Data shows consumer spending rising faster than incomes in Wichita area
03/20/2014 7:11 AM
03/20/2014 7:11 AM
Wichitans opened their wallets and pocketbooks a little wider last year, as consumers spent 3.3 percent more in 2013 than in 2012.
It’s the third year for rising spending by local consumers, after such spending hit bottom in 2010.
Christmas season sales, November and December, were up 3.5 percent over 2012.
The numbers come from sales tax receipts generated in Sedgwick County. The sales tax figures primarily reflect consumer spending, rather than business spending, according to Steve Brunkan of the Kansas Department of Revenue.
The increase mirrors national trends in a worrisome way, said Jeremy Hill, director of the Center for Economic Development and Business Research at Wichita State University.
People are spending money faster than their incomes are growing, which means they are spending down savings, he said.
The center forecast local retail sales to grow about close to 4 percent at the beginning of 2014 and drop as the year wears on. In 2011 and 2012, to some extent, Kansans saw a boost in incomes because of the booming oil and agriculture sectors. That temporary income surge in those two industries appears to be slowing.
And, he said, for most other sectors, income growth has been pretty flat. What’s left is overspending, which can only be temporary.
That’s why the center foresees spending increases falling through the year.
“We don’t think it can continue the way it has been,” he said. “But we could be wrong; they might get more credit cards.”
Wichita area wages rose 1.6 percent per year from 2009 to 2012, the last year for which figures were available, so businesses that rely on wage earners’ spending have faced weak growth.
Cheney Door Co., which mainly installs garage doors and vacuum systems, saw its sales increase 7 percent last year, said owner Keith Bomholt. But it wasn’t consumers who were making purchases. It was businesses.
Not only did its commercial door installation business thrive, but the fastest-growing piece has been setting up entertainment systems in bars and restaurants.
The company set up the huge television and stereo packages at several Twin Peaks locations in Kansas and Nebraska as well as in other bars and restaurants. The entertainment system can be controlled wirelessly from an iPad, Bomholt said. It’s been a nice addition to the business, he said.
“There are door companies that had really strong residential that are not around any more,” he said. “With our diversification with commercial and service we’re able to weather the storm.”
Try something new
For businesses, that’s the moral of the story: When your business stagnates in a slow economy, find something that’s growing.
George Matta, owner of Adrian’s Cafe, 2121 N. Rock Road, said that 2013 was down for him.
It’s not just the economy, he said, it’s the fiercely competitive restaurant environment in Wichita.
“It’s not like a clothing store,” he said. “You don’t see that many new clothing stores, but restaurants, they keep opening and closing – one closes and two open, another one closes and five open – and all of them offering two-for-one deals, or 20 percent off.”
Matta says his good customers who used to visit once a week are now coming once a month, as they try some of the new spots.
But he’s also among those starting new locations. Matta recently opened two new restaurants, Zorro’s Tacos & More, in former Taco Tico locations in Augusta and Newton.
Fast-food Tex-Mex – with bierocks and some Mediterranean items thrown in – is different from his classier sit-down restaurant.
“It’s been really busy getting them open,” he said, “but both are doing pretty well.”
At Java Villa Cafe & Catering, 7812 E. Harry, owner Kevin Boyd said last year was fine, despite several years of intense competition for gourmet coffee, especially from a Starbucks half a block away.
“Now even Braum’s and McDonald’s think they can make gourmet coffee,” he said
He fights back with his long-running assortment of home-baked pies, pastries, bierocks, quiche and muffins. That keeps many of his long-time customers coming back, he said.
But the reason his business is surviving is that he is growing his coffee bar catering service. He takes his coffee bar to mix up fancy coffee drinks at weddings, birthday parties and business meetings.
“The economy sucks in general,” he said. “You have to start finding what does well and responding to what people want. Try to be flexible enough to adapt and adjust.”