The Camera tries to put the new Lafayette Super WalMart into some kind of context today, with this interesting reference to Bonnie Star, community development director for the city: the article says she said there's no sense in trying to predict what the Supercenter's effect will be on the nearby grocery stores after only a week in business.
Really?
I would have thought this prediction would have been made way back when the development was approved, or at least made during construction. Or whenever Council wanted budget projections. Such an estimate must've happened sometime, right?
The article goes on: "but she said the existing stores should survive and even prosper."
This in reference to the nearby King Soopers and Safeway. (No one believes Albertsons will "prosper".)
"There's likely to be some effect, but there is a lot of demand for groceries in this area," she said. "The demand in total and the sales in total have continued to grow."
Without massive residential developments within a 5-mile radius of the WalMart, the assertions here just don't make common sense. Where will the aggregate demand for food come from? Are there that many growing families in Lafayette? Perhaps the demographics are more in flux than I realized.
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The comments on the Daily Camera story are great. Some people have no respect. As long as someone is sure that everyone will prosper, I guess we'll be OK. I predict at least one Grocer packing their bags in the next year or 2. Might not be WM's fault though.
I suggest if you are interested in what is really going on here, tune into the next council workshop this Tuesday about the 2008 city budget. (I will be on vacation so I won't be a disrupted voice.)
When the council decided to approve negotiating with W*M almost three years ago, we got a ton of government reports and links to W*M tracking sites. (I was also told I was a communist, traitor, etc. and should leave the country. Some precious advice.)
To sum them all up:
1. W*M takes 30% of the existing business it "targets" within a five mile radius of its site.
2. To compete, affected retail businesses often match the lower prices.
So the consumer wins either way and can buy the same stuff and save money, upgrade to better stuff, or buy more. A major unknown is whether such a store will attract non-residents (unless one believes residents will buy more and not pocket the savings.)
LN quotes Erie's mayor as saying they are budgeting a 20% decrease in sales tax from their Safeway.
What the city also does not do is adjust retail sales for the effects of inflation. Food and energy prices are up big time. So since sales tax is based on prices, there is an upward bias. Of course what counters that is things the city buys goes up and employees want raises to counter the CPI.
Note that LN reported that the proposed Target will not include a grocery department. If there was unmet demand, why would they?
So did the city model all this as part of the negotiation with W*M? Was this presented to the council as part of the of $2.2M rebate deal?
What do you think?
P.S. W*M just reported a difficult month and just launched a major price war.
P.S.S. Yes, I did a back of the envelope model, including the EDA effects. I did not mode the long term effects of those local businesses that won't make it.
P.S. Bonnie Star is the Economic Development Director. Also the second highest paid city employee.
I get paid $400 a month.
I took Bonnie's title right from the article - no disrespect meant, I should always check their work!
My mistake. I checked again on the city website. I must have missed the title change:
http://www.cityoflafayette.com/page.asp?navid=152
Now we have a "team". This is interesting because Ms. Trumbo has never appeared in that role as far as I can remember. Looks like I have to pay more attention.
Word on the street, Cyclo, that your prediction as to "the next year or 2" is optimistic.
If any of you watch the workshop next Tuesday, see if the 2007 projected revenue and expense numbers are compared to the budgeted numbers. One of my major campaigns this year was to have actuals compared against budget. Seems to be some sort of mystery that surrounds such a comparison.
Money appears to be a boring topic on this blog. But it drives department behavior, city services, etc.
I suspect the reason the city won't come right out and state their prediction on the WalMart impact is because any modeling they've done shows WalMart will have a huge negative impact on the other grocers in the area. Not good PR to predict bad news for existing Chamber of Commerce members.
I've gotta believe Erie is hoping their 20% decline in revenue from Safeway is conservative. It could be worse. Erie is more open about their prediction because the dollars they lose go to Lafayette.
The City of Lafayette apparently couldn't care less who survives/who doesn't, since total grocery sales will continue to grow.
But don't be fooled. When WalMart opens their SuperCenter at I25/Hwy7 grocery sales in Lafayette will drop. The recently opened WalMart will draw from a larger than normal market area until the next new store out east opens. In the meantime, if WalMart has it's way, at least one or two grocers will be taken out of the market in Lafayette/Erie.
Albertsons stores in Colorado stopped using "preferred customer cards" six months ago. They no longer collect data on who buys what in the state as Colorado is not pivotal to their long-range strategy. As Cyclo comments, Walmart may not be directly to blame for Albertsons' potentially leaving but competition and increased market share in the state is clearly trending upward for Kroger and Walmart while Safeway and Albertsons struggle.
To my knowledge, no modeling was done. At the time, the ranking in grocery sales in CO was starting at the top: W*M, KS (Kroger), Safeway, and last was Albertsons.
Along 287, withing a 7 to 10 mile radius of 287/Baseline today: 3 King Soopers, 2 Safeways, 1 W*M, and 1 Albertsons. Safeway is planning a store on 7 east of Lafayette and W*M is planning one at 25/7. LN reports Target has dropped their grocery department in the proposed 287 store.
This is a case of plausible denial here in town. If one doesn't do the research, one isn't responsible for the result. Now reality is upon us.
How could a Lafayette budget possibly be constructed without doing extensive research/forecasting on sales tax revenue from grocers? The largest grocer in the country opens a store in Lafayette and no one owns up to any forecasted impact?
This isn't plausible denial, that gives them too much credit.
This "I dunno" attitude smacks of ineptness. And the council is to blame for not forcing the issue.
OK, I'm waking from my dream now.
Somebody please chime in and tell us this isn't so. Lafayette did extensive work on forecasting revenue impacts from this store, right?
Of course, who's job is on the line if the budget is way out of whack? City Administrator's? Finance Director's? Answer - no one's. Unlike private enterprise, ineptness can survive in government.
True, D-B.
Didn't u know. Folks are buying more groceries. Which isn't true either.....
After all, it's only the taxpayer's money. So sad.
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