Lawrence losing shoppers

City sales tax revenue below average

The Legends 14 movie theater sign is reflected in the fountain pool that is a centerpiece fixture in the shopping complex in Kansas City, Kan. Sales tax numbers show that the Legends and other shopping areas might be drawing people away from spending in Lawrence.

Tiva Bruns, Lawrence, left, and her daughter Nixi Swedlund, 12, design a shirt for a gift at ACME T-Shirt Shop, 847 Mass., during a Christmas shopping trip in downtown Lawrence last month. Sales tax revenues declined for Lawrence in 2009.

Pull factors

Here’s a look at the most recent pull factors for Kansas’ largest cities, and the amount of change in the scores over the last four years. A score of 1.0 means per capita retail sales are equal to the statewide average. A score greater than 1.0 indicates sales are above the state’s per capita average.

  1. Lenexa: 1.69 (+.04)
  2. Overland Park: 1.62 (-.09)
  3. Junction City: 1.55 (+.44)
  4. Topeka: 1.44 (-.07)
  5. Salina: 1.44 (-.04)
  6. Hutchinson: 1.36 (-.07)
  7. Garden City: 1.31 (-.06)
  8. Liberal: 1.28 (+.04)
  9. Manhattan: 1.25 (+.02)
  10. Leawood: 1.23 (+.04)
  11. Olathe: 1.21(-.15)
  12. Wichita: 1.20 (-.03)
  13. Dodge City: 1.14 (-.02)
  14. Pittsburg: 1.12 (+.01)
  15. Fort Scott: 1.11 (+.02)
  16. Coffeyville: 1.04 (+.03)
  17. Emporia: 1.04 (-.04)
  18. Parsons: 1.03 (+.08)
  19. Lawrence: 0.99 (-.11)
  20. Shawnee: 0.98 (-.16)
  21. Atchison: 0.98 (+.01)
  22. Newton: 0.96 (-.09)
  23. Kansas City: 0.84 (+.21)
  24. Leavenworth: 0.77 (-.06)
  25. Prairie Village: 0.64 (-.02)

— Source: Kansas Department of Revenue

Lawrence is no longer part of the club.

Of the approximately 600 cities and towns in Kansas, there have been a few — maybe around 50 — that have been part of a special club of communities that stand out as shopping superstars.

They are the group of communities that generate more sales per person than the statewide average. Since the state’s Department of Revenue started tracking the numbers in 2003, Lawrence has always been a part of the group.

But no more. Lawrence — the sixth-largest city in the state — now is officially a below-average community when it comes to retail sales activity.

“These new numbers are meaningful, and they are sad,” said Kirk McClure, a professor of urban planning at Kansas University.

A loss of pull

The new numbers technically are called pull factors. That’s really just a fancy way of measuring how active a retail market is in a city. Researchers with the Kansas Department of Revenue each year calculate the amount of sales taxes collected per person in a community. They then compare the city’s per capita sales tax collections with the statewide per capita sales tax collections.

If the two figures are equal, the city scores a 1.0. If the city has higher per capita sales than the state, it receives a score higher than 1.0, which theoretically is a sign that it is attracting more shoppers from other communities than it is losing. If a city has lower per capita sales than the state, it receives a score of less than 1.0, which theoretically is a sign that it is losing more shoppers to other communities than it is attracting.

Now that we’ve got the math lesson out of the way, here’s what you need to know about Lawrence: Its pull factor is now 0.99.

That may sound fine, because it means Lawrence is just a shade below the statewide average. But at City Hall, the number is a red flag because it continues a trend of Lawrence losing ground in the retail market. In 2004, Lawrence was 10 percent above the statewide average. In 2006, it was 12 percent above the average. And remember, this number is one that is relative to every other community. In other words, just because the economy has taken a downturn doesn’t mean that Lawrence’s number was destined to go down.

“The drop we’re seeing is a definite concern,” said Mayor Rob Chestnut.

New competition

In trying to figure out why the number has dropped, City Commissioner Mike Dever said a good place to start is east of here.

