What happens when a Walmart dies?

  •   A series exploring the highs and lows of Lafayette’s economy, providing critical commentary about what’s working and what’s not.

Last week Walmart announced that at the end of March it’s shutting down its SuperCenter on Evangeline Thruway in the heart of Lafayette’s Northside.

While on the surface this may seem like minor news, in reality it could upend the lives of a vulnerable population while bringing to light troubling realities our community faces moving forward.

The best way to understand the impact this will have on the economy is to look at what’s about to happen next.

Almost 300 people are going to lose their jobs.

They might find work at one of the five other SuperCenters in the area or at another retailer. Commerce is on the uptick recently, after all. The parish just had its second best year ever in retail sales, and unemployment fell to 3.9 percent in December. But from an economic perspective, this loss cuts into the thin year-over-year gain of 405 jobs realized in 2018.

Those who live or work near that Walmart will face a disruption in their access to groceries, medicines and other goods.

Sure, that access doesn’t disappear completely; there are three other SuperCenters within a 15-minute drive of the Northside as well as a Super 1 Foods and pharmacy just around the corner. For families in economic distress, however, a 15-minute drive can be a major hurdle. And the number of people in Lafayette living at or near the poverty level has grown in the last few years.

Around 17 percent of residents in Lafayette Parish live below the poverty line. Another 27 percent are not making enough to maintain a basic standard of living, according to figures compiled by the United Way’s ALICE report. Put another way, 44 percent of the parish population faces tremendous economic hardship. While the total beats the statewide average of 49 percent, it still means almost half of our neighbors aren’t making ends meet.

And in parts of the Northside, this number is much worse. In fact in District C, which surrounds the Evangeline Thruway Walmart on three sides, the number of people living below the ALICE line is 75 percent, according the United Way’s interactive map.

The challenge for this population is that their access to transportation isn’t guaranteed. They may not own a car or be able to afford insurance. The bus system may be unreliable or even unreachable, depending on where they live. They probably can’t afford to Uber everywhere. They may be physically unable to drive. There are undoubtedly some whose entire existence relies on being able to get to Walmart, without a car, to buy everything they need to survive. And now that won’t be an option anymore.

Added transportation costs and extra travel time are more than inconveniences for Lafayette’s most vulnerable population. This could upend livelihoods.

While the most substantial impact will be on the people who work at and rely on that Walmart, the loss will have cascading effects throughout the local economy.

The city of Lafayette will lose hundreds of thousands of dollars in sales tax revenue.

While two of the three nearest Walmarts are also in the city, the closest by drive time is in Carencro. For every dollar that’s spent at the Carencro Walmart SuperCenter that would have been spent in the Northside Walmart were it still open, Carencro gets the tax revenue instead of the city of Lafayette.

Nationally, an average Walmart store produces $66.7 million in sales. Let’s round that down to $50 million since we know this store was underperforming. Then cut that in half again as a lot of Walmart’s sales are tax exempt, items like food consumed at home and personal pharmaceuticals. So if this Walmart is currently producing $25 million a year in taxable retail sales, it’s been generating $500,000 a year in sales tax for the city of Lafayette.

Lafayette won’t lose all of that revenue, as some of those sales will stay in the city, but it’s plausible that half of those dollars could migrate from the city of Lafayette’s balance sheet to Carencro’s. And it’s actually even better than that for Carencro, as the city sales tax there is 3 percent, while Lafayette’s is 2 percent. Carencro may add hundreds of thousands of dollars in sales tax revenue while the city of Lafayette subtracts hundreds of thousands from its tax rolls.

Property values, in part dependent on that Walmart, will sink.

Declining property tax values will bust a bigger hole in a precarious parish budget. Walmart will likely approach the tax assessor to get the building re-appraised because it’s vacant, as it and other big box retailers have been doing across the country. Last year, this Walmart was assessed with a market value of almost $10 million and generated about $135,000 in city and parish property taxes, $112,000 in parish taxes alone. While the structure will still retain some value, it will likely be cut in half or more, which means tens of thousands of dollars in less property tax revenue every year.

And don’t forget about the domino effect. Walmart is the kind of business that brings a lot of traffic to an area. While some of those surrounding businesses may benefit from not having to compete with Walmart, others will suffer because they can no longer take advantage of the traffic Walmart brought to them. This could hurt their ability to produce taxable sales and ultimately lower property values.

Two downward trends will continue.

At first glance, this may not sound like a lot of lost revenue given that Lafayette Consolidated Government has a budget in the hundreds of millions of dollars, but it becomes much more significant when you realize that this isn’t an isolated case but rather another instance of a very well-defined trend.

Big box retailers have been shutting their doors all across the country the last few years. In Lafayette alone, Sears closed in 2017, Toys R Us in 2018, and now a Walmart in 2019. Every time a major retailer shuts its doors, jobs are lost, access to goods are lost and tax revenue is lost. And we know this trend is only going to continue with brands like JC Penney and Macy’s set to close hundreds more stores across the country.

But that’s not the only trend at play here. The other is the continued degradation of the Northside economy. It’s reached a point where the Northside’s doing so poorly that it can’t even sustain a Walmart. The Acadiana Mall Sears closed because of extreme corporate cost-cutting measures to keep the lights on. Toys R Us closed its Southside store because the corporation was going out of business. Walmart’s doing great nationally; it just couldn’t sell enough stuff at that particular location to justify keeping it open.

This isn’t just about a Walmart closing. It’s about the Northside’s ongoing struggle.

Northside is already littered with empty storefronts. The area has struggled to court investment for decades. Walmart’s decision shines a bright light on issues that have been festering for decades.

What this story is really about is our community’s most vulnerable population being left behind, even as economic fortunes improve elsewhere.

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About the Author

Geoff Daily created FiberCorps and helped launch the Lafayette General Foundation. He now works as a launch strategist.

2 Comments

  1. Perhaps it’s time to “free the corridor”. The I-49 corridor plan at the Thruway surely inhibits the type of development that would make the surrounding neighborhoods more livable. The Evangeline Thruway, and the land banking that’s accompanied the corridor plan has been a development desert of our own making for decades. An empty Walmart building will be yet another, albeit large, scar of a long time economic injustice.

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  2. Michael waldon March 7, 2019 at 7:35 pm

    I beg our council members to drop their support for the I-49 Con. It has been a cancer eating away at the community for years. Choose to stand with the people not the consultant lobby.

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