Mars Petcare is planning an $81.7 million expansion of its facility at Chaffee Crossing that will add an estimated 95 good-paying jobs, according to information with a “Tax Back” resolution on the Tuesday (Feb. 17) agenda of the Fort Smith Board of Directors.

It’s the second significant expansion of the plant in the past two years. Mars Petcare – based in Brussels, Belgium, with a U.S. headquarters located south of Nashville, Tenn. – opened the Chaffee Crossing site in September 2009. In October 2013 the company announced a $50 million expansion that was expected to add 42 jobs.

Mars Petcare announced November 2007 it would build an $80 million pet food plant at Chaffee Crossing and employ 200 full-time workers when the plant was fully operational. At the time of the announcement, the city of Fort Smith estimated the plant would result in an annual payroll of $7.07 million, with the average annual salary around $35,300. The company received $2.2 million from Gov. Mike Beebe’s quick-action closing fund, and other state incentives that totaled more than $19 million — with many of the incentives rewarded only when Mars begins hiring. The city of Fort Smith agreed to drainage upgrades near the plant site that, according to estimates in late 2007, could cost up to $1 million.

The “Tax Back Endorsement” the Board will consider Tuesday is a formality as part of an incentive program administered by the Arkansas Department of Economic Development. The program allows businesses to seek refunds of sales taxes on construction materials, new equipment and other qualifying expenses of investments that result in new jobs.

“The current request is on behalf of Mars Petcare US, Inc., who plans to expand its current pet food production facility located in Fort Smith at 10000 Roberts Boulevard by investing $81,700,000 in new equipment and renovations to existing buildings. This expansion will add 95 new jobs to the region with an average wage of $21.17/hour, increasing Mars Petcare’s local employment by 90%,” noted a Feb. 12 memo from Deputy City Administrator Jeff Dingman to City Administrator Ray Gosack.

The new manufacturing jobs will certainly help. The Fort Smith area manufacturing sector employed an estimated 17,900 in December, up from 17,800 in November, and below the 18,400 in December 2013. Sector employment is down almost 37% from a decade ago when December 2004 manufacturing employment in the metro area stood at 28,400. Annual average monthly employment in manufacturing has fallen from 28,900 in 2005, 19,200 in 2012, and to 18,300 in 2013.

The Mars Petcare division employs an estimated 35,000 people with operations in 50 countries. Well known brands include Whiskas, Pedigree and IAMS.

PETCARE INDUSTRY GROWTH
The U.S. petcare industry continues to grow, and saw growth through much of the recent recession. Estimated 2014 pet industry sales in the U.S. were $58.51 billion, according to the American Pet Products Association, up over the $55.72 billion in sales during 2013. The 2014 estimate is up more than 21% compared to 2010 sales.

Of the estimated $58.51 billion in 2014 sales, $22.62 billion is for pet food.

A report from animal and pet expert Clarice Brough indicates the industry will grow at an annual rate of 4% beyond 2014.

“Going forward, growth in the pet industry is projected to be 4 percent annually through 2018. In the next five years, pet operations are projected to maintain strong growth. The number of households owning pets is expected to continue to increase along with an increase in discretionary income as the economic recovery takes hold. These two factors combined will continue to bolster the demand for premium products, foods and pet services,” Brough wrote.

Just six months after rolling out Savings Catcher and telling customers there is no reason to compare everyday low prices against Wal-Mart, the retail giant notified users of new restrictions as of Feb. 14.

Savings Catcher users were notified of the changes in an email on Feb.13, in which Wal-Mart thanked customers for using the savings tool but also noted a few changes to the program.

“Beginning Feb.14, we are removing some departments consisting mostly of items that do not have a like for like match at other retailers, such as produce and bakery items. Additionally, we are limiting our comparisons to offers of other mass market retailers, grocery and dollar stores, removing comparisons with drug stores,” the email stated.

Wal-Mart corporate spokeswoman Danit Marquardt told The City Wire that updates to Savings Catcher focus on grocery and consumable items that make up significant portions of customers’ weekly shopping stock up trips. She said Savings Catcher matches will continue to cover pantry staples, dairy products (like yogurt), cleaning supplies, health and beauty aids and over-the-counter medications.

Produce and bakery items as well as weighed meat do not have consistent uniform product codes (UPC) between retailers, which is why Wal-Mart said it will no longer match against competitor prices. Wal-Mart also said it opted not to continue matching against drug store competitors like Walgreen and CVS because that is not the channel most used for weekly stock up grocery shopping.

EARLY SUCCESS
Wal-Mart first unveiled Savings Catcher in March 2014, testing in a few markets before rolling it out it August and expanding it to include some toys during the holiday season. The retailer said in September it had returned $2 million to shoppers who were using the savings app. Wal-Mart declined to say how it planned to report these savings at year-end. The retailer does not allow shoppers to carry savings from year-to-year, noting that gift cards would be sent to those at year-end for the savings catcher balances.

A $599 annual limit was imposed on the Savings Catcher program per customer, according to the new guidelines found on the retailer’s website.

Analysts like Carol Speickerman, CEO of newmarketbuilders, have praised Wal-Mart’s Savings Catcher noting that it “adds a new dimension to its price match guarantee while continuing to make it incumbent upon shoppers to take the initiative. Wal-Mart can satisfy shoppers who are truly price sensitive and message value and price transparency to everyone else without lowering prices across the board. It offers the best of both worlds.”

Analysts with Cleveland Research had this to say about Savings Catcher” “It’s basically the same thing as the Ad Match Guarantee but it takes the work out of the hands of the consumer.”

PERCEIVED IMPACT
Restricting the program is not likely to have a big impact among avid users, according to some retail experts. A recent study by IRI found that 41% of consumers routinely shop multiple retailers to ensure they get the lowest prices. Sue Viamari, a retail expert with IRI told The City Wire that shoppers who are price sensitive do not mind shopping multiple retailers where they perceive they are getting consistent values.

“This shift in behavior began during the economic downturn and consumers have stayed with it. This is no longer a one solution fits all world” Viamari said.

Deep discount retailers like Aldi win favor by those shoppers looking for lowest fresh produce and dairy prices. For instance, Avocados were featured recently by Aldi for 29 cents each. Wal-Mart’s featured price of 59 cents that same week was 100% more expensive than Aldi. With the latest changes Savings Catcher will not capture that difference. Experts and shoppers recently interviewed say people who shop Aldi do so because they know they can get the lowest price on whatever produce the smaller retail is offering that given day, even if it’s on sale elsewhere.

Viamari said consumers are creatures of habit adding that they adopted several shopping strategies out of necessity when the economy was weaker, but in doing so they found out who has the best prices and consistent quality on the things they want. She said convincing them otherwise is no easy task.

Walmart’s new U.S. CEO Greg Foran has vowed to fix the “fresh” problem at Wal-Mart noting that he’s troubled when he sees too many shoppers walking past the fresh produce department to purchase items in the center of the store.

The weather early next week is expected to be cold, but lawmakers may be warming up to discussing workforce training, economic issues and criminal justice reform when the legislature reconvenes Monday.

Several bills were filed Friday by Sen. Jane English, R-North Little Rock, to revamp and overhaul the state’s workforce education and training programs. Senate Bill 368 would create a statewide workforce development system. The bill would also create a 10-member Career Education and Workforce Development Board that would be made up of people from different industries.

The industries include several with ties to workforce training including agriculture, construction, energy, healthcare, information technology, manufacturing, financial services, hospitality, transportation logistics and rehabilitation services.

According to the bill, the board “shall develop and monitor a state plan for vocational-technical education which shall include at least the establishment of at least one area vocational center in each education service cooperative service area and in Pulaski County.”

Much of the policy issues would be addressed by the board after consulting with the Arkansas State Board of Education, the state Department of Education and education service cooperatives. Under the bill, the board would continue to have general supervision of all programs involving vocational, technical and occupational education; and have control over handling the state’s adult education funds.

Two other bills (Senate Bills 369 and 372) would remove the Arkansas Higher Education Coordinating Board from determining service areas for two year colleges, while Senate Bills 370 and 371 would allow school district to use funding to partner with colleges and universities to offer concurrent classes or other options.

English said last week that the overhaul was needed due to officials wanting to know how money was being allocated.

BUILDING BETTER FUTURES
A workforce training bill that would help people with intellectual disabilities receive job training is expected to be debated this week in the House. Rep. Mary Broadaway, D-Paragould, sponsored House Bills 1255 and 1256, in part due to the work she and her husband did on behalf of their now 22-year-old son with autism.

Broadaway told the House Education Committee that the bill was a “two year labor of love” for their family and that the program would help others. The project, called the Building Better Futures program, would “allow students with intellectual disabilities to broaden their career opportunities through education and job training.”

There are three programs in the state that help people in similar circumstances, Broadaway said. House Bill 1255 is expected to go to the House Monday, while the House Education Committee is expected to take up House Bill 1256 Tuesday.