Lawrence’s decline has come at the same time that large new retailers have established themselves around the Kansas Speedway in western Wyandotte County and Kansas City, Kan. During the same period that Lawrence has seen its pull factor decline by 11 points, Kansas City, Kan., has watched its pull factor increase by 21 points.

Dever said he’s certain many Lawrence residents have spent time checking out the new retail developments around the race track.

“There are a lot of new places to look at, and while they’re looking they are purchasing,” Dever said.

At the same time, traditional Johnson County shopping strongholds have done a better job of holding their own against the new competition. Lenexa has the top pull factor of all large cities in the state, attracting 69 percent more in per capita sales than the statewide average. Overland Park is second.

“We certainly need to hope the allure of some of these new developments will wane, and they will get back to shopping locally,” Dever said.

Build more vs. build less

Hope, though, is not the only strategy city commissioners are likely to employ in trying to boost the city’s retail fortunes.

Chestnut said he’s now considering appointing a retail task force that would give retailers a chance to report ideas directly to the city.

Joe Flannery, president of Weaver’s Department Store in downtown, said there are lots of issues to think about.

“One thing you have to consider is that about 9,000 of KU’s student population are from Johnson County, and they may be more likely to go back there to shop,” Flannery said. “How do we address that?”

Kelvin Heck, a commercial real estate broker with Lawrence-based Grubb Ellis/The Winbury Group, said the first step will be for Lawrence to decide whether it wants to make retail a major part of its economy.

“The numbers we’re seeing now are not terribly surprising,” Heck said. “We have chosen as a city to not encourage a lot of retail development. I think that has been a conscientious choice at the City Hall level.”

That attitude may be changing some. Chestnut said he wants a new task force to study what the community can do to more formally promote retail sales in Lawrence. And he said that very well could include looking at trying to attract additional retail development.

“I think part of the answer is creating some attractions to not only keep shoppers here but also to bring folks from outside the community,” Chestnut said.

How that should be done, however, could be a topic of future debate. McClure, the KU professor — who writes a frequent blog critical of the city’s planning efforts in matters of retail and housing — is urging commissioners to clamp down on nearly all new retail development outside of downtown. His theory is that new big box retailers in Lawrence will do nothing to attract Johnson County shoppers over to Lawrence.

“We shouldn’t build more,” McClure said. “We should build smarter. We need to think about how to contract the supply, and then work on making our downtown the most attractive tourist magnet we can be.”

Chestnut said he strongly disagrees with McClure’s analysis. The main point of difference seems to be over how many Lawrence residents actually are leaving the city to go shop in Kansas City and elsewhere.

McClure contends the number is not as large as some think. Instead, he believes Lawrence’s pull factor has gone down because Johnson County shoppers who once visited downtown are now spending more time at the speedway shops and other new developments.

Chestnut contends Lawrence is losing out on both fronts: Fewer Johnson County shoppers, and Lawrence residents who are leaving the city to shop.

Hard data on the subject isn’t easy to come by, but Chestnut said the anecdotal evidence — everything from the number of residents who commute to work outside Lawrence to the number of Douglas County license plates seen in Kansas City shopping districts — is strong.

“I’m a firm believer (that) you have to let the market decide what opportunities exist, but I’m convinced there are plenty of them here,” Chestnut said.

The paycheck factor

But both sides do acknowledge there is one other factor that plays a role in the equation. New income numbers over the last several years have continually shown Lawrence wages to be lagging those of many peer communities.

The most recent report — a study conducted by city economic development coordinator Roger Zalneraitis — found the average wage in Lawrence was $32,000 per year, compared with $37,000 per year in 15 cities that have similar demographics and characteristics of Lawrence.

The lower wages bring up the question of whether the city’s retail slide is a function of not having as much disposable income as residents of other cities.

“I think we need to attack this from multiple angles,” Dever said. “We do need to recognize that building tons of retail space isn’t going to fix the fundamental problem of better paying jobs and incomes in Lawrence.

“But I think we all recognize we can’t have a thriving retail scene without a thriving economy.”