Wichita-area shoppers increase spending in 2015

Wichitans opened their wallets and pocketbooks a little wider last year as consumers spent 3.5 percent more in retail in 2015 than in 2014.

Once adjusted for inflation, which was almost nonexistent last year, Sedgwick County saw the highest sales growth in a decade.

The increase mirrors the slow acceleration of the local economy over the past few years, with more hiring plus cheaper gasoline and an overall cap on inflation.

The numbers come from sales tax receipts generated in Sedgwick County, which collects 1 percent of the price of a wide variety of consumer and business sales, leases or rents, and some services. The state also collects sales tax, which was raised last year to 6.5 percent.

Sales tax collections are a pretty good measure of overall spending in the economy because the tax is assessed broadly on retail sales as well as some categories of business sales and services.

Consumer spending has long been considered a key to a strong economy nationally because it makes up 70 percent of all economic activity. As more people return to work, they spend more, which drives growth in restaurants, retailers, hotels and, ultimately, manufacturers and transportation companies.

Some local business owners and managers say last year’s economy saw enough growth to allow them to relax a bit. And, for the first time in a decade, a decent increase in sales wasn’t gobbled up by higher costs. Inflation was 0.1 percent in 2015 as gasoline and other commodity prices plummeted.

One of the hottest single sectors, in both size and increase, is automobiles.

At Davis-Moore Auto Group, that means selling a little less than 5,000 cars in 2015.

“It was a good year, not a great year,” said Sean Tarbell, president of Davis-Moore. “But every year has gotten a little better.”

He estimated that his business – excluding the Nissan dealership that was sold – was up 10 percent over last year. That’s about half new and half used.

The price of gasoline, he said, hasn’t brought a lot more people into the showroom, but it got those who did come to look at bigger vehicles.

“We’re selling more higher-cost vehicles,” he said. “A lot of it is driven by the low gas prices. The super economy models aren’t nearly as sought after as the midsized SUVs.”

The hottest models, he said, are in the Jeep line. If Davis-Moore had had twice as many to sell, it would have sold them, he said.

More competition

For some businesses, any growth in consumer spending was offset by an increase in competition.

Barbara Hoffman is an owner of Green Acres Market, the health-food grocery chain with four locations in Wichita and eight in the region.

Over the course of a few years, Fresh Market, Whole Foods Market and two Natural Grocers stores have opened in Wichita. Last fall Sprouts Farmers Market said it will open at Piccadilly Square at Central and Rock Road this year.

“It just happened overnight,” she said. “And when Whole Foods came in, Kroger doubled their organics. What you have to do is really home in on your niche.”

She said Green Acres stepped up the focus on the short-time items on the perimeter of the store: deli, produce, “grab and go” items. The core groceries, she said, have slowed.

“With that much competition, you all start sharing more,” she said ruefully.

Chenay Sloan, owner of Trendy Tots, a children’s second-hand-clothing store on Rock Road at about 30th Street, said her sales were flat last year.

Clothing resale is a tough business, because the margins are slim on each piece of merchandise, she said. So she took a gamble to remodel the store to increase the amount of merchandise and spiff up the space.

“We would like to see more growth, and that is why we decided to invest in the renovation,” she said. “I felt like our customers are ready for it.”

She closed for two weeks recently for the work, and some customers told her they weren’t happy about it.

“I felt really lucky that people missed us for two weeks,” she said. “People asked me ‘Where were you?’ and ‘Why are you closed?’ Well, we’re back and better than ever.”

Pessimistic

Jeremy Hill, director of the Center for Economic Development and Business Research at Wichita State University, said he isn’t really impressed by the sales growth. He has seen six years of painfully slow growth in hiring, and virtually no growth in wages.

The most recent figures for income growth for the Wichita metro region, from 2013 to 2014, the latest figures available, showed just 1.8 percent growth. Income growth in Kansas in the third quarter of 2015 was 2.5 percent higher than the third quarter of 2014.

“I am not optimistic on retail sales, based on the labor data for the state and the area,” Hill said. “We are not a very strong economy.

“We have a lot of slack in the labor market and not a lot of pressure that would push up wages. The only thing that would push them up are those things connected to the national economy.”

He’s concerned that any consumer confidence gained in recent months will be eroded in the spring by the wrangling over the state budget and any actions the Legislature will take to balance the budget. The state lost 2,500 public-sector jobs in 2015.

The wealth generated by the local oil and gas industries has disappeared as that sector withers under low prices. And the state’s farmers and manufacturers are hurting because of global weakness and the strengthening dollar.

“I don’t have a strong, positive view on the local or state economy,” he said. “There are some employment opportunities, but we can’t repeat what’s going on in the national economy.”

This story was originally published January 24, 2016 at 7:01 PM with the headline "Wichita-area shoppers increase spending in 2015."