The Senate is also expected Monday to take up the budget for the Arkansas Economic Development Commission. The bill, Senate Bill 111, includes a $200 million appropriation for so-called “superprojects” and a $50 million line-item for the Governor’s Quick Action Closing Fund.

Finally, expect to see the first glimpse of legislation dealing with criminal justice reform. Lawmakers and the governor have been discussing an omnibus overview to prison overcrowding, sentencing guidelines, and long-term approaches to dealing with the state’s criminal justice system.

Gov. Asa Hutchinson, a former prosecutor and law enforcement agency director, should be deeply in command of the facts as he approaches this debate in the legislature.

Activity at the Northwest Arkansas Regional Airport (XNA) and the Fort Smith Regional Airport continued the gains posted in 2014, with January enplanements up at the two commercial airports.

XNA had 44,431 enplanements in January, up 6.85% compared to January 2014. The enplanement level also set a new record for January traffic at the airport. The previous record was 42,088 in January 2011.

The airport is served by five airlines that provide connections to 10 U.S. cities.

XNA ended 2014 with 640,537 enplanements, up 10.15% over 2013, and more than the record of 598,886 enplanements in 2007. The 2014 gain also marked the third consecutive year of increased traffic at the airport. XNA’s first full year of traffic was 1999, and the airport posted eight consecutive years of enplanement gains before seeing a decline in 2008.

January enplanements at Fort Smith totaled 6,920, up 1.43% over January 2014. The airport offers flights to Atlanta and Dallas-Fort Worth through Delta and American Airlines. American had 4,459 enplanements in January out of Fort Smith, or 64.4% of the total. The percentage is up from 60.1% in January 2014.

Enplanements at Fort Smith totaled 92,869 in 2014, up 9.87% compared to 2013. For all of 2013, enplanements at the airport totaled 84,520, down 2.46% compared to the same period in 2012.

The Bill & Hillary Clinton National Airport in Little Rock was the only one of Arkansas’ largest commercial airports to not post an enplanement increase in 2014. Enplanements in 2014 totaled 1.038 million, down 4.32% compared to 2013. (The airport did not have January data available as of Feb. 16.)

Little Rock enplanements in 2013 totaled 1.085 million, down 5.45% compared to 2012. Enplanements in 2012 totaled 1.147 million, up 4.07% compared to 2011. The 2012 numbers ended five consecutive years of enplanement declines at Arkansas’ largest commercial field.

The most recent federal data – U.S. Department of Transportation – show 59.903 million enplanements in the top 100 U.S. airports between January and November 2014, up 3.24% compared to the same period in 2013.

ENPLANEMENT HISTORY (Fort Smith Regional Airport, since 2000)
2014: 92,869
2013: 84,520
2012: 86,653
2011: 86,234
2010: 86,129
2009: 78,432
2008: 87,030
2007: 99,127
2006: 94,717
2005: 102,607
2004: 92,928
2003: 90,493
2002: 87,944
2001: 95,419
2000: 104,182

ENPLANEMENT HISTORY (Northwest Arkansas Regional Airport, since 2000)
2014: 640,537
2013: 581,487
2012: 565,045
2011: 562,747
2010: 570,625
2009: 540,918
2008: 571,845
2007: 598,886
2006: 586,320
2005: 583,940
2004: 511,714
2003: 448,228
2002: 400,063
2001: 374,122
2000: 367,157

Investors seeking bargain prices in an improving real estate market helped push home sales higher in the Fort Smith metro area in January. Stronger consumer confidence and temperate weather also meant more sales for agents.

There were 83 homes sold in Sebastian County in January, with 62 of those in Fort Smith, according to Kevin King, broker with Weichert King Realty Group. He said 11 of those 62 sales were priced below $75,000, an indication that investors are still active in the local market.

MountData.com reports the 83 homes sold in Sebastian County in January were valued at $10.472 million, which was a 10.6% gain in units sold and 12.3% more volume over the same month last year. Unit sales are up 59% from the same month in 2013 while total sales volume rose 65%.

King said January weather was better than predicted this year which does tend to positively impact sales. But equally important, King attributes the better sales to improving consumer confidence which is at its highest level in several years.

“Our listings were up 30% in January, which an indication there is more confidence about the local market. There are 580 listings in Fort Smith, out of the total 820 listings for Sebastian County.

The median prices for homes sold in Sebastian County last month were $111,225, or $67 per square foot, according to MountData.com. The average sales price was  $126,170, up slightly from $124,247 reported a year ago.

In Fort Smith, King said the average home price was $128,300 in January, noting that more activity at the low end of the market reduced the average price. He said the average price for homes sold by his office last month was $185,000, which was one of their better months.

CRAWFORD COUNTY
Crawford Country total home sales in January were valued at $3.656 million, down 5.9% from the same month last year. Agents sold 35 homes, which was 3 less than were sold in January 2014, according to MountData.com.

The median home price in Crawford County was $104,950, or $65 per square foot. This was up 17.2% from the $89,500 median price reported in the year ago period. Federal Rural Development loans which allow for 100% financing have been a contributor to the appeal for Crawford County among first-time homebuyers. 

Van Buren, the largest city in Crawford County, was among those eliminated from Rural Development loans as of October 2014. King said this will likely mean fewer sales for Van Buren going forward by those homebuyers needing the 100% financing.

Mortgage bankers said interest rates are still low and the recent reduction in mortgage premium insurance is making home affordability possible for those who can muster the 3% downpayment, which can be a gift from family.

JANUARY DATA
Home Sales (January)
Sebastian County
2015: 83
2014: 75
2013: 52

Crawford County
2015: 35
2014: 38
2013: 27

Home Prices (January)
Sebastian County - average sales price
2015: $126,170
2014: $124,247
2013: $122,045

Crawford County - average sales price
2015: $104,483
2014: $102,359
2013: $100,394 

Home Sales total value (January)
Sebastian County
2015: $10.472 million
2014: $9.318 million
2013: $6.346 million

Crawford County
2015: $3.656 million
2014: $3.889 million
2013: $2.71 million

There are numerous ways retail giant Wal-Mart assesses customer service feedback from its 5,000 U.S. stores. But there is evidence that a kiosk positioned directly in the front of the store could be a new way Wal-Mart solicits direct customer service feedback from its 140 million weekly shoppers.

The HappyOrNot kiosk is being tested at Walmart Store No. 100 which is located directly across the from the retailer’s corporate headquarter offices in Bentonville. This store is often a test lab given its proximity to top management teams. During a 20-minute period on Saturday afternoon (Feb. 14) there were no shoppers who used the kiosk to rate their experience. Traffic in the store was heavy ahead of inclement weather and last minute Valentine's Day shoppers.

Wal-Mart did not say if this kiosk would be added to other stores, only noting it is a test. Walmart U.S. CEO Greg Foran has made no secret of his efforts to improve store operations across the U.S. fleet. With some 5,000 stores, the retailer has said making changes at the bottom performing 10% is a big job.

Foran has spent much of the last five months on the job as chief of U.S. stores out in the field. He said during the recent Year Beginning Meetings that he’s visited about 70 stores and talked with hundreds of employees. That’s a mere drop in the bucket given the shear size of the U.S. fleet. 

“Retail is detail ... we’ve got a lot of work to do, one store at a time,” Foran told analysts during the Investor Meeting in October.

Kiosks could certainly help speed up the process helping busy store managers assess their own store feedback given that Foran is set on “fixing the shopping experience.” He said the store experience is everything from better customer service, cleaner stores, improved fresh departments, better in-stock numbers; while also bringing down overall inventory levels that have been rising at twice the rate of sales in recent quarters.

Seeking Alpha analyst Brian Gilmartin writes that one of the bigger issues over the last two years has been traffic erosion. The last time Wal-Mart U.S. posted positive quarterly traffic was in the fourth quarter of 2012. Following are traffic stats from Wal-Mart U.S. stores

WALMART STORE TRAFFIC
Oct. 2014: down 0.7%
July 2014: down 1.1%
April 2014: down 1.4%
Jan. 2014: down 1.7%
Oct. 2013: down 0.4%
July 2013: down 0.5%
April 2013: down 1.8%
Jan. 2013: down 0.1%

All eyes will be on Wal-Mart’s customer traffic report later this week (Feb. 19) as the retailer reports its fiscal fourth quarter results for 2015. Gilmartin said Wal-Mart is having to use price to offset low traffic, which is challenging the retailer’s “Every Day Low Price” mantra.

Wal-Mart CEO Doug McMillon recently said the company will return to the Every Day Low Price” (EDLP) model and reduce promotional pricing efforts. He has challenged suppliers to help the retailer return to EDLP.

Foran has won the favor of analysts as he’s made no excuses for the lackluster operations often reported in mainstream media. One of the first moves by Foran was boosting the importance of operational meetings. He said it goes back to the days of Sam Walton, with operational management meetings on Friday to make sure they are ready to maximize sales on Saturday and Sunday which will be reviewed on Monday.

“It reminds us each week about the urgency of every weekend. Sales have got to come up and traffic must also improve,” Foran said.

