Last updated on August 16th, 2012 at 12:08 pm
[gn_note color=”#FFCC00″]The 2011 Indiana Profile originally ran in the April 2011 edition of The Shelby Report of the Midwest. Due to reader requests we will be posting our Profiles from each edition of The Shelby Report. The profile will be published on theshelbyreport.com one month after it has run in print.[/gn_note]by Terrie Ellerbee/associate editor
Things just get curiouser and curiouser in Midwest statehouses. Add Indiana to the list of states with lawmakers hiding out in Illinois. With House Democrats holed up outside the state, the Indiana state legislature is trying to complete work on its 2012-13 budget bill.
The brouhaha started when Republicans introduced a “right-to-work” bill, House Bill 1468, which would give members of private-sector unions the right to opt out of unions and not pay dues.
In protest, the Democrats fled to Urbana, but that is just one issue keeping the Democrats out of state. As of late March, Democrats remained in Illinois to protest restrictions on teacher collective bargaining that passed in the Senate. They also want changes to bills that impact collective bargaining for labor unions. They also don’t like the education budget. All told, the Democrats have a list of about a dozen issues they very strenuously oppose.
Republicans say they will not negotiate any changes.
The battle in the Indiana capitol, as opposed to that in Wisconsin, has little to do with the governor.
Gov. Mitch Daniels, a Republican who may run for U.S. president, said he supports the right-to-work bill the House Republicans introduced, but suggested that lawmakers not pursue it because of the stalemate threat, according to the nonprofit Sunshine Review.
Grant Monahan, president of the Indiana Retail Council (IRC), describes Daniels as “a very shrewd political individual and very intelligent guy who knows exactly what he’s doing.”
But the legislative division happened regardless of input from the governor. The divide leaves behind, first of all, a failure to pass a budget. The Indiana Senate has taken up where the Ways and Means Committee left off because that’s as far as the budget got in the House.
“It’s critical, certainly, that we pass a budget and have that in place by the beginning of the fiscal year, which is July 1,” Monahan said.
He said that what lawmakers in the Senate will do is to amend, or add on, items to the bills that did make it through the house. This will make it a real challenge to keep track of where issues are in the legislative process. There are two items relative to grocery retail.
One issue affects supermarkets with in-store pharmacies.
“We’ve lost one bill dealing with giving pharmacists more authority to do immunizations,” Monahan said. “That House bill died when the Democrats walked out.”
Another issue, and the one at the top of the grocery retail agenda, is Sunday sales. There has been a push to permit grocery stores to sell alcoholic beverages on Sunday—and to permit them to sell cold beer. They currently can sell beer that isn’t cold, and they can sell cold wine, but not on Sundays.
Drug stores in the state can sell beer (not cold), wine (cold) and liquor, and also aren’t allowed to sell alcohol on Sunday.
“It was an important issue for us—to have the ability to permit drug and grocery stores to sell on Sunday and to sell cold beer,” Monahan said. “Our opponents there are liquor store owners who can sell cold beer. They have a monopoly on that privilege to sell cold beer for carryout and they don’t want to lose that monopoly, and they don’t want to be open on Sunday, they claim, because they want the day off—which is sort of amazing in this day and age. Go ahead and take your day off if you want to. You aren’t mandated to be open. But I would think as tough as retailing is you want to take every opportunity you can.”
Monahan said the IRC still would try to get language favoring Sunday sales inserted into a bill in early April. The IRC’s challenge is working its issues into legislation that already is confusing.
“There are some other things that we’re trying to accomplish, but now what everybody’s trying to do here is take whatever House bills are still alive in the Senate and load them up with other bills that are being killed in the House.
“The process … is going to get even more confusing for people to follow. ‘Where is Issue A? What bill is it in?’ It’s going to be hard to track. You’re going to have House bills in the Senate that are going to be loaded up with all kinds of different subject matter, which is very, very unusual for our legislature and particularly for the Senate.
“The Senate has traditionally held to pretty strict germaneness rules. But they’re going to have to relax those rules if we’re going to get anything accomplished his session.”
Another issue Monahan feels strongly about is requiring internet retailers to pay the same sales tax that brick-and-mortar retailers do.
“Our sales tax rate here is 7 percent, so our retailers are at a 7 percent disadvantage,” Monahan said. “We have a proposal that we’ve been shopping around all session long. It’s not in a bill yet unfortunately, but we have language that would define nexus or an internet retailer’s presence in Indiana in one of two ways—either by their physical presence here … or through affiliates—advertisers that help you and I up to differing sites when we’re surfing the web.”
Internet retailer Amazon has two distribution facilities in Indiana and many affiliates.
