Retail sales hit $1.6 billion during 2018 in Lawrence, but spending was still sluggish
photo by: Nick Krug
Now that the calendar has flipped to 2019, we can talk about this $1.6 billion that you’ve spent. While that sounds similar to the lecture I get regarding my New Years Eve charcuterie plate (chocolate-covered almonds are expensive), I’m actually talking about retail spending in all of Lawrence. The year-end numbers are out, and Lawrence consumers topped the $1.6 billion mark in 2018.
While that may sound like a lot of money (well, not if you are the type who buys chocolate-covered macadamia nuts), it actually was not that great of a year on the retail front in Lawrence. Retail sales grew by only 0.8 percent in 2018, according to the latest figures from the Kansas Department of Revenue. Consumers really slowed down in the second half of the year. Since July, retail spending in Lawrence basically has been flat compared to the same period a year ago (up 0.1 percent, if you are actually keeping track).
December totals certainly didn’t help that cause. Sales tax collections in Lawrence were down 1.3 percent in December 2018 compared to December 2017. One note on that: You may have read where local retailers were pretty pleased with holiday sales this season. These December numbers don’t yet reflect the bulk of the holiday shopping season. There is a lag time between when retailers collect the tax, the state receives the tax, and the city gets its sales tax check from the state. So, the city’s December sales tax check doesn’t yet include sales that were made in late November and early December. Maybe the numbers will improve significantly when January’s report arrives.
The city’s 1.55 percent retail sales tax generated about $25.48 million in sales tax collections. While that was up from a year ago, it actually was significantly less than what the city budgeted to collect. Its original 2018 budget called for the citywide sales tax to generate about $26.66 million in collections. That is about a $1.1 million shortfall. But city officials saw some of this coming, and revised their budget downward to about $25.56 million in sales tax collections. Actual collections still fell short of that mark, but only by about $80,000, which is couch cushion money at City Hall. In other words, they can make that up in other areas. Plus, these likely aren’t the official numbers City Hall will use. In the past they have waited until the January collection comes in to account for that lag time I described earlier. Those of you who understand the difference between cash- and accrual-based accounting understand why (those of you want to be regaled with such explanations should have attended my New Year’s Eve party). Regardless, we’ll look at the city’s year-end finances more closely on another day.
The $1.6 billion in retail spending, though, shouldn’t be glossed over. It is a good reminder of how large of a consumer center Lawrence has become. By my count, there are only 11 cities in the state that had more than $1 billion in retail sales in 2018, and Lawrence fared pretty well on the list. Here is a look at their retail sales totals and their 2018 growth rates:
• Overland Park: $4.2 billion, up 4.3 percent
• Topeka: $2.7 billion, up 1.1 percent
• Olathe: $2.6 billion, up 2.1 percent
• Kansas City: $2.3 billion, up 2.8 percent
• Lawrence: $1.6 billion, up 0.8 percent
• Lenexa: $1.3 billion, up 10.5 percent
• Shawnee: $1.3 billion, up 2.1 percent
• Hutchinson: $1.1 billion, down 1.1 percent
• Manhattan: $1.1 billion, down 0.4 percent *
• Salina: $1.0 billion, up 0.8 percent
A few things you may have noticed. First, there are only 10 cities on that list, even though I said there were 11. The one that is missing is Wichita. It doesn’t have a citywide sales tax, so I don’t have precise numbers for its retail sales. But it likely has the most retail sales of any city in the state. Sedgwick County, where Wichita is located, had $9.1 billion in retail sales, up 3.1 percent. Wichita generates the vast majority of those sales. In case you are wondering, Johnson County is still the county with largest amount of retail sales — $11.9 billion — but they are spread out over numerous cities in the county.
Second, there is an asterisk next to Manhattan’s totals. While I can think of many reasons why Manhattan needs an asterisk, this one denotes that its growth percentage actually is for all of Riley County instead of just the Manhattan city limits. Manhattan changed its sales tax rate, so its 2018 totals weren’t easily comparable to its 2017 totals.
But perhaps the most important thing you noticed is that Lawrence’s growth rate didn’t stack up too well with many other cities on the list. Lawrence had the slowest growth rate of any community in the important Topeka-to-Kansas City corridor. That has been a trend we’ve been reporting on all year. It is a reversal of fortunes for Lawrence. For the past several years, Lawrence has been near the top of the list in terms of growth rates. So, one lackluster year may not be reason for concern. If this is the beginning of a trend, though, it will have major implications for the local economy.
What the future holds, in part, will be determined by how much Lawrence embraces the idea of becoming a shopping hub for the region. The proposed shopping center at the interchange of the South Lawrence Trafficway and Iowa Street should get its hearings before city leaders this year. That will be a big factor in what the city’s future sales tax collections look like.
The current numbers, though, do show how much a hub we already are compared to other area communities. The list below shows total retail sales (as is always the case, retail sales mean more than just things you buy in a store. For example, your utility bill includes a sales tax. It also includes items you bought elsewhere, but have delivered to your house). The list also shows the growth rate of retail sales for the past year.
• Lawrence: $1.64 billion, up 0.8 percent
• Ottawa: $238.8 million, up 2.8 percent
• Eudora: $59.4 million, up 2.9 percent
• Tonganoxie: $44.8 million, down 0.1 percent
• Baldwin City: $37.5 million, up 8 percent
• Perry: $11.3 million, down 15.3 percent
• Lecompton: $5.9 million, up 23 percent