Gov. Mike Beebe, Rep. Warwick Sabin, D-Little Rock, and AEDC director Grant Tennille revealed a $575,000 grant to the Arkansas Regional Innovation Hub, which held a “wall breaking” ceremony at a downtown North Little Rock building that will house the group’s efforts.

The building will be remodeled to allow for an entrepreneurial program center that will feature a network of resources, programs and education opportunities to attract, develop and retain emerging Arkansas talent.

“The nature of our economy is changing, and if our state wants to compete for the best and brightest minds, we need to change the way we think and do business,” Gov. Beebe said. “The Innovation Hub attracts those who think outside the box and who will forever change the economic climate in the area. They will be our business leaders of tomorrow.”

The innovation center combines maker space, education and arts programs, and entrepreneurial advisors and resources. Its aim is to create work space for entrepreneurs to experiment and share resources in an effort to grow start-up companies.

It is modeled after New Orleans’ Idea Village, which has provided direct support to more than 3,000 entrepreneurs, generated more than $100 million in annual revenue, and created more than 2,000 jobs in New Orleans since its inception in 2000.

“Our new Innovation Center builds on the best practices from successful national models to create a broad set of resources for people of all ages here in Central Arkansas,” said Rep. Sabin, executive director of the Arkansas Regional Innovation Hub. “We will provide the opportunity for everyone to discover and develop their interests and talents and unlock their unlimited potential.”

Recently, the innovation center also received a $250,000 grant from the Delta Regional Authority.

A U.S. Chamber of Commerce official warned an Arkansas audience that overregulation of fracking practices in the oil and gas industry could cost jobs, tax revenue, and the overall economy.

Karen Harbert, the president and CEO of the U.S. Chamber Institute for 21st Century Energy, was a featured speaker at an Arkansas State Chamber of Commerce/AIA luncheon held at Heifer International’s world headquarters.

Harbert touted a litany of energy statistics that highlighted that in the next 35 years the world’s electricity demand will increase by 140%. Harbert also noted:
• The oil and gas industry created 9% of all American jobs in 2011;
• Oil imports are expected to decrease 60% by 2020;
• Oil and gas production has led to an American manufacturing renaissance as well as a return of chemical, fertilizer, and steel industries.

She said that the natural gas “fracking revolution” has helped feed the nation’s energy demand. Harbert said that Arkansas is now the No. 4 natural gas producing state in the U.S., according to recently released 2013 data from the U.S. Energy Information Administration (EIA). According to a “marketed production” report from the EIA, Arkansas ranked 8th in 2012 in natural gas production.

During the past decade, shale gas production has risen from two percent of the nation’s energy mix to 30% today. That number is expected to rise to 50% by 2035. But Harbert said regulatory intervention by the Environmental Protection Agency (EPA) could undermine that trend.

“What if the 13 federal agencies looking to regulate fracking are successful?” she said. “We have to keep it attractive.”

Harbert said a Colorado ballot initiative to allow local governments to supersede state fracking laws could also be detrimental if other states follow suit.

According to Harbert, Arkansas’ natural gas industry is expected to create 52,000 new jobs and produce nearly $900 million in tax revenue by 2020.

A relatively higher price and the continued production of natural gas from existing wells resulted in a record of $62.685 million in Arkansas’ gross natural gas severance tax revenue during 2013. The tally was up more than 53% compared to 2012 collections and up more than 6.4% over the previous high set in 2011. In 2009, the first year of the severance tax hike, Arkansas joined the list of the nation’s top marketed natural gas producers when sales of Arkansas natural gas spiked 57.5% to 690 billion cubic feet (Bcf). Arkansas natural gas sales rose another 36.1% to 939 Bcf of annual production in 2010, according to figures from the Arkansas Department of Finance and Administration and the federal Energy Information Administration.

Harbert also touted that coal, gas, oil and nuclear power must remain a crucial component of the nation’s energy policy. She said that there is no quick or easy way to remove U.S. dependence on low-cost coal as a fuel for generating electricity despite efforts to replace it with alternative fuels.

“The dinner party is still going to be the same,” she said. “”We’re going to need it all.”

Harbert is a former assistant secretary for policy and international affairs at the U.S. Department of Energy (DOE). She was the primary policy advisor to the DOE Secretary and to the department on domestic and international energy issues, including climate change, fossil, nuclear, and renewable energy and energy efficiency.

Scott Hamilton, director of the Arkansas Energy Office at the Arkansas Economic Development Commission, said Harbert’s message is a welcome discussion in the state.

“The points she made are very valid,” he said. “We have to have an energy focus in the U.S., and Arkansas has to continue to find ways to educate [this need] at the local level.”

The U.S. Chamber has developed a nine-point action plan for U.S. energy policy.

Northwest Arkansas is becoming a hotbed of innovation for startup ventures looking to make a name for themselves among an impressive junior alumni group such as Amy Callahan of Collective Bias, Jay Howard with I.O. Metro or John James and Terry Turpin of Acumen Brands.

“The past five years have been incredibly remarkable with the velocity of entrepreneurial startup ventures in the region,” said Jeff Amerine, director of technology ventures at the University of Arkansas.

