When up is down in Lafayette’s retail sector

Line chart increasing until arrow breaks
Illustration by Peter DeHart

When retail sales are up, that’s generally a good sign for your local economy. Don’t take it from me, take it from the experts. “Retail sales are a good barometer of consumer confidence, and it is very encouraging to see retail sales continuing to rebound,” LEDA CEO Gregg Gothreaux explained to KPEL last week. “We have seen improvement in indicators across the board in Lafayette, indicating that the economy has started to emerge from the downturn. Taxable sales is a concurrent indicator that adjusts at the same time as the overall economy.”

And retail sales in Lafayette are up. Last year saw the second biggest annual retail haul in parish history coming in at $6.04 billion. Sales tax collections for the first quarter of this fiscal year have increased $1 million for the city and $260,000 for the unincorporated parish. And 2019 kicked off with the best January in parish history.

Like a lot of economic news around here, though, the story is more complicated than the rebound narrative going around. Digging into the numbers highlights just how much ground Lafayette’s retail sales have to recover and what parts of the economy are still struggling.

The best-ever numbers aren’t what they seem

Let’s start with total retail sales from 2014 to 2018:

Lafayette Parish Retail Sales

YearTotal retail sales
2014$6.41 billion
2015$6.00 billion
2016$5.77 billion
2017$5.81 billion
2018$6.04 billion

As you can see, Lafayette took a big hit after the oil bust in 2014, dropping almost $640 million or about 10% of its sales activity by 2016. The crash hit bottom and marked a modest recovery of about $40 million in 2017, before starting a faster climb last year, when we added back around $230 million total retail sales, parish-wide.

After three consecutive years of bad news for the retail industry, it’s understandable why these recent headlines generated excitement. However, what was our second best year ever in 2018 still fell more than a billion dollars short of where the retail market could be if the local economy hadn’t tanked.

In a healthy economy, every year should be your best year ever for retail sales. If you’re growing, then your population is increasing, so your labor force should be, too. Ideally, wages follow suit to keep up with or exceed the growing cost of goods and services due to inflation. Put altogether, a good economy has more people who work more jobs and make more money that they spend on more expensive things.

But Lafayette has not had a healthy economy. While the parish population increased from 235,000 to 252,000 and inflation averaged around 2% per year nationally, Lafayette’s labor force decreased by 15,000 people from 2014 to 2018, and per capita personal income has declined by more than $3,000 from 2015 to 2017. So we have more people buying stuff that costs more, but fewer working jobs that pay them less.

Think of it this way. If Lafayette’s retail sales had simply grown at the same rate as its population and inflation, then instead of having the second best returns on record at $6.04 billion, it would have crushed the 2014 high with a record $7.4 billion total in 2018.

Now that’s a somewhat unrealistic projection when you factor in the on-the-ground reality. With national retailers closing local stores, shoppers buying online instead of in a store (not all of which is captured in these retail sales numbers), and younger buyers having different shopping habits, Lafayette’s retail sales were likely set to slow even without the local recession.

But it does provide a different context for understanding where the retail sector of our economy is today relative to just a few years ago.

Rising tide doesn’t always lift all boats

Another important thing to unpack when looking at retail sales is how well each part of the parish is doing. While we may all be one parish, we’re also five cities, a town, and a whole lot of unincorporated area. Here’s a table that shows total retail sales for each component of Lafayette Parish and the percentage each has changed from 2014 to 2018 (all dollar amounts in millions):

Retail Sales and Population Change by City/Town/Other

Area20142018% ChangePopulation Change (2014-2017)
Youngsville$214.1$277.9 30%33%
City of Lafayette$4,430$4,260-4%2%

It’s no surprise that Youngsville’s retail sales are up, given ballooning development and a rapidly expanding population. The other two cities that have done well the last four years — Carencro and Scott — have outperformed the growth in their population. That’s most likely driven by new stores opening, like the new Walmart in Carencro.

Duson and the city of Lafayette both have limited population growth and slight declines in retail sales, though there’s literally 100 times more retail activity in the city of Lafayette than Duson.

While Broussard wasn’t the biggest loser, it’s arguably the most troubling case, as it saw a 17% decline in retail sales despite a 27% increase in its population. That’s undoubtedly driven by the decimation of oil and gas businesses based there.

