Sales tax collections and metro population totals both have been up in Arkansas over the past year, according to Steve Goode, executive director of the Arkansas Grocers & Retail Merchants Association in Little Rock.
“The overall economy is doing slightly better than a year ago,” he said.
Sales tax collections are up by 1.8 percent versus the previous fiscal year, totaling $3.48 billion, and people continue to move to northwest, northeast and central Arkansas. But the eastern and southern areas of the state remain flat or are declining in population, he said.
Goode noted that Arkansas’ four largest metro areas had a combined 27,923 year-over-year jobs gain as of June, which was more than twice the 13,496 jobs gained in other areas of the state. The four largest metro areas are Little Rock/North Little Rock/Conway (central); Bentonville/Rogers/Springdale (northwest); Fort Smith (west/north-central); and Jonesboro (northeast).
Speaking of jobs, he added that “labor continues to be a top-of-mind concern for our retailers.”
For the first quarter of 2024, the state unemployment rate was 3.6 percent, according to arkanstats.com. The national unemployment rate as of June was 4.1 percent. So, the low unemployment rate is one factor, but on top of that, “we are challenged in some markets with a declining work force,” he said, referring to the areas where population is static or declining.
Another issue of great concern to retailers is retail crime, Goode said. To address the issue more in-depth, ARGMA held its first Asset Protection Summit earlier this year, and legislation was passed in 2023 that increased shoplifting charges on second convictions from misdemeanors to felonies.
“That should begin to help deter shoplifting,” he said.
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A long-standing soft drink tax is something his members would like to see abolished. For the last three decades or so, Arkansas retailers have paid this tax, which funds certain Medicaid programs. It amounts to 20.6 cents per gallon of bottled or canned soft drink product (soft drink syrup and drinks created from powders/bases also are taxed).
“Even though we’ve got general revenue today that would offset that,” the government doesn’t want to lose that funding, Goode said.
The tax may not be as impactful for large chains, which can dollar-cost-average it across thousands of stores. But for smaller grocers, it typically shows up in the price at the shelf, which puts them at a competitive disadvantage.
“It’s a real cost that we, in turn, have to pass on to our consumer,” he said. “We are adamant that we try to get that off [our members].”
Many of AGMRA’s members also would like to see a vape registry bill passed in Arkansas to cut down on vape products with indeterminate, or possibly illicit, ingredients being sold in the state. Other states have passed similar bills, so there are models to follow, and there are Arkansas legislators who are on board, Goode said.
The goal is to eliminate vapor products “that we have no idea what’s in them. They’ve not, in many cases, gone through the PMTA (Premarket Tobacco Product Application) process with the FDA, and I think that that’s something that as retailers we will push for. [The product maker] may not be PMTA approved, but you’ve at least got to have an application in at the FDA; otherwise we don’t think you ought to be able to sell in the state.”
Grocers would like to be able to sell higher alcohol content beers and premixed beverages that contain spirits in order to level the playing field with retail outlets that are allowed to sell them. While grocery stores – where the locality allows – can sell wine with 15 percent alcohol content, beer is capped at 5 percent, and no beverages that contain spirits can be sold in Arkansas’ grocery stores. Customers seeking these items have to look somewhere other than their local supermarket.
Despite the challenges, “I’ve got a good group of retailers to work with, and we’ve got great relationships at the capitol, so it’s made for a good deal so far,” Goode said.
No major changes
While there have been no major changes to the Arkansas grocery landscape over the past year, there have been some developments, according to Goode.
Discounter Aldi opened three stores (in Conway, Springdale and West Little Rock); Edwards Food Giant debuted a new location in a remodeled Stein Mart this past April; Harps opened a store in Brookland; and others have remodeled and/or expanded sites. Still others are “examining markets” to decide on future plans, he said, adding that high interest rates have caused some retailers to slow remodel or expansion plans.
“The Arkansas independent grocery business is good, but not great. Most retailers are showing flat to modest sales increases year over year,” according to Goode, who is a grocer himself. His company has two stores in north central Arkansas – Clinton and Damascus – operating under the Goode’s Cashsaver banner.
Goode opened the Clinton store in 2012. It was converted from a Harvest Foods to the Cash Saver cost-plus format. He opened his second store in 2017 in a former Walmart Neighborhood Express store in Damascus that had been empty for about 18 months. Even though it’s a small-format store, they’ve made room for Damascus Drug to operate inside the store, and there’s a fuel center on the corner near the store.
“It’s kind of a one-stop shop for that 300-population [town] and then a little bit of a draw area” outside Damascus, he said.
Both have done well, and “we’re very blessed to still be in the business,” Goode said.
The Arkansas grocery industry continues to hold its own “in a market that is dominated by the largest retailer in the world,” he said.
Walmart, as of April 29 this year, operated 131 stores in the state, including 76 supercenters, five discount stores, 32 Neighborhood Markets, 11 Sam’s Clubs and seven pharmacy format stores.