An ecosystem of support has evolved, also, with at least five active angel investment funds to help with seed money and early stage capital. Equally important, Amerine said, there is active engagement from the state level down to local chambers of commerce from leaders who understand the importance a thriving entrepreneurial sector can have for moving the economy forward.

The downturn in the economy was the catalyst for this local movement and now that the “flywheel” is in place, Amerine said sustaining high levels of intensity could be a challenge, although there is no sign yet of a letdown. Longer-term, he said, the region must commit to educating future technical talent beginning in grades K-12 to make sure there is an ample workforce with specialized technical skills.

“Startups that grow require more talent. Without it, the region and state run the risk of losing those companies to areas with more abundant technical centers,” Amerine said.
“It is good to hear our local schools and two-year colleges making commitments in these areas.”

WIth respect to funding, Amerine said it’s always hard for startups, but there are more options for local companies than ever before. He said the angel fund networks are applying more rigor to their selection and investment process and hope to work more with private equity capital partners in the future with $1 million to $2 million stage investments, a level that has been lacking.

More than 300 startups launched in Northwest Arkansas in the last five years, raising more than $190 million in funding to do so. Amerine said the bulk of that capital was raised last year and put the region on the map as a viable place to start a business.

“There is no shortage of ideas in this region and the state. We continue to see really strong candidates and some solid business plans presenting for capital infusions,” said Ramsay Ball, an angel investor and mentor for several startup ventures in the region.

With the help of entrepreneurial advocates like Amerine and Ball, The City Wire has tagged five new companies in various early business phases as the ones to watch in 2014. Oh Baby Foods, Overwatch, Silicon Solar Solutions, EcoVet and DataRank were selected because they have talent, capital and ideas — three main ingredients necessary for success, according to local advocates and investors. Some of these five startups may thrive for years, some may get acquired and some may fizzle. (Videos from four of the startups may be viewed at the end of this story.)

OH BABY FOODS
Oh Baby Foods and its founder Fran Free are dubbed the pacesetter for this year’s class. She launched Oh Baby Foods in 2009, armed with two college degrees, a baby on board and $50,000 of her own money. Product hit the shelves on daughter Lucy’s first birthday.

Free said she toted Lucy from store to store as she tried to sell her way into the retail space. Oh Baby found a following, but keeping up with the growing demand for the product has not always been easy.

Free almost quit two years into the effort. She developed a frozen baby food product that was offered in several retail outlets, but profits were nil and the seed money was almost gone. That’s when an angel investor stepped in and provided the capital she needed to reformulate the product to go on the shelf in the baby food aisle. Free worked with Whole Foods to get additional funding in 2012 to convert to squeeze packets and the retailer put in her more than 200 stores across the country.

“Sales are up 1,113% in our Whole Foods business since we went to the squeeze packets in September,” Free said.

She said Whole Foods accounts for 40% of her business, and she has retailers regularly calling and wanting the product. Free said she has secured a line of capital from Arvest Bank, but is at a crossroads that requires carefully evaluation of how the capital is used.

Expanding into regions like the Northeast U.S. is costly, she said, but there are many offers from specialty stores in the area or moving to the area. Working with food brokers and distributors, Free said there would be numerous fees and promotional costs associated with taking on a new retailer in a region far away from her processing production in California.

Free recently hired a new "options analyst,” someone who carefully evaluates all the options for future distribution the company receives each week.  

"We are having to turn down retailers. We want to grow, but we are being cautious about how fast," she said. “We have four employees and just moved to a new office in the Three Sisters Building in downtown Fayetteville.”

Free said the future is bright for Oh Baby, but getting a handle on how many stores and retailers they serve is a constant challenge as there is limited inventory and sales visibility with 60% of her wholesale customers.

“I was eager enough to fake what I didn’t know in those early years, but the business is becoming more complicated as it grows. There is a lot to process mentally each day. We are a close team and we are working really hard to make the best decisions for the company’s future,” Free said.

ECOVET
EcoVet began as S.A. Concepts in 2012, a startup venture dedicated to provided liveable wage jobs for military veterans also trying to get a college degree. S.A. Concepts initially hoped to secure nonprofit status as a workforce program but because the employees were manufacturing a product for sale, the company was denied non-profit status.

Drake Vanhooser, co-founder of S.A. Concepts, said last year the company was approached by EcoArt 360, a locally based supply chain management company that took over ownership of the workforce venture. At that time the name was changed to EcoVet and the focus moved from making aero dynamic skirting for semi trailers to crafting wood furniture that could be sold to furniture retailers.

EcoVet takes old semi trailers headed for the graveyard, breaks them down and reclaims the maple and oak planks that make up the trailer flooring. They sell off any extra scrap metal and use the wood for their furniture. EcoVet employs nearly 30 full-time workers, running two shifts a day in their Springdale facility. The workers have the capacity to break down three trailers a day.

Vanhooser said the company sources its trailers from Wal-Mart and several large trucking companies which is challenging because they are often located hundreds of miles from the Springdale manufacturing center.

He said these are interesting times for EcoVet as they have been building up inventory to take to Sam’s Club for a Road Show next week in San Antonio at a new club opening.

