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Rock County sees rush on retail spending

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Neil Johnson
Sunday, October 29, 2017

JANESVILLE—Ryan Poppie said a recent surge in sales at his family-owned business, Beloit Mattress Company, is the biggest in the company's 88-year history.

“Going all the way back to 1929, dollars and cents-wise, it was by far the best third quarter we've ever had -- the best sales for any quarter, actually,” Poppie said last week.

Poppie spoke between mattress delivery runs to Chicago and Kenosha. Such trips are becoming more frequent for the factory-direct mattress maker and seller on Beloit's west side.

An upsurge in orders for products Beloit Mattress makes and sells has bolstered Poppie's bottom line and upped his hopes that consumers are finally over the hump of a long economic recovery. He believes a surging economy is leading to more customers who favor local, USA-made products such as his company's mattresses.

Poppie's company was among the winners boosted by an 11 percent spike in third-quarter retail sales in Rock County, according to a Gazette analysis of sales tax receipts.

BIG SPENDING

In July, August and September, Rock County saw retail sales top $734 million, according to state Department of Revenue figures. That's the most consumer spending for any quarter in the seven years the Gazette has tracked local economic trends through its quarterly Economic Dashboard.

The surge in spending has come on faster in Rock County in recent years than even some tourism-heavy counties in the state.

Between 2010 and 2016, per-capita sales tax collections have jumped by 35 percent in Rock County, compared to a 30 percent climb in Walworth County and a 25 percent increase in Sauk County, which is home to the bulk of the Wisconsin Dells tourism area.

In 2016, consumer retail spending in Rock County was on par with statewide averages for the first time since 2010, according to county sales tax collections.

Forward Janesville President John Beckord said he believes the uptick is a sign some local residents have a growing reservoir of discretionary income, and they're spending some of it locally.

The reason might be because some local residents' jobs are now offering a bigger payday than a few years earlier.

“Anecdotally, I'm hearing that some of the major local employers have had to step up their compensation to stay competitive -- not just to recruit people but to keep the people they have,” Beckord said. “That trickles through the economy in the form of higher disposable income. For most people, it translates to higher spending.”

The unemployment rate in Rock County has hovered between 3.5 percent and 4 percent for most of 2017, which some employment analysts say means the local workforce is near “full employment.” That's given local employers no real breather in a tightening labor market.

Beckord pointed out that discretionary spending tends to come in waves, often most visible in large-scale purchases such as new vehicles. In the third quarter, Rock County had 2,160 new vehicles registered, about 1,550 of them pickup trucks, according to state Department of Motor Vehicles records.

That's the sixth-highest total for vehicle sales for any quarter since 2010, when The Gazette began tracking vehicle sales as part of its Economic Dashboard.

GO, USA?

Poppie said he remembers a time in the late 1990s when his company put two bed headboards in its store showrooms in Beloit and Rockford, Illinois.

One was a headboard made in the United States, and the other was made in China.

“The made-in-China headboards were not as well made. But the American headboards were slightly more expensive, by $6. Guess which ones nobody would buy? The slightly more expensive American ones," Poppie said.

Recently, he's running into more customers whose mentality runs the opposite direction, he said.

"I've talked to my other colleagues in the (mattress) business, and the thing we're seeing is a little bit more of a trend away from big box and return to mom-and-pop. Back in the Great Recession, it was: 'Wherever it's the cheapest, I'll buy it.'

“People are now saying they're coming to us to buy a mattress that's made here, in the USA. There seems to be a big surge of people caring where stuff is made, and that always seems to go along with more disposable income and a better economy,” Poppie said.

Poppie said better sales has helped him increase payroll for his own workers.

Beckord said a single-quarter surge in retail spending is nice to see, but it's tough to isolate exactly what's driving it or what retail sectors are seeing the biggest benefit. If pay increases for local workers are one driver, they might not continue to show the same impact.

“It's a slippery slope because a lot of employers aren't able to increase their prices. Their margins could slip if they are unable to increase their prices,” Beckord said.

HUNGRY TO SPEND

Fabian Gonzalez, general manager at Milwaukee Grill, a restaurant along the Interstate 90/39 corridor on Janesville's northeast side, said in the last three months, he's seen a boost in business, including an 8 percent jump in the restaurant's catering service.

Since the summer started, Gonzalez said he's added eight wait and kitchen staff and a manager.

“A lot of the guys that work here in the kitchen and in the front of the house, most of those guys have other jobs in town in hospitality at other restaurants. From what I've heard from them saying, other restaurants in the last three months, it's been crazy there, too, which is a good thing,” Gonzalez said.

Gonzalez said spending bounced back from a slow first and second quarter, a period when he believed restaurant spending was bridled in the wake of the presidential election.

In recent months, Gonzales said, he's seen travelers stopping off the Interstate more often, and some of Milwaukee Grill's regulars have been visiting more often, sometimes four or five times a week. Some of those regulars earlier this year had trimmed visits to once a week.

Like Beckord and Poppie, Gonzalez believes customers on average have more to spend and lately feel more at ease spending.

Gonzalez hopes the recent spending momentum carries forward into the holiday shopping season, another crucial time for the restaurant business.

“I'll tell you that I'm very excited about the holidays coming up,” he said.



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