited from in our community."

Stager emphasized that the city’s long-term budget stability depends on growing its population, property base, and sales tax revenue.

Community Engagement and Partner Agencies

During council discussion, Peters asked whether the city had invited Codington County or Watertown Municipal Utilities (WMU) to share the financial cost of the contract, noting that new retail development also generates property tax revenue and utility hookups.

Stager said the city had not asked outside entities for funding, adding that active participation from local organizations is more critical than splitting the fee.

“Honestly, I don’t really want their money. I want their engagement and commitment,” Stager said. “That’s more important than the money; we can afford the $45,000.”

When Jurrens asked how the Watertown Area Chamber of Commerce and the Watertown Development Company (WDC) fit into the initiative, Stager confirmed both organizations will be invited to participate in the steering group leading the effort. Jurrens also emphasized the importance of supporting existing local businesses during the holiday shopping season and noted the economic impact of the regional agricultural community within a 50- to 100-mile radius.

Contract Guardrails and Regional Exclusivity

Responding to a question from Mohrmann on why Retail Strategies was selected over competing firms, Stager cited the company’s existing familiarity with Watertown and its tailored data approach.

“They know more about us right now than we know about ourselves from a retail standpoint,” Stager said.

Heuer voiced support for the agreement while asking on behalf of residents whether the three-year contract includes off-ramps if the city does not see a satisfactory return on investment during quarterly reviews. Stager confirmed the contract includes standard municipal provisions allowing the city to defund and exit the agreement if necessary, though both Stager and Heuer stressed entering the partnership focused on execution.

Mayor Holien said he and Stager vetted the firm thoroughly prior to bringing the agreement to the council, including securing a commitment of regional exclusivity so Retail Strategies represents only Watertown in the surrounding area during the contract term.

Holien also noted the firm’s direct relationships with national retail and restaurant decision-makers and knowledge of specific site requirements, such as five-lane road access, turn lanes, lot sizes, and morning traffic counts. He cautioned residents that retail recruitment is a multi-year process.

“I want to caution everyone in the community not to expect immediate results in a month or two,” Holien said. “It can take over a year to establish that contact and bring out the company representatives to look over the community.”

Holien added that expanding retail and dining options works alongside housing initiatives to attract both visitors and permanent residents to Watertown.