“Clearly, Indiana and every other state in this country is losing a significant amount of sales tax revenue because internet retailers are not collecting and remitting that tax,” Monahan said.
Overall, it is anyone’s guess as to exactly what will make it through the legislature this year.
“There is a lot going on in Indiana, particularly … in the House of Representatives that was making some very significant changes to how we do things here, and the Democrats are concerned about it,” Monahan said. “And since they’re in the minority, there’s not much they can do about it except walk out.
“But to have them walk out for as long as they have and to take the dramatic step to actually leave Indiana and hole themselves up in Urbana, Ill., is kind of amazing.”
Economic indicators fall in February
Like many other states, Indiana faces a deficit. Its $1 billion shortfall, however, includes $500 million to build up reserves.
The state had $1.3 billion in reserve, but drew on it to balance the current biennial budget, which runs through June 30.
Meanwhile, the state’s economy has improved over the year, but there are hiccups and hurdles to overcome.
In February, the Leading Indiana Index (LII) dropped for the first time since August last year, according to the Indiana Business Research Center (IBRC), Indiana University Kelley School of Business. The LII focuses only on sectors specific to Indiana’s economy, including the Manufacturing Purchasing Managers Index (PMI), Unfilled Orders for Motor Vehicles and Parts and the Dow Jones Transportation Index.
“Indiana’s economy historically has been heavily dependent on manufacturing,” Monahan said. “The state of Indiana has lost a significant number of manufacturing jobs.”
The LII also takes into account the Housing Market Index and Interest Rate Spread. The index dropped significantly in February.
“This month is a reminder that it will be a rocky road to recovery,” the IBRC report stated. “Consumer sentiment hit a giant speed bump in February.”
The Reuters/University of Michigan consumer sentiment index hit a post-recession high of 77.5 in February and then slid to 68.2 in March—the largest drop since the financial crisis began in 2008. The consumer expectations index fell more than 13 points, from 71.6 to 58.3.
“March’s reading seems to show that many Americans now think that the U.S. economy has taken a dramatic turn for the worse,” the report states.
On the retail side of the automobile sector, one very important to Indiana’s economy, dealership floor traffic was up nearly 14 percent in early March this year vs. March 2010. The recent tragedies in Japan, however, could impact automobile manufacturing at least temporarily.
“We certainly have felt the strong impact of the recession over the last two to three years,” Monahan said. “We’re beginning to make some strides. Unemployment here is beginning to drop a little bit. The Daniels administration continues to work hard at job creation.”
The state’s unemployment rate in February was 8.8 percent, down from 9.1 percent in January, and down from its recent peak of 10.9 percent in June 2009. Indiana’s jobless rate was at or above 10 percent from March 2009 until September 2010, when it fell to 9.9 percent.
Personal income grew more quickly in Indiana than in any of its Midwest peers in 2010. Income earned in Indiana totaled $226.5 billion, a 3.68 percent increase vs. the previous year. That put Indiana eighth in the nation in income growth.
Per capita income increased, too, by $8 billion, but the workforce shrank, which suggests that higher-end workers probably made higher salaries. In the state rankings in this category, Indiana stayed at 41st, with the average per person income at $34,943, up 2.6 percent vs. 2009, but still $5,600 lower than the national average, according to STATS Indiana (www.stats.indiana.edu).
Local retailers expand operations
With the state’s economy inching toward recovery, retailers are capitalizing on opportunities to expand.
Late last summer, Strack & Van Til and WiseWay Foods bought all four Wilco grocery store locations in the state: in Cedar Lake, Lowell, Rensselaer and Winfield.
Terms of the transactions were not disclosed, and as for why Wilco was sold, Linda Armstrong, president, said only that the change in ownership would allow her to focus on her personal interests.
Highland-based Strack & Van Til took over at Wilco County Markets in Lowell, Rensselaer and Cedar Lake.
Dave Wilkinson, president of Strack & Van Til, said the purchase allows the company to expand into the southern portion of Northwest Indiana, because more stores are already concentrated in the middle and northern tiers of the area.
By the end of March this year, Wilkinson hoped to complete a $2 million-plus makeover of the Lowell store.
“Recession or not, we have to make sure it has the look and feel of a Strack & Van Til store,” Wilkinson told nwitimes.com.
The extensive remodel includes new flooring, displays and décor.
Wilkinson told the Post-Tribune that Strack & Van Til has seen a better-than-expected rise in the number of shoppers since his company took over the Lowell store.
“We’ve seen some nice increases,” he said. “We’re investing a lot to get that return.”
A similar remodel is under way at the Rensselaer store. New, state-of-the-art, energy efficient freezer, meat and dairy cases have been installed in that store.