Unincorporated Lafayette Parish saw the biggest losses in raw dollars and in percent loss despite a growing population. Property annexation by the nearby cities tends to gobble up the good retail, a long-lamented problem. While these annexations may not make a difference to the parish’s total retail sales, they make a big difference in the sales tax revenue that goes into its general fund.

What’s troubling about these numbers when you break them down by geography is that more than 86% of the people who reside in Lafayette Parish live in areas that have seen retail sales decline from 2014 to 2018 — namely the city of Lafayette, unincorporated Lafayette and Broussard. Despite there being more people living in these areas, there’s less money being spent in them.

If retail sales reflect consumer confidence, then 14% of residents in Youngsville, Carencro and Scott are doing well. They have money, and they’re confident enough to spend it.

Meanwhile, retail sales in the city of Lafayette were still lower in 2018 than they were in 2014, the city of Broussard has been losing retail sales almost as fast as it’s been gaining people, and unincorporated Lafayette has seen its retail sales tax base shrink by more than a third.

Many retailers still struggling

When it comes to understanding who’s still struggling in the city of Lafayette, we have more granular data to dig into that highlights the performance of particular sectors of the retail market. Here are the types of retailers that have lost the most business since 2014:

City of Lafayette Struggling Retail Sectors (millions/USD)

Sector20142018% Change
Bars$51.9 (2013)$42.9-17%
Chain food stores$257$216-16%
Women’s clothing$50 (2013)$38-24%
Shoe stores$33$26-21%
Chain clothing stores$39$22-43%
Oil well equipment$177$61-65%
Machine shops$24$6.9-71%
Leasing/renting$156 (2013)$131-16%
Jewelry stores$166$119-28%

When you look through these numbers there are a few takeaways that become clear:

  • People are spending less money on luxuries in the city of Lafayette. By that I mean less money on going to bars and less money on eating at chain food stores. Women are spending less money on clothes, and everyone’s spending less money on shoes. Jewelry stores also took a big hit. The story here is that when people have less money in their pockets, they’re less likely to spend it on things that aren’t necessities.
  • People are spending less money on housing in the city of Lafayette. Leasing and rental income took a relatively big hit, especially given that we haven’t been losing population. Some of this trend may be due to renters buying homes, but either way it still doesn’t bode well for anyone who owns rental properties. The other type of housing that’s down is hotel/motel sales. Dropping 31% is significant, even more so as typically anyone who’s staying at a hotel or motel is also spending money in our restaurants, bars and stores as it means fewer people coming to visit or work here. Rubbing salt in this wound is the fact that this fall will be the first time LAGCOE happens anywhere other than Lafayette, so we can’t count on them to help buoy these numbers back up.
  • People are spending a whole lot less money on oil and gas-related services. Oil well equipment sales are down almost two thirds, and machine shop sales have dropped even more. These numbers show just how devastating it’s been to owners of these types of businesses.

Less retail means less tax revenue

A big concern here is the loss of potential sales tax revenue for local government, especially as our population has continued to increase. The more people we have in Lafayette, the more of a load is placed on public infrastructure and services. The greater that load, the higher the cost to maintain everything that our community and economy relies on to function. So if tax revenue isn’t keeping pace with population growth, that puts further strain on public finances.

It’d be one thing if the local government were in a strong financial position, but the parish government is effectively bankrupt. The city side of LCG is stronger, but it can’t afford to be losing revenue as expenses rise.

It’d be another thing if we could count on property tax revenue to pick up the slack, but we can’t. Last year, parish property tax revenue growth flatlined, increasing less than 1% from 2017 to 2018, and total parish property tax collected is projected to shrink slightly from 2018 to 2019, according to LCG’s adopted budget. That trend may worsen as we deal with the fallout from departed retailers like the Northside Walmart, Stage or big tenants at the Acadiana Mall on top of the sustained downfall of the oil and gas economy, which emptied buildings up and down Highway 90.

Meanwhile, there’s a backlog of $97 million in road work and upwards of a half billion needed to comprehensively overhaul drainage infrastructure, not to mention deferred maintenance in public buildings. Remember, Buchanan Garage had to be shut down because it was deemed a public hazard.

Think about this: What happens if the population continues to grow but sales tax revenue never fully recovers and property tax revenue continues flatlining or, worse, starts to fall? The impact could be a local government that not only can’t afford improvements, it can’t even afford necessities.