A “Festival of Murals” project for downtown Fort Smith was unveiled at Tuesday’s (Feb. 17) meeting of the Central Business Improvement District Commission (CBID), with event organizers saying it will boost downtown traffic, and participation of international artists will be a boost to the city’s public relations image.

Members of the CBID also heard from Dennis Snow, director of the Steel Horse Rally, as part of a request for financial support from the CBID for the May 1-2 motorcycle rally in downtown Fort Smith.

John McIntosh, who has helped launch several events and event venues in Northwest Arkansas and Fort Smith, is leading the murals project for a newly formed group “64.6 Downtown.” In addition to McIntosh, the murals project team is Claire Kolberg, festival coordinator; Don Lee, head of the art department at the University of Arkansas at Fort Smith; Galen Hunter with Fort Smith-based MAHG Architects; and Jim Perry, a corporate marketing executive with Fort Smith-based ArcBest.

McIntosh said 64.6 is the number the square miles in Fort Smith. The mission statement of the newly formed organization notes: “64.6 Downtown is committed to the revitalization of downtown Fort Smith and the Riverfront. Downtown is our heart and soul, and a more vibrant and accessible downtown is better for all within the 64.6 square miles of the city.”

‘THE UNEXPECTED PROJECT’
The festival is set for Sept. 6-13, with several events – to include artist reception at the Fort Smith Regional Art Museum, emerging artists show, spoken word event, wine tasting, skateboard park, and sidewalk art collaborations between artists and area school students – to coincide with large murals painted or applied to between five and 10 downtown buildings.

“This will bring activity all week long to downtown Fort Smith,” McIntosh told CBID members.

The first year of the event is being pitched as “The Unexpected Project.” Steve Clark, owner of Propak Logistics, a CBID member and active supporter of the murals effort, said a festival that brings artists in from around the world “is not what you would expect in Fort Smith, which is why it could be a phenomenal success.” He also said the artists being considered are also those who would actively “Tweet out where they are,” which would attract international attention to Fort Smith.

Clark is also investing millions in downtown Fort Smith with the renovation of the historic Freidman-Mincer building – aka, the OTASCO building – in downtown Fort Smith. He plans to move Propak corporate offices to the location when renovation is complete.

CURATOR, ARTIST SELECTION
Helping find, recruit and coordinate with artists is Charlotte Dutoit, an art curator from France. Dutoit is the founder and curator of Life is Beautiful Festival Art program in Las Vegas, the largest U.S. street art event. For that event, she received the “Mayor’s Public Art Award.” She is also the curator of Rex Romae Gallery that organized pop-up exhibitions in vacant spaces across London. She also manages JustKids, which is a “network of curators, artists, designers and art consultants that creates international art events and gallery shows, designs conceptual spaces for high-profile clients and connect top-tier urban artists with leading global brands.”

McIntosh said the committee will work with Dutoit, building owners and artists to develop ideas for the murals. Maser, an artist from Ireland who has created murals in Fort Smith and Northwest Arkansas, was mentioned as a possible artist for the festival. Maser was one of 11 artists to be part of a film that was part of U2’s release of the band’s new album “Songs of Innocence.”

McIntosh said the history and heritage of Fort Smith will not be the only factor driving mural decisions.

“It’s not about the history of Fort Smith, it’s about the promotion of the future of Fort Smith,” McIntosh said, adding that what drives the festival is “the notion of using downtown Fort Smith as a canvas.”

McIntosh provided the following explainer language to the CBID: “The objective and magnitude of the Mural Project is a commitment to an awareness of and appreciation for the visual arts in Fort Smith. The idea is to collectively advance visual art and artistic process by collaboration, cooperation, and support. The plan and action will result in an aesthetically enhanced municipality in concert with the region, state, nation and planet.”

The murals project is working with a first-year budget of between $75,000-$85,000. McIntosh was not asking the CBID for money. In addition to support from Clark, McIntosh said the group is also seeking other private sector financial backing.

STEEL HORSE RALLY
Snow, president of The Steel Horse Rally Inc., made a brief presentation about the planned motorcycle rally in downtown Fort Smith, which could see an estimated 5,000 motorcyclists and visitors in the downtown area May 1 and May 2. Outreach efforts to market and advertise the Steel Horse Rally are planned for Oklahoma, Texas, Louisiana, Missouri and states bordering Arkansas. The Fort Smith Advertising & Promotion Commission has authorized $2,500 to help with such outreach.

Snow said he is confident the event will grow beyond 5,000 visitors in the coming years.

“The days of James Dean and the Wild Ones are over. The men and women that ride (today) have a large disposable income,” Snow said.

CBID Chairman Richard Griffin praised the event and encouraged the commission to help support the rally’s launch. CBID members agreed to pay up to $5,000 for marketing efforts to promote the rally.

Whether it’s buying value-size packages, shopping multiple retailers for lowest prices or avoiding major stock-up trips in general, consumers are holding fast to shopping habits they honed during the sluggish economic recovery in recent years.

Sue Viamari, a consumer analyst with IRI, said recent shopper research indicates that while the economy is improving, “consumers are not reverting to their free-spending ways.” She said whatever devices consumers began using to save money a few years ago, they are likely to keep because saving money feels good anytime. For consumer packaged goods companies and retailers alike, Viamari told The City Wire that this mindset is the new normal and she sees no big changes in shopper habits going forward.

VALUE DRIVEN
The research holds some interesting insights for consumer packaged goods (CPG) companies and the retailers they serve. For instance, 43% of shoppers surveyed said they will buy large packages to get the lowest price per serving. This suggests that CPG companies who can provide value size pricing are poised to benefit. 

Wal-Mart is already playing the value size game. The retailer recently began selling a 65-ounce bottle of ALL Stainlifters laundry detergent for $4.97 which replaced the 50-ounce bottle which sold for $4.87. Having this “new” size also renders this item not eligible for “Savings Catcher” matches with other retailers who don’t carry the new size.

Viamari said value-size packaging is a good way for CPG companies to differentiate their products against competitors. She expects to see more of this trend in the future across multiple retailers and product categories.

“There are opportunities here if retailers and CPGs understand the way their consumers are approaching price,” she said.

For instance some retailers might offer a lowest entry point price with some type of enlightened small package deal because value should not be restricted to bulk quantities. Those shoppers with strict, limited weekly budgets could be endeared to a brand that gave them a value in smaller packaging that fits within their budgets.

SIMPLE SOLUTIONS
One particular category under stress is cleaning supplies, Viamari said. IRI found that 41% of consumers look for multiple purpose cleaners to keep down the total number of cleaning items purchased.

“We know shoppers still look to save money in this category, more are using home-made remedies and all-purposed cleaners, others want more environmental friendly options,” Viamari said.

There are opportunities in this category to simplify things to ensure they have the one or two cleaning products that make it into shopper baskets. The days of Top Job, Spic and Span or Mr. Clean-type liquid cleaners have given way to specific scent formulas of kitchen degreasers and antibacterial options to a plethora of bathroom cleansers. And then there are windows and furniture to consider. Viamari said consumers want simple solutions and product suppliers who can best figure out how to deliver will reap the rewards.

NO STOCK-UP
Another interesting aspect noted in the IRI research was that 41% of shoppers avoid stocking up and instead shop weekly with a controlled list to stay on budget. This behavior shift could mean continued traffic problems for Walmart supercenters and wholesale clubs if the trend continues.

While IRI doesn’t not comment on specific retailers, Viamari said this behavior is vitally important to store channel performance. Viamari said fill-in trips have become the normal because fewer folks can afford to have their budgets disrupted.

“The bottom line here is that consumers are using well-controlled lists when they shop. This cuts down on impulse buying that most retailers try and induce,” Viamari said. “The opportunity here is for retailers and CPG companies to reach out earlier to the shopper when they are making that list. We know shoppers do make occasional changes to the list while they are in-store after seeing better deals,” she said.

Coupons, circulars and social media interaction are some of the ways retailers and CPG companies might ensure the consumers think of them when making their lists of items they will buy each week.

E-receipts like those given by Wal-Mart shoppers who use the “Savings Catcher” tool give that retailer an advantage in helping shoppers create future shopping lists. The e-receipts are available on the mobile devices of the users, but there is no indication the retailer is using that data to prompt future sales at this time. This is a lost opportunity to provide useful help on the front-end of a shopping trip.

However, for shoppers who visit Walmart.com or just about any other online retailer, there is no end to the stalking on social media or email suggestions on deals for the items searched whether it’s Benjamin Moore paint at Walmart.com or new bedroom linens from Overstock.com. 

MULTIPLE STOPS
The IRI research found 41% of consumers still shop at more than one retailer for grocery and household consumables. 

“Shoppers are confining their multiple shopping trips to those stores that consistently offer the values they expect. Out of necessary they began this during the recessionary years and now they operate on auto-pilot,” Viamari said.

She said the days of one-size-fits-all is long gone in retail as consumers made sacrifices that have turned into smart savings strategies they have no intention of abandoning no matter how hard some retailers work to win back lost business.