“We have 24 of these Sam’s Club opening Road Shows to do in the next few months and hope this will lead to the retailer purchasing the product for online or in club merchandise. We are working with two other prominent furniture, home furnishing retailers about carrying the EcoVet products,” Vanhooser said.

The 2014 goal for this company is to ramp up sales, so more veterans can be hired.

DATARANK
Harnessing the power of big data, Ryan Frazier and his DataRank team help companies sort through social media feeds to better understand the power and influence of their brand and company image within the cyber world.

Frazer and co-founders Kenny Cason and Chuong Nguyen started the company they first called TTAGG while in college at the University of Arkansas in the fall of 2011. Frazier said they changed the name to DataRank last year because they felt it better told their story.

In two and a half years DataRank has been able to market their analytical dashboard software to numerous customers, namely consumer packaged goods (CPG) brands such as Clorox and Callaway Golf.

DataRank uses nine dimensions that they divide into two categories: content influence and user influence. They then prioritize the best, most actionable information from the content feeds.

Frazier said DataRank’s strength is its ability to take cumbersome data sets and make them more manageable. While the startup pales in comparison to well-known data analytic firms such as Nielsen, Frazier said the sector is still ripe with opportunity.

Since founding the business, the company has grown to nine employees with plans to ramp up to 12 in the next few months. They recently closed a deal for $1.4 million in funding and are looking to add a smaller investment in the next few months from a local angel network. Frazier said that should be adequate funding for a couple of years as DataRank continues to grow its customer base. Sales grew 350% during 2013 and Frazier said the company is profitable.

Frazier sees the big data industry only get bigger. He said it took time to get the technology scaleable, but now that it’s available, DataRank is signing partnerships with agencies and marketing firms in addition to signing on new CPG customers.

A recent study of 75 North American retail executives found that 46% of retailers considered the volume of information they had to deal with to be their biggest challenge. That creates an even bigger need for companies like DataRank.

SILICON SOLAR SOLUTIONS
Silicon Solar Solutions, co-founded by Douglas Hutchings in 2008 while he was a graduate student at the University of Arkansas, has grown from a class assignment into a nationally recognized solar technology company with a spinoff startup known as Picasolar.

Hutchings later earned his doctorate and has expanded the company to eight employees, all with advanced engineering degrees. In October, Silicon Solar received a SunShot Incubator Award from the U.S. Department of Energy. The award came with $500,000 in funding which was targeted toward early-stage assistance for startup companies seeking to commercialize their inventions.

The company has developed patented solar technologies since 2008, subsisting on private capital raised along with numerous grants and awards at the state and federal level. Silicon Solar Solutions also licenses core intellectual property to existing solar manufacturers. The recent award is for a patent-pending process that will increase the efficiency of solar cells.

“Our goal is to prove our technology on industrial cells and work towards Arkansas-based manufacturing of the equipment,” he said.

The newest technology is a self-aligned hydrogenated selecting emitter for N-type solar cells that was invented by Seth Shumate, the chief technology officer for Silicon Solar. This product could improve the efficiency of solar cells by 15% and save an average-sized solar panel manufacturer $120 million annually and make solar energy more affordable for consumers, Hutchings said.

The emitter is marketed through Picasolar Inc., a sister company that shares the same senior management and board of directors as Silicon Solar Solutions.

Hutchings said the company’s next move is to raise $2 million from private investors or strategic partners. This would help Picasolar partner with an equipment manufacturer to prove if the technology can be scaled for production in the marketplace.

The SunShot Initiative is a collaborative national effort to drive innovation to make solar energy fully cost-competitive with traditional energy sources before the end of the decade.

“As part of the SunShot award we have access to the testing labs affiliated with the Department of Energy, which is helping us speed up the process to manufacturing phase,” Hutchings said.

OVERWATCH
The new kid on the block in this group of local startups is 17-year-old Josh Moody, CEO of Overwatch. He is finishing his senior year at Little Catholic High School and helping to scale-up his company that was an idea only eight months ago.

Moody’s idea marries video game play with physical outdoor activity such as laser tag, airsoft and paintball. Moody said it’s a $70.4 billion market, $19.1 billion of which is combat video games.

He took his idea to RevUnit, a software development company in Bentonville, in hopes of hiring them to create the application. But Joe Saumweber and Michael Paladino of Red Unit loved the idea so much the three of them partnered together and decided to toss the business concept into the ring for the ARK Challenge.
arkchallenge.org/

In that 14-week competition Overwatch secured a partnership with Cybergun for the gun hardware rights and distribution, which will give them access to online stores and 9,000 store fronts where they do business, including Cabella’s and Wal-Mart, Moody said.

Overwatch was one of three ARK Challenge winners selected in September. Since then, Moody and team have been developing the application, which is 90% complete for iOS and Android smart phones. Along with the application, Overwatch has developed a casing for the phone that attaches to the gun.

“We are working on the final design prototype for the casing that will be manufactured by Cybergun. Once the app is complete we have about 70 users designated for beta testing. We should be to that phase in the next couple of months,” Moody said.

