Economic Impacts of Walmart Store in Skyway

Each new Walmart store opening in a Puget Sound neighborhood will result in a net loss of $13 million of net economic output and $14 million in lost wages over the 20 year life of the store.

April 2012 - Recent analyses conducted in support of Walmart store development plans in the Pacific Northwest are irreparably flawed by their failure to address offsetting losses in employment and employment income that would be the result of new store development in the saturated retail environments for which these projects are proposed.

Following standard practice in regional analysis, we consider the redistribution in consumer sales that would occur if a new Walmart “neighborhood market” of approximately 40,000 square feet were to open at the site of a former grocery in the Skyway neighborhood of South Seattle.

Our analysis finds evidence of significant direct and indirect impacts on the local economy associated with Walmart’s potential entry into the Skyway neighborhood grocery market and within a broader study area extending out approximately five miles from the proposed site:

  • The new grocery would shift consumption patterns in the neighborhood, diverting $25.38 million per year in sales from existing retailers based on 2010 levels of consumer spending on groceries.
  • This shift translates into a drop in the total payroll value of $655,000 per year or 1.2% percent of the total payroll for grocery store employment within our study area.
  • When the direct and indirect effects of this change are considered the impact rises to $898,000 in lost output, roughly 6.4 full-time jobs and $997,000 in lost labor income.
  • Although the direct impacts resulting from the renovation of the site contribute a net positive effect of $2.67 million in economic output and $1.12 million in labor income during construction, this is not nearly enough to offset other changes over the twenty year life of the project.
  • The net present value of all changes estimated in our Base scenario over a 20 year project lifespan is projected to be a net loss of $13.07 million in economic output and a loss of $14.51 million in labor income.
  • These losses mitigate somewhat to $11.61 million in economic output and $12.89 million in labor income in our Opportunity Cost scenario, in which the impacts of a new Walmart are compared to those of a generic competitor, but deepen further to $13.73 million in economic output and $15.24 million in lost labor income in our Consumption Growth Cost scenario in which growing consumer demand out to 2015 is also accounted for.