Consumers may not mind the multiple retailer approach despite the lure of “Savings Catcher” from Wal-Mart, which was recently restricted just six months after the wide rollout of the shopping tool.

Dollar General’s efforts to email $5 coupons off $15 or $20 spent is one way the small box retailer is wooing shoppers who might purchase dog food or diapers that is not restricted to branded coupons. DrugStore chains like CVS and Walgreens offer significant savings with their loyalty programs that can be used in conjunction with manufacturer coupons on everything from allergy meds to mascara.

Aldi continues to pack shoppers into their small no-frill stores who are searching the lowest prices on select and featured produce from 29-cent avocados to $1.99 asparagus. Aldi deals also include organic produce such as bananas for 44-cents a pound or grape tomatoes for $1.69 per carton.

These consistently low prices on limited selections of fresh produce are hurting Wal-Mart’s produce sales. Walmart U.S. CEO Greg Foran said recently he’s bothered by the fact that too many shoppers rush past the “fresh” produce at Wal-Mart and head straight for the packaged foods. That is one area of focus for Foran and his team this year.

Wal-Mart also said it will no longer match produce prices with competitors in its “Savings Catcher” program. 

Niche online shopping services from Dollar Savers Club to Diaper.com that offer subscriptions at a value and the convenience of home delivery are also eating away the dollars spent for these goods during traditional shopping trips.

Viamari said if this trend continues retailers and suppliers will have to rethink how much shelf space they devote to those products in traditional retail stores. She said retailers have an opportunity to work with suppliers to strategically offer the right value sizes and flavors their specific customer base expects, keeping in mind that price matters.

Arkansas voters may have a key role in deciding who the nominees for next year’s presidential election will be, a state Senator said Tuesday.

Sen. Gary Stubblefield, R-Branch, filed Senate Bill 389 at the capitol Tuesday morning. The bill was referred to the Senate State Agencies and Governmental Affairs committee. Under the bill, voters would head to the polls March 1, 2016 to decide the Republican and Democratic nominees for the White House. Stubblefield said the bill would give the state’s voters a “voice in the process,” noting the nominee is often determined in early primary states like Iowa, New Hampshire and South Carolina.

“The South has been an afterthought,” Stubblefield said of the process.

Stubblefield said the bill would work to end the nationwide belief that the “South is South Carolina.”

According to published reports, officials in Alabama, Georgia, Mississippi and Tennessee are working on a so-called “SEC Primary” for the first Tuesday in March 2016. Stubblefield said his bill would work toward that goal and that the idea has received bi-partisan support. The state Senator said the March 2016 idea would not only bring candidates to the state, but also allow them to talk about issues with the state’s voters.

Under Stubblefield’s bill, candidates would file a party certificate with the Secretary of State’s office from Nov. 2, 2015 until Feb. 23, 2016. Each party would be responsible for determining the qualifications for running, provide applications to candidates and accepting and processing the applications.

There are at least two dozen Republicans and a half-dozen Democrats who are considering running in 2016. Among them are two people with ties to Arkansas – former Gov. Mike Huckabee, R-Ark., and former Arkansas First Lady, Democratic senator and Secretary of State Hillary Clinton.

OTHER LEGISLATION
Bradley Phillips with LobbyUp.com recently spoke with Talk Business & Politics on the most viewed bills from the legislative session, including a look at some of the filings for potential constitutional measures.

LobbyUp’s online bill tracking service uses its technology and analytics to bring some of the most heavily-read and controversial bills of the session to viewers and readers. Following is some of the legislation reviewed by Phillips.

• House Bill 1241
Filed by State Rep. Mark Lowery, R-Maumelle, this bill would eliminate the PARCC assessment, a test tied to Common Core standards. The state has roughly invested $30 million in training and student prep for the assessment, which makes it a volatile measure of debate. HB 1241 was the most viewed bill of the week.

• House Bill 1373
The bill filed by Rep. David Fielding, D-Magnolia, also attracted a lot of traffic. It would prohibit the use of wireless handheld devices while driving. Phillips said this bill goes a little further than a texting bill; it could ban any usage of a handheld device in a car. As it is written, some believe the bill would outlaw talking or listening to music on a handheld device in your vehicle.

On the constitutional front, roughly 40 measures have been filed by the deadline to consider potential changes.

• House Joint Resolutions 1024-1026
The resolutions filed by Rep. Julie Mayberry, R-Hensley, would all impact the Lt. Governor’s office by eliminating the position, reassigning its duties, or providing that the office seeker run as a ticket with the Governor.

• Senate Joint Resolution 13
Filed by Sen. Bart Hester, R-Cave Springs, the proposed constitutional amendment would change sheriff’s terms to four years from two. Phillips said the logic behind the measure would be to provide more stability in local law enforcement.

Another round of snow and ice is predicted for most of Arkansas, according to a Tuesday report from AccuWeather. This next push of arctic air is expected to bring air that is just as cold, or even colder than the air that brought subzero lows to the Midwest and Northeast during the weekend.

Millions will shiver from Chicago to New York City as record lows are challenged during this bitter blast. Records may also fall across parts of the South where temperatures manage to fall into the teens and single digits.

Such cold will be dangerous to those who lose power during the recent ice storm. As of Tuesday morning, a couple of hundred thousand customers were still without power in the South.

The worst of the cold is expected to focus on the Midwest on Wednesday before shifting east over the East for Thursday into Friday. A period of snow or snow showers will accompany the arrival of the harsh cold from Arkansas, through Tennessee and North Carolina, northward to New England with slippery travel. The system could drop a few inches of snow on the central Appalachians.

Temperatures can be very dangerous, and possibly even life threatening during this arctic outbreak. Anyone planning on venturing outside should wear extra layers, hats and gloves to help stay protected from the cold. Fortunately, winds should not be as strong as they were during the cold spell over the weekend, making it feel not quite as cold.

Throughout the Midwest, Northeast and into the South, insufficiently protected plumbing could freeze. Some heat-pump furnaces could struggle to keep up with the severe cold. Anyone who has animals that live in the outdoors should also take the proper precautions to keep their pets stay safe.

As a preventative measure for freezing pipes, people can leave the tap drip slowly. Keep cabinet doors open in cold rooms where plumbing passes through.

Pet owners should bring their animals indoors and make sure that they have proper bedding when temperatures dip below the 20-degree mark, as well as ensuring that they have water that is not frozen.

City directors appeared frustrated with Fort Smith management at the Feb. 17 Board of Directors meeting as part of a discussion to renew insurance for an estimated $240 million in city assets.

The event, held in its usual location at the Fort Smith Public Schools Service Center, featured one item in particular where directors expressed annoyance at being placed in time crunch mode with what they viewed as a dearth of information for making an informed decision.

The item pertained to the possibility of changing to the Arkansas Municipal League (AML) for property, vehicle, and equipment insurance on city-owned assets. Travelers Insurance through Fort Smith-based Brown Hiller Clark and Associates is the current provider. For 2015, there would have been a premium difference between the two with AML coming in $240,000 cheaper than Travelers' $794,298 ($330,770 for Property, $393,680 for Auto, and $69,848 for Equipment).

However, there were key differences in coverage. For instance, Travelers offered the city insurance on a replacement cost basis with a blanket that would allow the city to recoup the full cost of rebuilding a property in the event of a total loss. AML offered actual cash value, which would be replacement cost minus depreciation.

As an example, if a building was 20 years old and it was leveled by a storm, Travelers would provide funding to rebuild the property at what it would cost by today's standards. The AML would factor in how much the building had depreciated over the course of 20 years and remove that amount from the final total.

Another key difference: if the city had a storm that damaged the roofs on five buildings, it would have to pay one $25,000 deductible ($50,000 for wind/hail damage), for the one occurrence instead of the deductible for each building. AML's $5,000 deductible would be per location, adding up to a total of $25,000 if equal damages were done to each location.

Whether the city would save money was a point of contention, and City Directors Tracy Pennartz and Keith Lau didn't believe there was enough information to see if Fort Smith would come out ahead on the AML plan.

Pennartz asked for "trend data" on claims that the city had issued over an extended period of time, but did not receive it. Lau reiterated that such data would have been helpful in making a decision as to whether the city was over-insured rather than having to decide on one provider without the proper data and a March 1 deadline (when Travelers coverage expires).

"This is typical that we’re getting crammed with this decision at the eleventh hour without adequate analysis of the consequences of our decision," Lau said. "I think a loss-run analysis is warranted. I think we’ve got to gauge the catastrophic consequences of being underinsured especially as tight as our budget is."

Lau continued: "I’m not sure our funds or fund balances could handle the stress of a non-coverage catastrophic event. I’m not saying that ultimately I don’t agree with this decision in participating in the Municipal League. I just don’t think in my opinion it’s prudent to make a hasty decision to save $300, $200,000, whatever it is, a year and expose ourselves potentially to a $600,000 to $1 million loss, which would eventually have to be funded out of a fund balance or ultimately (we’d) have to issue debt to cover."