He expects the commercial product launch of the hardware casing will to happen later this summer. The app will be a free download with the purchase of the casing. Overwatch plans to upsell premium gaming services to frequent users for added revenue.

He said the startup has raised $170,000 in capital funding with plans to secure up to $450,000 more in the next few months as they are pitching to several of local angel networks.

“Overwatch is approaching a vital point as we begin testing and prepare to launch the app and case simultaneously later this summer. From idea to manufacturing in just 8 months is a rapid ramp-up,” Moody said.

Wal-Mart’s Mexican business unit, Walmex, did not have much to cheer about last year, as comp sales throughout Mexico were down between 2% and 4% every month. But despite those problems, the retailer plans to invest $1.8 billion in expansion efforts this year.

David Cheesewright, the new CEO of  Walmart International, said consumers around the world are stressed, with “significant slowdowns” in numerous markets, including the faster-growing developing countries.

Fortunately the operating climate in Mexico is showing signs of recovery and Cheesewright said the retailer plans to make hay during the sunnier times.The retailer expects to spend $633.38 million opening new stores, adding 3.7 million square feet of space. Mexican floor space will grow 5%, with Central American stores expanding 7.6%.
The plan calls for $263.9 million dedicated to remodeling and maintenance. It will devote $90.48 million to logistics and $143.26 million to e-commerce and other technology. Cheesewright and his executive team in Mexico made the announcements during an investor conference in Mexico City on Monday (Feb 24).

The Mexican market is important to the retailer’s overall international portfolio which Cheesewright characterized as “big and complex,” operating 6,300 stores in 27 countries under around 300 banners. If Walmart International stood on its own, it’s $136.5 billion in annual sales would make it the world’s second largest retailer behind Wal-Mart, Cheesewright said.

He said the retailer must move faster to ensure it has the products, shopping formats and conveniences that consumers want when they realize they want it.

“We have to be there when the customer arrives,” Cheesewright said.

LOOK AHEAD
Wal-Mart executives note ample growth opportunity as the population decline from recent years has stabilized at 1.2% annual growth in the past two years. The population of Mexico is young, which means there will be a demographic bonus of 10 million more adult consumers within the next five to 10 years. More women are also working, but adds to household buying power, the executives said.

The retailer’s food and grocery business, and small store formats are performing well and there is a push to expand e-commerce toward general merchandise. The retailer launched general merchandise on e-commerce just this past summer.

Cheesewright said Walmex still sees potential pressure on profit margins from a new tax on high-calorie food and beverages, and an increase of value-added tax in border cities from 11% to 16%. 

“We expect moderate improvement in the economy, driven by government investment and increased remittances from the U.S.,” he added.

Walmex execs also continue to look for alternatives to strengthen financial service products for customers. The retailer recently ended its relationship with BBVA Bancomer, who issued co-branded credit cards for the Walmex.

SAM’S TURNAROUND
Sam’s Club in Mexico represents 27% of Wal-Mart’s Mexican business, and 22% of Walmex overall which includes Central America.

The warehouse club reported negative 4.4% comps during all of last year losing sales among its Advantage members and its wholesale members. The retailer operates 156 clubs in Mexico and says there is room for more growth.

There are major changes under way to win back Sam’s Club shoppers throughout Mexico, according to the company. Execs with the retailer said they will focus on price, excitement, bulk and quality for Advantage members who shopped elsewhere last year.

Sam’s Club said it lost sales to department stores, competitor club, and drug stores last year because it did not meet shopper expectations. Going forward Sam’s said it is focused on treasure hunt excitement as well as luxury and fresh consumables — bakery, deli and Sam’s Cafe.

The retailer plans to leverage it’s relationship with Sam’s Club U.S. to work more exclusively with top brands in apparel, food and luxury. Lastly, Sam’s Club Mexico is relaunching its e-commerce site, something that is sorely needed, the executives said.

WALMEX INFO, HISTORY
Walmex operates 2,199 stores under eight banners employing 248,373.
1991: Wal-Mart opened its first store outside the U.S. — Sam’s Club in Mexico City.
1997: Wal-Mart acquired a majority position in Cifra.
2000: The name changed to Walmart de México (WALMEX). 
2006: Walmart de México received a banking license in Mexico.
2007: Banco de Walmart began operations with 16 branches in five states of Mexico. 
2009: Walmart de México acquired Walmart Centroamérica, expanding its presence to six countries and becoming Walmart de México y Centroamérica.

Peco Foods Inc. has acquired Townsends’ poultry plant, feed mill and hatchery in Batesville. Peco also said it will purchase selected inventories, according to an announcement by Mark Hickman, CEO of the Tuscaloosa, Ala.-based poultry company.

“We are pleased to add the Townsend Foods complex in northeast Arkansas to our operations,” Hickman said Friday, (Feb. 22). “The Batesville plant is very similar to our complex in Sebastopol, Miss., and will fit seamlessly with our overall market strategy and growth plan.”

The deal was transacted through the bankruptcy court auction and is slated to today, (Feb. 25). 

Peco Foods is the 8th largest poultry producer in the United States and privately held and family operated. The company has a processing capacity of 24 million pounds of poultry per week in its six other slaughter and processing plants located in Alabama and Mississippi.