Both stores will get new checkout lanes and registers and fresh service seafood counters. A new service has been added as well: customers may get their seafood purchases cooked while they shop.
The Rensselaer store also will get an expanded break room and bigger restrooms as well as a new customer service counter. Work there also was to be finished by the end of March. The third store, in Cedar Lake, has been closed since Strack & Van Til bought it. It will be reconstructed. “We’re working on developing plans there,” Wilkinson told the Times. “It’s a unique site. … There are a lot of challenges.”
Most have to do with easements with adjacent properties, the paper reports.
Wilkinson said the company continues to look for acquisition opportunities.
WiseWay took over at Amelia’s County Market in Winfield and expanded the meat department and added an organic section. It is the fifth store in the chain.
Don Weiss, president of WiseWay Foods, said the purchase of Amelia’s complemented its network of stores in northwest Indiana. The company also operates WiseWay stores in Valparaiso (two), Chesterton and Hobart, as well as three PayLow discount grocery stores and a Wise Guys liquor store.
Indianapolis-based Marsh Supermarkets, owned by Florida-based Sun Capital Partners, closed a store in Rushville on Jan. 7. It also announced that it would close its store at 1015 E. State Rd. 44 in Shelbyville and a store in Connersville by the end of February.
It was the latest in a series of closings for Marsh, which shuttered stores in Rushville, Noblesville and Indianapolis in recent years.
(It also was the latest in a series of closings for Shelbyville. The Indianapolis Business Journal reports that other grocers closing stores there from January 2010 to January 2011 included Kroger, Walmart and Aldi.)
Marsh also consolidated two stores in Connersville into one, the company announced in January, leaving a Virginia Avenue store that would be converted to a MainStreet Market. Stores in Lebanon, Wabash and Franklin all were given the new MainStreet Market name last November.
The company said it was a move to distinguish smaller Marsh Hometown Market stores from the larger and more upscale Marsh the Marketplace stores.
“Operating under the name MainStreet Market will enable us to take the best of what Marsh stands for in these communities and add a much more customized marketing approach for these stores,” said Frank Lazaran, Marsh chairman, CEO and president, in a press release. “Consumer research has consistently indicated that while our initial strategy aimed to better position and differentiate our stores according to their size and varying consumer demands, the fact that both banners continued to operate under the Marsh name limited our ability to do so.”
Kroger brings Marketplace to Indiana
The Kroger Co.’s Central Division has been working on major building and remodeling projects in the Fort Wayne market. A year ago, it announced a $100 million, five-year plan that included the first Marketplace store in the state.
In January this year, the division announced that its 601 E. DuPont Rd. store in Fort Wayne was ready for a major expansion and remodel into a 123,000-s.f. Marketplace format—the state’s first.
A Scott’s banner store at 710 E. DuPont Rd. has been reconfigured to handle traffic from the 601 E. DuPont store during the expansion work. Once the Marketplace is open—with completion expected this September—the Scott’s on East DuPont will close.
The Scott’s banner store at 5725 Conventry Lane will be replaced by a second Marketplace store at Village of Conventry. Once that Marketplace transition is complete, the Kroger store at 8801 US 24 West will be closed.
Last summer, Kroger completed a $14 million renovation project on its Georgetown Square store at 6310 E. State Blvd. The 60,000-s.f. store’s banner changed from Scott’s to Kroger. Updates included a new façade, flooring, coolers, freezers, an olive bar, expanded soup island and a gas station, The Journal Gazette reported.
Last September, Kroger celebrated the reopening of its Southgate Plaza store in Fort Wayne after it got a $2.8 million makeover.
On Nov. 4 last year, Kroger held a grand reopening for its 6002 St. Joe Center Rd. location in Fort Wayne.
Kroger also is expanding its convenience store subsidiary, Turkey Hill Minit Markets, in Indiana. The first Indianapolis store opened last fall and the company has plans to open five more by the end of this year, reports the Indianapolis Business Journal.
On March 26, Kroger closed an Elkhart store at the corner of Fulton and Nappanee streets. The move will consolidate three locations to two in the city.
Kroger spokesman John Elliott told eTruth.com the company made a similar move in Kokomo several years ago. It could not sustain its three stores there when the economy contracted.
“We focused our effort on making two stores more successful,” Elliott said.
On the wholesaler side, grocery distributor Nash Finch, via its wholly owned subsidiary Grocery Supply Acquisition Corp., invested more than $10 million to buy and retrofit a 300,000-s.f. facility at 311 N. Curry Pike in Bloomington last year.
The plant came online ahead of schedule and houses the company’s MDV division, which serves military commissaries.