Due to the "limited amount of time and research" that directors were given, Lau didn't believe city staff had put enough thought into its findings and ultimately decided to vote against AML. Three other directors agreed, thus ending in a 4-3 vote to renew with Travelers for the 2015-2016 term.

MARS EXPANSION VOTE
Also Tuesday night, the Board endorsed Mars Petcare for participation in the Tax Back Program.

Mars Petcare is planning an $81.7 million expansion of its facility at Chaffee Crossing that will add an estimated 95 “good-paying” jobs. It’s the second significant expansion of the plant in the past two years. Mars Petcare – based in Brussels, Belgium, with a U.S. headquarters located south of Nashville, Tenn. – opened the Chaffee Crossing site in September 2009.

In October 2013 the company announced a $50 million expansion that was expected to add 42 jobs.

The “Tax Back Endorsement” the Board approved is a formality as part of an incentive program administered by the Arkansas Department of Economic Development. The program allows businesses to seek refunds of sales taxes on construction materials, new equipment and other qualifying expenses of investments that result in new jobs.

The next U.S. presidential election may come and go before consumers no longer have to choose between buying a few steaks or making a car payment.

Multiple metrics are at play most of the time help to determine how much consumers will pay for their favorite steak or their next hamburger. It could be investors on Wall Street, corn prices paid by farmers and feeders, demand for exports to Korea and China or higher prices for the limited supply of cattle.

The main catalyst pushing beef prices to record highs last year were low cattle numbers as the national herd hit a 63-year low. However, the shrinking herd trend appeared to reverse. Overall cattle numbers made positive gains rising 1% last year, according to the U.S. Department of Agriculture’s Jan. 1 cattle inventory report.

The report shows the U.S. herd rose to 89.9 million head. Almost all categories of cattle, including heifers, steers, bulls and calves weighing less than 500 pounds, increased. While the overall number is an increase from the prior year cattle census of 88.5 million head, it is still significantly lower than the 25-year peak of more than 103 million head in 1996.

Total cattle and calves in Arkansas decreased by 1% to about 1.64 million head, with several other benchmark numbers remaining roughly the same. While the number of bulls remained unchanged at 55,000 head and the number of calves weighing less than 500 pounds increased from 360,000 to 380,000, the number of adult steers decreased by 15,000 head to 130,000, according to Tom Troxel, head of Animal Science at the University of Arkansas System Division of Agriculture.

While cattle numbers are making a slow improvement, high live cattle prices make it harder for farmers to retain heifers which is necessary in the herd rebuilding process. Troxel said calving rates across the country last year were strong. He expects that will also be the case this year.

EXPORT KINK
Another kink that has recently hit the beef supply chain are delays at West Coast ports related to difficult labor talks between longshoremen and port operators. The American Meat Institute estimates that the port issue costs beef and pork industries $170 million per month.

Higher valued beef cuts that might normally be shipped to South Korea are now being ground up and used domestically, which is helping to bring down beef prices somewhat. This price dip is believed to be temporary for as long as the port issues lag.

Richard Kinder, a butcher and meat manager at Allen’s Foods in Bella Vista, has spent nearly 40 years in the meat business and grocery business. He said wholesale beef prices have dipped a few penny’s per pound from the West Coast port disruption. He said all of last year retailer’s passed along the higher wholesale prices to consumers to the point where less beef was consumed. 

CHICKEN SALES UP
Tyson Foods CEO Donnie Smith said recently that consumers are trading down from hamburger and fresh beef to fresh chicken. He predicted it would happen two years ago when beef prices started rising, but Smith said it just began occurring last fall. This prompted Tyson to add fresh chicken lines in three facilities to meet added demand. 

Kinder said he also has witnessed the chicken push.

“I know my fresh chicken sales are up. I can’t say beef sales are down because we sell a lot of beef. My beef sales are flat to a year ago, but chicken is up,” Kinder said.

He said because Allen’s allow customers to purchase single items of their own choosing like bacon wrapped filets, they still sell a lot of steaks between the $4.50 and $6 range.

“Pork has stayed reasonably priced but it seems shoppers will only buy pork when it’s on sale. At least at Allen’s they are more likely to reach for the steaks or roasts than pork chops and loins,” Kinder said.

Kinder does not expect major changes in retail beef prices this year but he said that could change quickly if there’s a drought this summer or if exports began to flow more freely.

Troxel said the slight increase in cattle supply across the country may take a while to reduce beef prices.

“I don’t anticipate any decline in retail price of meat until 2016,” he said.

Gov. Asa Hutchinson announced a prison reform plan Wednesday that will spend $64 million, including $32 million this biennium, to create an additional 790 beds – 288 of them leased in Texas – and seek to change behavior through investments in the parole system, a new societal re-entry system, and alternative sentencing arrangements for nonviolent offenders.

The state has more than 18,000 inmates in state prisons – a 17% growth rate, which he said is one of the largest in the nation – with a backlog of 2,500 state prisoners in county jails.

“It’s really backed up our system, and it cries out for immediate relief and a long-term solution,” he said.

Hutchinson called for spending about $50 million for more bed space rather than the $100 million advocated by some for a new prison. Those beds would come from a variety of sources, including through a contract with a county facility in Bowie County, Texas, where 288 prisoners would be housed at a cost of $36 per day. The rest of the prisoners would be farmed out to various locations in Arkansas, including 200 in county jail facilities, if the counties will take them.

Hutchinson said the long-term goal is to change behavior that has led to a recidivism rate of 43%. In 2014, 10,000 inmates were released from prison on parole. At that rate, an additional 4,300 beds will be needed over three years at a cost $9.5 million, he said.

“I think with this balanced investment, we have the greatest opportunity to change behavior,” he said. “And I’ll assure you that there’s not any guarantees here, but this is our best chance of trying to avoid building $100 million prisons every five years going into the future.”

The plan initially would be funded by $31 million coming from the Arkansas Insurance Department’s reserve fund and $2.6 million from unclaimed property recruitments. After two years, it would be absorbed into the regular budget.

In addition to the money spent for prison space, about $16 million will be spent for Department of Community Corrections initiatives for re-entry programs and alternative sentencing to change behavior “so that we’re not just simply building more and bigger prisons over the next decade.”

Of that, $7.5 million would be spent over the next biennium for additional parole and probation officers, support staff, and substance abuse treatment managers. The plan would also spend $5.5 million to create transitional re-entry centers for 500 parolees at a cost of $30.62 per inmate. Eligible parolees would be within six months of their parole eligibility date. The centers would provide work training and preparation to re-enter society. Hutchinson said it would be the first time that Arkansas has offered such a program.

“Right now, as you know, if you leave prison, you get $100 and a bus ride, a bus ticket, or something of similar fashion,” he said. “That is really not going to help reduce repeat offenders from going back in.”

Hutchinson said $2.8 million would be provided for grants to create alternative sentencing courts, with $100,000 available per judicial district over the next biennium.

Sen. Jeremy Hutchinson, R-Benton, said he and Rep. Matthew Shepherd, R-El Dorado, will introduce a bill Thursday that will reflect Hutchinson’s priorities.

“You’ll see a lot more depth and meat on the treatment side of it, and then the bed space, which the governor outlined, which is necessary,” he said. “You’ve got to have a stick. … And then you’ll see a component in the bill tomorrow that exponentially expands our enforcement capabilities.”

He said he felt confident it would pass in the Senate.

Sen. David Sanders, R-Little Rock, said he will introduce the Public Safety Transparency and Accountability Act, which will increase the amount of information about inmates available to the general public. Inmates’ complete criminal record and their disciplinary records in prison are shielded from public view. He said another bill he will file this week would make the state’s sex offender database in compliance with federal law. Another bill would reduce the number of offenses subject to mandatory parole and expand the discretion of the Arkansas Parole Board for denying parole.

Community Health Systems plans to invest $10 million in an emergency room expansion at Summit Medical Center in Van Buren, and is also changing the name of Summit to Sparks Medical Center – Van Buren.

The expanded emergency room will have 12 beds and will be located near the front of the existing hospital in Van Buren. A groundbreaking is expected later this year.

“It will be an exciting year for our hospital,” Anthony Brooks, interim administrator and chief financial officer for Sparks Medical Center – Van Buren, said in a statement announcing the name change. “We are looking forward to growing and expanding with Sparks Regional Medical Center and continuing a tradition of being there for Crawford County residents when they need us most.”

New signage will complete the hospital’s rebranding in the second quarter of this year. This name change, according to Sparks, is a strategic decision to spotlight Sparks Medical Center – Van Buren as an integral part of Sparks Health System.

“Our plans for 2015 include improving physician recruitment and patient confidence, as well as utilizing the hospital’s geographic location for patient convenience,” Brooks said.

Sparks Medical Center – Van Buren is a fully accredited, 103-bed acute care hospital providing emergency services, outpatient testing, inpatient surgical services, same day surgery, rehabilitation services, and respiratory therapy.