Plans for a third Fort Smith high school are coming under more scrutiny after a Monday (Feb. 24) school board meeting in which a group of concerned residents requested more due diligence be done before the district ultimately decides that another high school is needed.

Plans for a third Fort Smith high school have been discussed for some time, though a formal pitch for the more than $65 million high school was made at a January school board meeting.

At the time, Dr. Benny Gooden said the district needed a new high school due to continued enrollment increases in the district coupled with an eventual plan to re-align the schools to have freshman be on high school campuses instead of the current configuration, which places freshman in the city's junior high schools.

According to Gooden, the district's current population of 14,313 students was expected to blossom to about 17,000 students by the year 2023, which would necessitate the re-alignment.

Sam Sicard, president and CEO of First National Bank of Fort Smith, was among a group to express concerns with the plan. One of the primary points Sicard makes is financial.

"The concern that we have is with all the operational costs of a third high school," he told The City Wire on Tuesday (Feb. 25). "We don't know what the operational costs of Northside and Southside (High Schools) are, but we guess it's a pretty large number. As students increase, you'll increase operational costs."

Sicard said the concern among himself and about 20 others, including several prominent members of the Fort Smith business community, include the costs not only of a building, but also funding extracurricular facilities, such as gyms and activity centers, as well as administrative offices. The additional costs trickle down all the way to office staff and coaches — all taking away from funding that could go toward academics if the district did not construct a new high school.

The group also expressed concern in a memo to the school board about the impact that developing a third high school in Chaffee Crossing could have on the rest of the community.

"If you drive around town, there are all of these areas throughout the center of the city where you see a lot of vacant homes," Sicard said. "If you built a state-of-the-art high school out on the periphery of our community, it will continue to attract people to that area and result in a lot of vacant houses in the core of our city and declining real estate values and declining appearances of many of the properties in the core of our city."

In addition to the two major concerns of costs and deterioration due to outgrowth, Sicard said the group is also concerned about the district's enrollment projections.

"Some of us in the business community have trouble understanding how enrollment will be as rapid as they are saying (it will be) based on what we are seeing in the economy," he said. "We're questioning whether those projections…we're not doubting the continued growth or (need for more) capacity, but it surprises us that it would be that aggressive."

In order to ensure the district makes the best decision regarding future building needs, Sicard proposed that the district bring in an outside consultant to do a facilities assessment for the district to find out if it building another high school would be in the district's best interest or if expanding the existing schools would be more beneficial. He said he and his business colleagues were asking such questions after comparing Fort Smith to similar-sized districts across the state.

According to figures provided by the Arkansas Department of Education, Fort Smith is on par with most of the state's largest districts in terms of the number of students enrolled and the number of high schools in each district. Following is a list of the state's largest districts with their corresponding number of high schools (2012-2013 school year):
• Little Rock Public Schools: 23,676 students, five high schools;
• Springdale Public Schools: 20,542 students, two high schools;
• Pulaski County Special School District: 17,060 students, five high schools;
• Bentonville Public Schools: 15,081 students, one high school (plans are underway for a second high school);
• Rogers Public Schools: 14,757 students, two high schools;
• Fort Smith Public Schools: 14,313 students, two high schools;
• Cabot Public Schools: 10,172 students, one high school;
• Conway Public Schools: 9,733 students, one high school; and
• Fayetteville Public Schools: 9.421 students, one high school.

Sicard said while it may appear that he and his fellow business leaders are against school funding or the millage increase that could come before voters sometime in the next year or two, it is simply not the case. His group just wants to see the most money possible spent on academics, "to see it used in a way to take us to the next level in way of academic achievement for our students."

He said the fact that the board is taking the time to conduct due diligence was appreciated.

"We don't think they're wrong for (proposing) the third high school, we just have concerns and want all alternatives researched and evaluated due to the concern we have," Sicard said. "We're really grateful that Dr. Gooden and the (school) board were willing to listen to our concerns and pursue a study. We're thankful that they're responsive to some of the concerns in the community and we appreciate that."

Gooden did not respond to a request for comment.

Business leaders who signed the memo to the school board include: Bobby Aldridge, Mike Barr, Shannon Blatt, Kent Blochberger, Phillip Bryant, Gary Campbell, Steve Clark, Brandon Cox, Sen. Jake Files, Richard Griffin, Jason Green, Melissa Haynesworth, Scott McClain, Rep. George McGill, Sam Sicard, Pastor Kevin Thompson, Jim Walcott, and Fred Williams.

Executives with consumer packaged goods (CPG ) companies admit they have underestimated how quickly consumers have become acclimated to purchasing food, household and personal care items online. A recent study by Deloitte found many CPG companies may be missing out on a substantial market opportunity.

The research includes an online shopper survey as well a poll of 43 executives in digital commerce positions at CPG companies and in-depth interviews with selected executives.

Executives expect 35% growth in e-commerce sales in the next year and 76% growth by 2017. Conversely, consumers surveyed expect their online purchases to increase 67% in the next year, ramping up 158% in the next three years.

