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In The News

Retailers ride tide of local economy
The Wichita Business Journal
June 22, 2009

Retail sales in the United States rose in May for the first time in three months, according to the U.S. Department of Labor.

Local merchants don't dispute the report, which indicates that national sales were up 0.5 percent from April. Wichita retailers say their numbers have been holding firm, while some claim they are even beginning to see more traffic in their stores.

However, continued layoffs in the Air Capital may mean they face a longer road to recovery than other areas of the country.

"Spending does seem to be down, but it hasn't been as dramatic as other places," says Steve Brunkan, a financial economist with the Kansas Department of Revenue. "But I suspect it may get worse (in Wichita) because of the layoffs."

The Workforce Alliance of South Central Kansas reports 13,674 layoffs from July 2008 to June 1, 2009 in its six-county region. That number will increase to nearly 15,000 following Cessna Aircraft Co.'s announcement last week that it would be cutting an additional 1,300 jobs.

That could have an impact on local retailers.

And Chris Courtwright, principal economist with the Kansas Legislative Research Department, says any decrease in sales tax receipts is bad news for the state's general fund.

As more people find themselves out of work, he says, it will only get worse.

"Disposable personal income is definitely going to go down," he says.

Helping Themselves

Brunkan says through May of fiscal year 2008, the state collected $1.787 billion in sales tax. For the same time period in FY 2009, Kansas has brought in $1.775 billion, a modest decline of $12 million — less than 1 percent. He says many analysts had forecast declines of more than 1 percent.

"All in all, sales tax is holding up pretty well," Brunkan says.

The state hasn't yet broken down numbers by county for the first half of the year.

Sarah Bagby, managing partner at Watermark Books, says business is improving.

"Our April was a little tough," she says. "But in May we rebounded and in June we've had a real strong start."

Although she declined to give specific sales numbers, she says Watermark is down about 10 percent from last year.

"But we're throwing last year's numbers out," she says.

That means she is adjusting how the store does business, while keeping expenses in line with sales.

It also means adjusting to the demands of customers.

Bagby says she has sold more books and materials associated with training and education. She says people seem to be doing what they can to help themselves.

'Belt Tightening'

Greg Hephner, owner of Hephner TV and Electronics says his business picked up around Christmas time and has since held steady to where he expected.

He says he has seen more consumers waiting longer to make larger purchases though.

"I have noticed a little more tire kicking and less impulse buying," he says. "We saw that starting back in March. But overall, we're tracking about where we expected to be. Not really up or down."

He also declined to give specific sales figures, but says he may have been insulated from the problems facing other retailers because of his product line.

"People compromise other things to get their TVs," he says.

But Brunkan says retailers here need to prepare for tougher times, as layoffs will continue to take a toll through the summer and fall.

"Now that more folks are out of work, or know they will be, I think what you're going to see is there is going to be some belt tightening," he says.

Sales tax receipts through May of fiscal year (July 1 - June 30).
2006 - 1.67 billion.
2007 - 1.746 billion.
2008 - 1.787 billion.
2009 - 1.775 billion.

Source: Kansas Department of Revenue.

 

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