Sparks and Summit were part of the early 2014 sale of Health Management Associates to Franklin, Tenn.-based Community Health Systems, a company whose portfolio of hospitals was nearly double the size of HMA's portfolio. Locally, CHS owns four Northwest Arkansas facilities — Northwest Medical Center-Bentonville, Northwest Medical Center-Springdale, Siloam Springs Regional Hospital and Willow Creek Women's Hospital in Johnson.

“I think the community response has been very positive,” said Jackie Krutsch, executive director of the Van Buren Chamber of Commerce.

Krutsch said discussions about rebranding Summit began when then Naples, Fla.-based Health Management Associates bought Sparks Health System in late 2009. At the time, HMA had a lease agreement with Crawford County to manage Summit Medical Center.

“The conversation (with HMA) was, what a great opportunity for Summit because of the opportunity for shared resources ... and expanded services to Summit,” Krutsch explained.

However, the process and the cost of rebranding, along with the unplanned acquisition of HMA by Community Health Systems served to delay the decision.

“I am really thrilled that they have now pulled the trigger. It gives us a brand as well as a location,” Krutsch said of changing the name from Summit to Sparks Medical Center – Van Buren.

Strong car and truck sales along with more on-time payments at America’s Car-Mart helped to push third quarter net profits to $7.461 million, up 407.5% from the lackluster $1.47 million reported a year ago. The third quarter gross revenue rose to $131.5 million, up 7.3% from the $122.58 million reported in the same period last year.

Wall Street has been bullish on earnings and revenue expectations with consensus at 77 cents per share net earnings. Car-Mart blew past that prediction posting 82 cents per diluted share, and also beating on revenue expectations. 

The Bentonville-based buy here, pay here used car dealer reported after the markets closed on Wednesday (Feb. 18) for the three months ending Jan. 31. However, investors sensed the favorable report because the stock price (NASDAQ: CRMT) rallied 2.94% prior to closing to reach $52.82. In aftermarket trades the shares gained another 2% to finish at $53.88.

"Our plan of focusing on solid top line growth is working out very well and we are excited about our prospects as we look forward. Retail units sold was up 7.1% and same store revenue was up 2.8% when compared to the third quarter of fiscal 2014. Productivity as reflected in the average retail units sold per month per store increased from 27.7 to 28.0 for the quarter. We feel very comfortable with our new store opening plans and with our ability to grow profitably into the future," CEO Hank Henderson, said in the earnings report.

The company has 138 dealership in 10 states, which is eight more than this time last year. 

“We are looking to pick up the pace of new lot openings a little in 2016," Henderson said. "We are pleased with the top line growth, and we remain convinced that we are moving the company in the right direction."

Closing the sale is just half of the battle for Car-Mart who finances 100% of the deals made. In recent quarters the company has struggled from hyper competition in the subprime auto financing sector.

"While the competitive environment remains challenging, our sense is that financing offerings in our markets may be a little more rational now when compared to say 12 months ago. We are hopeful that we can get back to a point where customers in the markets we serve are presented competitive financing options that are in their best long-term interest, structured for their ultimate success,” said Jeff Williams, chief financial officer. 

In the recent quarter Car-Mart saw positive trends with collections, average down payments and accounts past due 30 days.

“While net charge-offs are higher than historical levels and much higher than we would like to see, we are encouraged by the decrease for the quarter,” Williams said.

The company reported net charge-offs at 6.5% of sales, which was down slightly from 6.7% of sales a year ago. The 30-days past due accounts were 5.2%, down fro 5.8% and downpayment amounts rose to 5% up from 4%. 

Car-Mart sold 11,495 cars in the quarter, 7.1% more than a year ago. The average sales price rose fractionally to $9,764. The company has finance receivables of $425.07 million at the end of the quarter, a gain of 6.1% year-over-year.

Bill Armstrong, analyst with C.L. King, pegs Car-Mart shares a “buy” position noting that management appears to be more effectively adapting to the still-difficult competitive environment as evidenced by the company’s improved recent performance. In addition, improving employment trends and the likelihood of lower used car prices should stoke demand and unit volume growth going forward.

“We think credit availability for subprime auto buyers may begin tightening up in the months ahead as industry-wide loss rates continue to increase. ... This would be a clear positive for Car-Mart as it would represent a reduction in competitive pressure and would drive more traffic to its stores where it can provide it’s own financing. We remind investors that Car-Mart posted strong earnings increases during the credit crisis,” Armstrong noted.

Through three quarters of business in fiscal 2015 Car-Mart posted total revenue growth of 7.1% to $392.7 million. Revenue is comprised of gross sales and interest income for the finance receivables. Interest income was $43.41 million in the three quarters compared to $41.249 million in the same period of the previous fiscal year.

Net Income is up 50% through three quarters of this year to $22.21 million, well ahead of the $14.786 million a year ago. Net earning per share year-to-date are $2.45, versus $1.56 a year ago.

New restaurants in downtown Bentonville, a new murals festival in downtown Fort Smith and other tourism products that “creates a buzz” are what will help Arkansas’ tourism industry in 2015 build upon an impressive 2014, said Richard Davies, executive director of the Arkansas Department of Parks and Tourism.

2014 was a solid year for the travel and tourism sector in most Arkansas cities and for the state. Collections of Arkansas’ 2% tourism tax needed only 11 of the 12 months of 2014 to set a new annual record. Collections of Arkansas’ 2% tourism tax during the first 11 months of 2014 totaled $12.866 million, up 7.51% compared to the $11.967 million during the same period of 2013. The 2% tourism tax set a record in 2013 with $12.716 million, and the 2014 numbers are on track to reach more than $13.5 million in 2014.

Tourism tax collections in Northwest Arkansas’ four largest cities was up a combined 8.2% for the first 10 months of 2014. Hospitality tax collections in Fort Smith and Van Buren were up 4.2% and 1.4%, respectively. Conway saw similar collections increase 4.35% in 2014. Hospitality tax revenue was up 2.3% and 2.1% in the tourism towns of Eureka Springs and Hot Springs, respectively. Collections were up 5.26% in Little Rock during 2014.

Industry jobs are also increasing. Arkansas’ tourism sector (leisure & hospitality) employed 113,900 during December, up from 110,400 during November, and above the 106,900 during December 2013. The December number, if it stands, marks a new record for employment in the sector. Employment in the sector is up 23% in the past 10 years.

‘A NEW RIDE’
“I think we will continue to grow at the same pace, which in my view is pretty good,” Davies told The City Wire. “It’s actually harder to keep that growth up than to accomplish it just once every few years. ... I will be totally surprised if 2015 falls below 2014 unless we have some freak of nature with the weather or some national emergency. I can see no other reason for decline.”

Davies said a mild 2014 summer helped the state’s tourism facilities and events. Keeping the growth on an upward pace will require more things to do and proper marketing of what there is to do in Arkansas.

“I think the factors in our growth included more ‘product’ either on the ground or in serious discussion (Marshal’s museum in Fort Smith, or instance) that creates a buzz, along with some targeted marketing by cities, regions and states at user groups like motorcyclists, bicyclists, adventure sports, and arts/culture/history,” Davies said. “We’re going to have to keep on top of trends, especially in technology, user preferences, and needed tourism offerings. Research, as always, is terribly important, as is continuing to add ‘a new ride’ as Joe David (Joe David Rice, tourism director for the Department of Parks and Tourism) is fond of saying. We can’t become stale.”

CONTINUING TO EVOLVE
Kalene Griffith, president and CEO of the Bentonville Convention & Visitors Bureau, agrees that new “product” is the key to growth. In an e-mail interview, Griffith provided a long list of new developments to help Northwest Arkansas tourism in 2015. The list included: opening of the Amazeum museum; the “Van Gogh to Rothko” exhibit at Crystal Bridges Museum of American Art in Bentonville; opening of at least eight new restaurants in downtown Bentonville; opening of Sheraton Four Points (103 rooms) hotel in the Spring; and continued growth of the Market and Arts Districts in downtown Bentonville.

“We need to continue to evolve as a leisure destination. People are looking for value, unique and authentic experiences. We see Bentonville and Northwest Arkansas as all three,” Griffith said. “Most importantly, is for us to sustain the excitement for our area as a destination for all ages. Our job is to put our cities at the top of mind with travelers. We have many unique and authentic experiences, currently and coming in the future.”

Officials in the Fort Smith area are also counting on new events to maintain the pace in 2015. The inaugural Steel Horse Rally is expected to bring thousands of motorcyclists and enthusiasts to downtown Fort Smith on May 1-2.

A “Festival of Murals” project for downtown Fort Smith was unveiled Feb. 17. The festival is set for Sept. 6-13, with several events – to include artist reception at the Fort Smith Regional Art Museum, emerging artists show, spoken word event, wine tasting, skateboard park, and sidewalk art collaborations between artists and area school students – to coincide with large murals painted or applied to between five and 10 downtown buildings.

For long-term industry growth, Davies said workforce training is essential.

“Another needed change is the number of hospitality training programs and degrees being offered in Arkansas that we didn’t use to have. We need good, smart young folks to replace us old worn out ones,” Davies said.

It may have not been a stellar financial year for Wal-Mart Stores, but the global retailer ended its fiscal year with income and revenue numbers heading in the right direction for CEO Doug McMillon’s first annual report.