Research co-author Pat Conroy notes that consumers are becoming more comfortable with ordering consumables online, from diapers to vitamins and pet food. Sometimes it’s bulk pricing that attracts them and other times it’s merely the convenience having those products delivered to the front door.

Data show that CPG companies are not as prepared as they need be to take full advantage of this growing opportunity. The study also found that 92% of CPG execs agree that e-commerce is a strategic sales channel, there is a disconnect between the expressed opinions of the executives and the readiness of their companies to execute. Only 43% of CPG execs think their company has a clear, well-understood digital commerce strategy.

Digital commerce could drive incremental sales for CPG companies, yet there is a disparity between executives and consumers that further suggests the channel may be more significant than executives believe, according to the report.

The CGP execs surveyed said only 2% of the past year’s e-commerce revenue came from brand new sales — those which would not have been made otherwise. Consumers said 10% of the online food and personal goods purchased over the past year were completely new. This finding regarding initial e-commerce purchases is a sign to CPG companies that there is opportunity for them to take market share from competitors and increase consumption.

An advantage for CPG companies is that 41% of consumers have no personal attachment to buying items at a supermarket. With the right incentives, this group could be likely be lured away from traditional retailers, the study notes.

“I purchase CPG products online because I can do it at 3 a.m. when I am thinking about it,” according to one consumer survey respondent.

The biggest factors wooing consumers to purchase food and consumables online is free at-home delivery, competitive pricing, and the option for free in-store pick-up. Another consumer surveyed said, “Most of the products I buy online are only available online, or their availability is not consistent in local stores.”

To gain a competitive advantage, transformative opportunities exist for CPG companies across all areas of possible consumer interaction. Not only do 90% of executives see digital commerce improving brand awareness and driving product initial purchase, but it also has an important role in driving repeat purchases and reconnecting with lapsed consumers.

Conroy notes there are a number of critical steps CPG companies can take to capital of the e-commerce channel. First they need to establish a clear and well-understood digital commerce strategy. He also said it is important to collaborate with retailers on social media platforms to build a single view of the consumer.

Lastly, Conroy said having dedicated talent in the digital area is crucial.

The holiday season was brutal for many retailers, but Target also was hit hard from the massive data breach during the height of the holiday shopping season, a situation still unfolding.

Target said losses related to the data breech were $61 million in the fourth quarter, partially offset by $44 million in insurance receivables.These expenses include costs related to investigating the data breach, offering credit-monitoring and identity-theft protection services to our guests, increased staffing in our call centers, procurement of legal and other professional services, REDcard fraud losses and card replacement costs, and an accrual for a probable loss on payment card networks anticipated claims for operating expenses incurred as a result of the data breach.

The costs do not include any amounts for the potential claims by the payment card networks for counterfeit fraud losses. Target said at this time it is unable to reasonably
estimate a range of possible losses on the payment card networks potential claims in excess of the amount accrued.

Target executives said future earnings will likely be impacted from these ongoing costs for some time.

Avivah Litan, a security analyst at Gartner Inc., a technology firm, puts the costs of the breach from the $400 million to $450 million. That would include the bills associated with fines from credit card companies and services for its customers like free credit card report monitoring.

Target reported net income of $520 million or 81 cents per share, falling 46% from the fourth quarter period in 2012, but inline with the lower guidance given following the data breech. Revenues fell 3.8% year-over-year to $21.52 billion, reflecting the impact of an additional accounting week in the prior year and a 2.5% decrease in comparable sales. Like Wal-Mart, Target gave a lower guidance for this year, which was below the consensus estimate.

So far Wall Street’s action has been favorable to the lackluster report with Target shares rallying nearly 4% in early trading on Wednesday (Feb. 26). Target shares (NYSE: TGT) were trading up more than $2 at $58.59 on heavy volume.

The growth of entrepreneurial programs and financing support seen in recent years in Northwest Arkansas may soon be repeated in central Arkansas.

More than 300 startups launched in Northwest Arkansas in the last five years, raising more than $190 million in funding to do so. Jeff Amerine, director of technology ventures at the University of Arkansas, said the bulk of that capital was raised last year and put the region on the map as a viable place to start a business. (The City Wire announced Tuesday the five Northwest Arkansas-based startups to watch in 2014. Link here for that report.)

Gov. Mike Beebe said during a Tuesday (Feb. 25) event in Conway that he believes fostering innovation is one of the most important investments the state can make to ensure future economic growth. The Arkansas Economic Development Commission contributed $575,000 in seed money for the new regional Innovation Center in downtown North Little Rock. The AEDC grant announced this week is part of a capital campaign for the 15,000-square-foot multi-use facility that will be part business incubator, think tank and technology workshop.

"The total capital budget is $1.1 million for this phase of the project, and we will be announcing additional secured funds in the coming week," said Rep. Warwick Sabin, D-Little Rock, and executive director of the Arkansas Regional Innovation Hub.

INNOVATION HUB
The Innovation Hub strives to increase entrepreneurial activity by creating a network of resources, programs and education opportunities to attract, develop and retain emerging talent while building the state’s economy.

