The U.S.’s rural population is growing after 10 years otherwise. Retailers have noticed the moves — and the purchasing power of those households.

According to the latest U.S. Department of Agriculture data, Net migration to non-metro areas rose a quarter of a percent from July 2020 through June 2022, a sharp turnaround from the contraction that occurred each year from 2010 through 2016 and the flatness each year from 2017 through 2020.

The USDA also noted that among the U.S.’s 58 million non-metro-area households, median household income is 15% higher than the countrywide average. Combined with the lower cost of living, this means rural consumers have higher discretionary purchasing power. That’s a populace that’s highly attractive to retailers.

Elliott Cook — Retail Strategies director of real estate for the Retail Academy division, which teaches communities to attract retailers — said rural markets have several advantages over urban markets. “They offer developable land, they have good vacancy and they were incredibly resilient during the pandemic,” he said.

Indeed, the list of national retailers opening in rural and tertiary locales is growing from longtime staples like Tractor Supply Co. and Dollar General to others like Petco and Lowe’s.

Last spring, Lowe’s announced it would open 300 stores in the South, Midwest and Northeast that add farm, ranch and outdoor products to the typical offerings of Lowe’s stores. “While in years past, our penetration of rural and remote stores was viewed as a competitive disadvantage, we now expect that these stores will be a key component of our operating profit growth over the next three to five years,” president and CEO Marvin Ellison said at the time.

Retail Following Rooftops? Retail Can Attract Them Now

NewQuest Properties director of geographic information systems and research Chris Myers believes rural and tertiary markets represent the bulk of future job growth. “I look at potentially 50,000 new jobs being created in the chip industry, for example, and the bulk of those jobs are not going to be in urban markets,” he said.

Retail and restaurants used to follow the rooftops as corporate facilities opened and employees moved in. Now retail and restaurants are needed to attract employers. “It used to be that if you got the large manufacturer, then the rooftops would follow and then the retail would follow that,” he said. “Now, you have to have a certain quality of life to appeal to younger Millennials and Gen Zers that are settling in these communities. You have to have the cool coffee shop and the cool brewery, but then also they want to have a Taco Bell or Chick-fil-A or a Target. And communities are now focusing on getting those things so that they can compete” to attract employers.

He added: “We have seen more than anytime previously, especially coming out of the pandemic, how many communities … in the rural and tertiary markets are now looking at retail and retail recruitment as a big focus for their economic development strategy.”

Getting a Market onto a Retailer’s Radar

One of the biggest challenges retailers have in identifying rural opportunities is a lack of substantive data on these markets, according to Myers. “What we are talking about here is narrative building,” he said. “The retailers want to be convinced statistically by the data that it is a good market to enter. … The more people that live in a place, the bigger the sample size and the better-quality data.” A small population doesn’t mean an undesirable market, but it might keep a market off a retailer’s list of considerations nonetheless.

MORE FROM C+CT: Telling the Community’s Story: Attracting Retailers to Rural Locations

He cited Kyle, Texas, a city of about 46,000 on Interstate 35, describing it as a great example of a growing community squished in between Austin and San Antonio. “Consumers are shopping somewhere, and people that live in Kyle are going to Austin, they are going down to San Marcos.” The very retailers those shoppers frequent are looking at foot traffic data that displays demand in the larger surrounding cities but not the demand emanating from Kyle.

Kyle falls within the Austin metropolitan statistical area, but Cook said rural markets can sell themselves based on broad trade areas. “Even though the town limits may only have 2,000 people, oftentimes their trade area is upwards of 50,000 people who are coming and going through that market every day,” he said. “We know that the people that live within this trade area are either forced to or they are choosing to go to that larger market nearby, and they are spending millions and millions of dollars elsewhere.”

Demand is definitely there, said St. Louis native John Cusumano, who in May founded Cusco to advise national and regional retailers that want to reach rural communities in the South, Southeast and Midwest. He makes the case that for retailers convinced of the value of rural and tertiary communities, his experience as a retail broker in the Midwest can fill in where data around markets and property owners is missing.

“Where most of my peers see flyover country, I see a compelling supply-demand gap and significant opportunity to solve a problem,” he said. “Rural communities are no less in need of convenient access to their daily essentials than anyone else, and the brands I’ve worked with — including Five Below, AT&T, Great Clips, Jersey Mike’s, T-Mobile and Eyemart Express, among others — understand this and desire to get closer to the hearts of these areas.”

Cusumano loves seeing retailers, residents and municipalities share a win: “When you go to a town like Moberly, Missouri, and you bring in a quality tenant like AT&T and you see people waiting in line outside the building, that is a different level of appreciation you have for doing your job.”