Total revenue for the fiscal year ended Jan. 31 was $485.651 billion, up 2% compared to the previous year, the company reported Thursday (Feb. 19) morning. The total was just below analysts’ consensus estimate of $486.62 billion. Fiscal year net income was $16.363 billion, up 2.1% compared to the previous year.

The topline earnings per share for the year was $5.07, which beat the consensus estimate of $4.99 per share. However, the per share earnings was shaved by 8 cents for wage and hour litigation expenses and the cost of closing 30 stores in Japan during the fourth quarter.

Comparable store sales, a closely watched metric with Wal-Mart, also improved. Comp sales in all U.S. stores – including Sam’s Club – were up 0.5% in the fiscal year, better than the 0.4% decline in the previous fiscal year.

"Like many other global companies, we faced significant headwinds from currency exchange rate fluctuations, so I'm pleased that we delivered fiscal year revenue of $486 billion. But, we're not satisfied,” McMillon said in the earnings report.

Currency exchange rates reduced annual revenue by $5.3 billion.

FOURTH QUARTER GAINS
For the fourth fiscal quarter, which includes the holiday shopping season, Wal-Mart posted total revenue of $131.565 billion, up 1.4% over the same quarter in the previous fiscal year. The revenue missed the consensus estimate of $132.36 billion, but the topline earnings per share of $1.61 was better than the estimate of $1.54. However, the fourth quarter per share earnings were reduced by 8 cents for the reasons noted above.

The fourth quarter also saw improvements in comp sales. Walmart U.S. reported comp sales up 1.5% in the quarter, better than the 0.4% decline in the year-ago period. Sam’s Club comp sales were up 2% compared to a decline of 0.1% in the year-ago period.

"Our fourth quarter was the first positive traffic comp we've had since the third quarter of fiscal year 2013," said Greg Foran, Walmart U.S. president and CEO, said in the statement. "Walmart U.S. had increased traffic during the six-week holiday season, with strong sales in seasonal, toys, home and apparel. We completed almost 1 billion total transactions during the holiday season, including our largest online day ever on Cyber Monday. We are also pleased to deliver positive comp sales for the full year."

E-commerce sales were $12.2 billion, up 22% in the fiscal year.

Operating income by segment shows continuing problems with Walmart U.S. – Wal-Mart’s largest division. Operating income at Walmart U.S. for the fiscal year was $21.336 billion, down 2.1% compared to the previous fiscal year. Operating income in the International segment was $6.171 billion, up 19.8% for the year. Sam’s Club operating income was $1.976 billion, up 7.2% for the year.

"We have work to do to grow the business. We know what customers want from a shopping experience, and we're investing strategically to exceed their expectations and better position Walmart for the future," said McMillon. "Our first priority is to run great stores and clubs. We will continue to integrate our physical locations with a great e-commerce and mobile commerce business.”

PAY AND BENEFIT BOOST
The company also announced a pay and training plan that will raise pay for about 500,000 full- and part-time employees in the first half of the fiscal year. The goal is to have all employees make at least $1.75 per hour above the federal minimum wage by April. By Feb. 1, 2016, the goal will be for all employees to make at least $10 per hour. The pay adjustment in this fiscal year will cost the company an estimated $1 billion.

Wal-Mart and the Walmart Foundation will also spend $100 million during the next five years to “increase the mobility for entry level workers” in the retail and service industries through training programs.

“We're strengthening investments in our people to engage and inspire them to deliver superior customer experiences. We will earn the trust of all Walmart stakeholders by operating great retail businesses, ensuring world-class compliance, and doing good in the world through social and environmental programs in our communities,” McMillon said in the statement.

But the company used the earnings report to lower financial expectations for the new fiscal year. First, currency exchange issues could shave $10 billion from the topline in the fiscal year. The company also lowered its fiscal year earnings forecast to between $4.70 and $5.05 per share.

“Given the potential impact of currency headwinds, we expect that our fiscal year 2016 sales growth will be between 1 and 2 percent, versus the 2 to 4 percent we provided at our October investor conference," Charles Holley, Wal-Mart Stores chief financial officer said in the report.

Wal-Mart shares (NYSE: WMT) were trading lower in pre-market action. The share price closed at $86.29 on Wednesday. During the past 52 weeks the share price has ranged from a $90.97 high to a $72.61 low.

OTHER EARNINGS REPORT DETAILS
Following are other details from the earnings report and related conference call.
• Wal-Mart said Federal Corruption Practices Act compliance-related costs totaled $173 million for the year. These costs were comprised of $121 million for the ongoing inquiries and investigations, and $52 million for our global compliance program and organizational enhancements. Last year, total FCPA and compliance-related costs were $282 million. This investigation into alleged FCPA violations is now its third year. 

• Wal-Mart increased its dividend for 2016 from $1.92 to 1.96 which is paid quarterly. This marks the 42nd year the company has increased its shareholder dividend. For the full year, the company returned $7.2 billion to shareholders through dividends and share repurchases. Wal-Mart ended the year with free cash flow of $16.4 billion, compared to $10.1 billion last year.

• Fuel sales had no impact on Walmart U.S. same-store sales in the quarter. However, executives said overall lower fuel prices were responsible for more trips and a slight average uptick per ticket.

• Foran said the retailer had a good holiday season.

“Walmart U.S. had increased traffic during the six-week holiday season, with strong sales in seasonal, toys, home and apparel. We completed almost 1 billion total transactions during the holiday season, including our largest online day ever on Cyber Monday,” Foran said.

• Foran said Neighborhood Market stores delivered a 7.7% same-store comp during the quarter. This smaller format is resonating with customers prompting Walmart to open 233 of them last year, with many of those in the recent quarter.

• Wal-Mart ranked at the bottom of list for customer satisfaction according to recent survey by the American Customer Service Satisfaction Index. McMillon said Thursday that such news “breaks my heart” as he doesn’t want anyone to have a bad customer experience at Wal-Mart. He acknowledged there are lots of stores and more work required to improve customer service. To that point, Foran said adding staff back to stores in the Checkout Promise program during the holidays did increase costs, but it was the right decision for the customer.

• Inventory management is another area Foran wants to improve. He said inventory grew by 3.9% in the quarter. He attributed much of that to the 178 new store openings in the recent quarter. Foran said comp store inventory improved in the quarter because of the strong holiday sell-through and better aligned seasonal markdown in apparel.

“Inventory management is a key element to customer experience, and while we have room for improvement, we’re also making progress to better manage working capital,” Foran said.

• Wal-Mart’s fiscal 2016 year began on Feb. 1 and the retailer said it plans to add between 15 million and 16 million more retail square feet across the U.S. this year.

• Foran said there is some concern over the imported merchandise flows related to the
upcoming spring and Easter seasons, due to ongoing port congestion. 

“We’ll continue to take the appropriate steps, using our diversified supply chain network, to reduce the impact for our customers,” he said.

Less than a year after promising to address worker pay, Wal-Mart Stores CEO Doug McMillon has made what he calls a bold move to invest $1 billion in corporate revenue to raise the pay of 500,000 of the lowest paid Wal-Mart employees.

McMillon, who began with Wal-Mart as a hourly employee, promised to address the issue of worker pay and job advancement last year when adding staff to stores during the holiday shopping rush hours. In an email to workers on Feb. 19, McMillon reiterated that “people make the difference at Wal-Mart,” which is why he plans to raise the starting pay to $9 an hour or higher by April and up to $10 an hour in February 2016. (See the McMillon video at the end of this report.)

It’s just one piece of the puzzle being addressed, according to Walmart U.S. CEO Greg Foran, as the retailer seeks to improve customer service among its 4,500 U.S. stores. Foran also began his retail career as a hourly employee, but not with Wal-Mart.

Aside from raising the pay for entry level jobs, Wal-Mart is also raising the average pay of department managers to $13 per hour and up to $15 by the following year. The plan includes providing workers more opportunities for training flexibility over their own schedules. As the nation’s largest private employer Wall Street analysts applaud the retailer for this action.

WORKER RETENTION
”It’s long overdue at Wal-Mart,” according to CNBC contributor Jim Kramer. “It’s good to see the company trying and address some of the problems that have drug on for too long with their workforce, knowing that the investment in the short term will nip at earnings.”

He said retraining employees who stay on the job an average of six to nine months is a budget buster and Wal-Mart’s effort to pay a higher wage might in fact help them attract a workforce that will stay on the job long enough to improve customer service.

“We know we can’t raise customer service levels unless we ensure we are first taking care of our associates,” Foran said during a media call following Thursday’s (Feb. 19) announcement. 

For a company that proclaims the “Customer is alway No. 1”, an investment in customer service is a no-brainer. But Foran put it in perspective saying, “We also have to treat our associates as good as we treat our customers. We have to give associates a clear understanding of what it takes to get promoted in our business.” 

Allen Ellstrand, an expert in corporate management teams at the University of Arkansas, said better pay at the bottom and expanded opportunities for department managers will mean the company can attract and retain better talent in the future – talent that is key to improving store operations and ultimately the company’s earnings over time.