“The nature of our economy is changing, and if our state wants to compete for the best and brightest minds, we need to change the way we think and do business,” Gov. Beebe said in a statement. “The Innovation Hub attracts those who think outside the box and who will forever change the economic climate in the area. They will be our business leaders of tomorrow.”

The entrepreneur movement began to catch fire in Northwest Arkansas as the national economy went sour in 2008, according to Amerine. He said that excitement has spread eastward in past couple of years toward central Arkansas finding continued support from the state economic leaders and local chambers of commerce from Fayetteville to Jonesboro.

Amerine said regional entrepreneurial hubs supported with angel funding networks, mentors and educational opportunities is critical to keep innovative juices flowing.

Josh Clemence, co-founder of the Northwest Arkansas Entrepreneurial Alliance and Iceberg project in Fayetteville, said the Innovation Hub has been a longtime coming for central Arkansas.

“Arlton Lowry and Dustin Williams are two unsung heroes that have been pushing for more cohesion in the entrepreneurial sector in central Arkansas. It’s good to see the wheels are turning,” Clemence said.

ENTREPRENEURIAL CONNECTIONS
The connections between central and Northwest Arkansas’ entrepreneurial communities are close, despite a healthy competitiveness. In the recent ARK Challenge competition held in Fayetteville, four of the nine startups making it to the found round of competition were teams with central Arkansas connections. Overwatch, one of the three winners in the ARK Challenge, has founders in both areas — Josh Moody, a high school student at Little Rock Catholic and Joe Saumweber and Michael Paladino, who founded RevUnit, a Bentonville-based startup. This trio continues to work toward the launch of their gaming application and casing device on target for later this summer.

Clemence said it’s also a positive that the ARK Challenge will be held in central Arkansas this year, after several years of being held only in Northwest Arkansas. He said there are also efforts being made in Jonesboro to foster entrepreneurial advocacy.
arkchallenge.org/

“Our new Innovation Center builds on the best practices from successful national models to create a broad set of resources for people of all ages here in Central Arkansas,” Sabin said. “We will provide the opportunity for everyone to discover and develop their interests and talents and unlock their unlimited potential.”

Sabin also will oversee the Central Arkansas ARK Challenge competition slated for this fall.

The first phase, the Argenta Innovation Center, will include four components:
• The Launch Pad will provide cutting-edge tools and technology for professionals and amateur tinkerers alike. There will be 3-D printers, laser-cutting machines, and other equipment that can be used to prototype inventions and refine products. Educational opportunities will be provided for people of all ages as well as support for local manufacturers and corporations that want to solve problems or provide additional training.

• The STEAM Lab will be operated in partnership with the EAST Initiative to offer STEM (science, technology, engineering, mathematics) education across a variety of ages and disciplines. Expertise in these areas is critical for Arkansas’s workforce to be prepared for jobs in the 21st Century. This classroom and laboratory will have advanced equipment and technology along with the nationally-recognized training in computer coding, programming, and computer-aided design (CAD) that EAST has provided to Arkansas students for the last 20 years.

• The Silver Mine is a co-working space for entrepreneurs and small business owners looking for networking and enrichment activities. It will also be the home to vertical business acceleration programs that will seed and mentor promising new enterprises from Arkansas and around the world. The Silver Mine will be able to incubate and give birth to a steady stream of new businesses, where ideas can connect with capital and other resources.

• The Art Connection is an after-school and summer work program for high-school students designed to develop leadership and innovation through hands-on training in the visual arts industry. Modeled after the successful Artists for Humanity program in Boston, Massachusetts, the Art Connection works with arts organizations, local artists, business owners, city government and others in the community to provide practical skills for under-resourced youth.

The innovation center recently received a $250,000 grant from the Delta Regional Authority.

“We are proud to join Governor Beebe and AEDC in support of this program and to invest in what will be a great opportunity for Arkansas’ small businesses and entrepreneurs,” Chris Masingill, federal co-chairman of the Delta Regional Authority, said in a statement. “The Innovation Hub will provide the programming and resources necessary to further our mission of creating jobs and helping to build an innovative and technologically-advanced environment for our region’s entrepreneurs.”

Revenue from Arkansas’ 2% tourism tax set a record in 2013 by reaching $12.716 million, and the state’s tourism chief is predicting that 2014 could be even better for Arkansas’ tourism and travel sector.

The 2013 collections were up 2.5% compared to the $12.405 million in 2012, and well ahead of the $11.378 million slump in 2009 when national economic conditions proved tough on Arkansas’ tourism industry.

In an interview with Roby Brock for the upcoming issue of Talk Business magazine, Richard Davies, executive director of the Arkansas Parks & Tourism Department, said the recent spell of cold weather around the country may result in people wanting to get outdoors when temperatures rise. Combine that with what Davies said is an improving consumer confidence, and the state could see more travelers in 2014.

“I think we’re going to have a good season this year. I think holding on during the bad times was a victory,” Davies said in the Talk Business interview. “From what I can tell, if the weather will let us alone for a while, we’re going to have a good year. I think people are a little more sure about the economy. I think they’ve got a little money in their pockets. And I think after this winter, they may have some severe cabin fever they want to solve. So I’m looking forward to a good year.”