“On a couple of levels this wage announcement is a good move. From a public relations perspective it’s a positive step forward. From a practical level, the employer turnover has been a big problem when workers are tempted to leave for better wages elsewhere,” said Allen Ellstrand, an expert in corporate management teams at the University of Arkansas. 

Paul Trussell, an analyst Deutsche Bank, said the investment in wages is good news. 

“Part of Wal-Mart’s problems have been out-of-stock inventory, long check-out lines and disgruntled workers. The new CEOs are taking steps to correct some of these past evils,” Trussell said.

‘POWER OF THE MARKETPLACE'
The National Retail Federal applauded Wal-Mart’s decision to increase bottom wages.

“Today’s announcement by Walmart regarding associate wages is just another example of the power of the marketplace. Like many other retailers, Walmart made its decision based upon what is best for their employees, their customers, their shareholders and the communities in which they operate,” 

McMillon said Wal-Mart’s decision to raise wages has been in the works for the past year as he and Foran have been out in stores and witnessing areas that needed improvement relative to understaffing concerns.

Critics said perhaps Wal-Mart IS moving ahead of what is a national trend toward a higher minimum wage as four states, including Arkansas voted to raise their minimum wages in November.

The move to boost worker pay also received political attention.

“I applaud Wal-Mart for its plan to increase wages for the company’s U.S. based full and part-time employees,” U.S. Sen. John Boozman, R-Ark., said in a statement. “This sets the example for other American companies that investing in their workforces is important to their bottom line. Business-based initiatives like this are best set by companies and states, not forced on by federal government policies.”

Arkansas Gov. Asa Hutchinson issued this statement: “The Walmart story has always been about the American Dream. Sam Walton embodied that dream, building the world’s largest retailer through hard work, vision and exceeding the expectations of his customers. He would be proud of the forward-thinking plan announced by Walmart today to raise the pay of all current associates, provide those who want it the training and clear path to career success and work with associates on schedules that best fit their busy lives. This is especially good news for Arkansas and its 51,000 Walmart associates.

“Walmart understands that a company is only as strong as its employees. And its visionary new plan makes the company an even stronger, better place to work and advance in a career. I often talk about individuals having the opportunity to climb the economic ladder. Most of us hunger for that chance to earn our success. Walmart provides it.”

CRITICS SAY PLAN ‘FALLS SHORT’
Emily Wells, an OUR Walmart leader from Merritt Island, Fla., said the move to raise wages would not have happened without the work by thousands of supporters to change the country's largest employer. While she’s glad to see the move, it falls short of  the $15 minimum wage and consistent hours OUR Walmart continues to seek. 

Wells is a soon-to-be mom who earns $9.50 and hour after three years at Wal-Mart. She was most excited about the promise of flexible scheduling as she only gets about 26 hours a week.

"But, without a guarantee of getting regular hours, this announcement still falls short of what American workers need to support our families. With $16 billion in profits and $150 billion in wealth for the owners, Walmart can afford to provide the good jobs that Americans need – and that means $15 an hour, full-time, consistent hours and respect for our hard work,” Wells said.

McMillon said the starting wage is just a piece of the puzzle being worked. He said this investment will mean the average full-time hourly wage at Walmart will be $13, up from $12.85. The average part-time hourly wage will be $10, increasing from $9.48. The retailer said the part-time to full-time worker ratio is about 50:50. Full-time workers log a minimum of 34 hours a week.

He also said there is the benefits package to consider, which includes a “my share” performance bonus, 401(k) benefits and a variety of health care options valued at $22 per day. He also said the one-day wait period for sick pay is being lifted for full-time employees.

A side note to the employment news was an update on Wal-Mart’s efforts to employ 100,000 veterans by 2018. 

“We set this goal just under two years ago, and we’re proud to say that we’ve already hired almost 80,000 veterans through this program. Furthermore, over 6,000 have been promoted to roles of greater responsibility since joining the Walmart team,” Foran said.

Primary rules of thumb for any partnership is to know your partner and avoid unequally yoked arrangements. That was case for Rogers-based Redman & Associates founder Mel Redman who has amended his suit against Chinese manufacturing partner Sales Chief Enterprises claiming at least $40 million lost in his efforts to onshore the production of ride-on toys as part of Wal-Mart’s onshoring jobs initiative first announced in 2012.

Redman amended his lawsuit and damage claims in a federal court filing Feb. 15, on the heels of a motion to dismiss request filed recently by Sales Chief. Redman noted in the amended complaint that Wal-Mart Stores pulled its purchase commitment on Sept. 15, a deal that would have been worth approximately $70 million over a three year period.

Wal-Mart officials announced on Jan. 15, 2013, a pledge to purchase in the next 10 years an additional $50 billion in U.S.-made goods. Company officials have said they hope to boost U.S. manufacturing – often referred to as “onshoring” – by purchasing more sporting goods, apparel basics, storage products, paper products, textiles, furniture and higher-end appliances.

On Nov. 22, 2013, Wal-Mart committed to purchase a minimum of 520,000 ride-on toy units on an annualized basis in 2014, 2015 and 2016. This was the assurance Redman said he needed to invest $6 million in a new manufacturing and distribution facility in Rogers with plans to onshore the production from China over the three-year period.

The deal never came to fruition. Redman claims in the filing that Sales Chief changed terms of the financial arrangements that previously allowed for a 60-day grace period for payment once product was received by Redman and delivered to the retailer. The filing claims that Sales Chief changed the shipping terms in May 2014 with no prior warning as the product coming from China had been assigned to someone other than Redman. The suit claims Ellen Liu, principal for Sales Chief, knew this could jeopardize delivery to Wal-Mart. At the same time Sales Chief revoked its 60-day trade credit terms and required immediate full payment of all inventory on the water and in port.

Product began to stack up for weeks on the West Coast at Redman’s expense. Liu traveled to Bentonville in July 2014 and toured the Redman facility asking if there was a way to create “loopholes in the Made in the USA program, for example proposing manufacturing the 6-volt toys as substantially assembled kits for nominal assembly in the U.S.,” the filing states.

Redman’s suit states that the Wal-Mart commitment required actual and bona fide manufacturing of the products in the United States, which Liu did not like. 

Sales Chief notes in email documents included in its motion to dismiss that it warned Mel Redman in May 2014 that it was going to change the payment terms unless Redman cleared up the unpaid balance of inventory shipped.

Redman said it paid Sales Chief $60 million for product it ordered between March 2012 and April 2014. The Redman suit claims it was not uncommon for it to have large unpaid balances  with Sales Chief given the 60-day credit terms allowed. When Liu visited in July, Redman’s suit said the company asked that the 60-day credit terms be restored, noting that Wal-Mart also asked Sales Chief to restore the typical 60-day credit terms customary for trade with China.
 
FALLOUT
By last fall products were stacking up on the West Coast and Wal-Mart agreed to pay the two parties separately to get the product to its shelves. The retailer than cancelled the purchase agreement with Redman.

Redman is no longer doing business with Sales Chief and the Redman ride-on toys are no longer manufactured for sale at Wal-Mart. Redman is seeking $20 million in compensatory damages and $20 million in punitive damages along with attorney’s fees and court costs. Redman said he working to repay the debt he owes from this situation and is looking forward to his day in court.

Wal-Mart provided the following response to The City Wire about the issue between Redman and Sales Chief: “The circumstance in this situation appear to be specific to this manufacturer and its 3rd party supplier and it’s best for any comments to come from them. I will tell you that we are excited about the progress being made on our $250 billion commitment to support U.S. manufacturing and U.S. jobs. We continue to see growth in the number and type of suppliers who are bringing us products that support our commitment.”

Wal-Mart said it was not aware of any other similar problems with other onshoring 
efforts.

TRUE PARTNERS
Redman Industries and Kent Bicycles were two of the early faces of the Wal-Mart’s onshoring jobs program. 

Arnold Kamler, president and CEO of Kent Bicycles, told The City Wire that onshoring production has been a focus of his company for about four years because operating conditions in China shifted. He said having a good partner can make all the difference.

Kamler said unlike pure importers, Kent’s manufacturing plant in China is also a 49% owner in the company since 2010 when his sister sold her interest.

“I negotiated a good deal with a major bike supplier in China who is not only a manufacturing partner but also a financial partner. We will import three million bicycles this year, so the U.S. manufacturing is still a small percentage of the total business,” Kamler said.

This week Dawson Meadows updates us on a Mars Petcare expansion that could add up to 95 good-paying manufacturing jobs, insuring more than $240 million in Fort Smith city assets, and a Festival of Murals event that is being touted as an “Unexpected Project” set for Sept. 6-13 in downtown Fort Smith.

He also unveils a rap battle between city officials and those who want to change the city’s form of government ... but, well, that won’t happen. Meadows had his story wrong.

As usual, Meadows also provides some insight on Things To Do In Fort Smith.

Also, this week’s short production appears to be safe for viewing at work.