MIXED RESULTS
Although collections were up in 2013, results were mixed around the state. For example, the four largest cities in Northwest Arkansas reported $5.32 million collected in hospitality taxes for the full year, up from the $4.99 million during 2012. The cities also reported 6% gains in their fourth quarter hospitality tax receipts, compared to the prior year. Fayetteville, Rogers, Springdale and Bentonville collected $1.31 million in hotel and food taxes during the months of October, November and December.

While October and November were strong months, inclement weather has since prompted cancellations and lackluster traffic among business and leisure travelers, said Roger Davis, general manager of the Springdale Holiday and Convention Center.

Hotel operators across Northwest Arkansas have recorded revenue in excess of $128.564 million during 2013, up 10.7% over 2012, according to Smith Travel Research.

Hospitality tax collections were not as strong down the road from Northwest Arkansas. Collections in Van Buren during 2013 totaled $423,221.83, remarkably close to the $423,222.91 during 2012. December collections were $32,071, down 1.2% from the $32,451 in December 2012. The city collects a 1% tax on lodging and a 1% prepared food tax.

Maryl Koeth, executive director of the Van Buren Advertising & Promotion Commission, said wintry weather in December likely resulted in the monthly decline. She said the January tally will also see a weather effect. Koeth said she expects 2014 tourism activity to be similar to 2013.

“Lodging ended the year above last year, but restaurants were down and are staying down. Due to the economy, specifically the smaller paychecks, we continue to see a change in the dining out patterns of consumers. I don't see that changing in the near future,” she said.

Collections in Fort Smith during 2013 totaled $731, 057, down 2% compared to the same period in 2012. The gap in collections improved through the year with first quarter collections were down more than 6% compared to the 2012 quarter. For the fourth quarter, collections were up 0.62% compared to the 2012 quarter. The city collects a 3% tax on lodging.

TOURISM INDUSTRY EMPLOYMENT
The rise in overall tax collections is reflected in job numbers for the industry. Arkansas’ tourism sector (leisure & hospitality) employed 103,400 during December, down from a revised 103,700 during November, and above the 102,900 during December 2012. At a revised 103,700, the November employment tied a record for the sector that was first reached in January 2013.

Montine McNulty, director of the Arkansas Hospitality Association, noted in the Talk Business interview that the tourism industry also is a job engine for the state.

“One thing about our industry is we continue to need people. It’s not going to be replaced by robotics or anything else. We’re in the service industry and we’re going to have to have people,” McNulty explained.

Travel and tourism industry employment also reflects tax collections in Northwest Arkansas and the Fort Smith metro area.

Employment in the Northwest Arkansas tourism industry was 21,400 during December, down from 21,900 in November and up from 20,400 during December 2012. September employment of 22,300 was a new record for the sector.

Employment in the Fort Smith metro tourism industry was 9,000 during December, down from 9,100 in November and above the 8,700 in December 2012. The sector reached an employment high of 9,800 in August 2008.

O.K. Foods is under new leadership after the resignation of CEO Paul Fox, but the company is keeping quiet as to why Fox may have left the company.

Donna Miller of O.K. Foods confirmed in a telephone call with The City Wire that Fox had resigned from the company, but declined to provide details or the date his resignation became effective.

"If there is anything to be said, I'm sure someone will call you back," she said Wednesday (Feb. 26). "I can't make a statement on any of that. I was just told that he resigned. I'm not privy to any of that."

According to Fox's LinkedIn profile, he came to O.K. Foods in January 2012 after serving for nine months as managing director of Sao Paulo, Brazil-based Marfrig Group, one of the world's largest meat producers, and president and CEO of Dickinson Frozen Foods for about four years.

NEW CEO
With Fox's departure, Senior Vice President of Sales and Marketing Trent Goins has been promoted to president and CEO of the company, according to his LinkedIn profile. Goins' father if former O.K. Industries CEO Randy Goins.

Goins started his career at O.K. Foods as a management trainee in January 2003 before becoming a regional sales manager in January 2005, a position he held for four years. During that time, he has served on the board of the National Chicken Council and the Arkansas, Oklahoma, and Missouri Poultry Federation. Goins is currently an executive committee member of the National Chicken Council.

Prior to joining O.K. Foods, Goins was a legislative assistant for agriculture and trade policy in the office of former U.S. Rep. Marion Berry, D-Gillett.

The Fort Smith-based O.K. Foods was founded in the 1930s as a feed manufacturer, according to the company's website. It eventually moved into processed poultry in the 1950s before opening a state of the art research and development facility in the 1990s.

On Nov. 11, 2011, Celaya, Mexico-based Industrias Bachoco, itself a poultry producer, closed a deal to acquire O.K. Foods and its more than 3,000 U.S.-based employees. The deal, estimated at $93.4 million, made the combined company the third largest chicken producer in North America, according to O.K. Foods.

FOX HISTORY
Fox came to Dickinson after a 17 year tenure at Tyson Foods that included stints as vice president of international operations and vice president of processed meats operations. It was during his tenure as vice president of international operations that Fox and several other Tyson executives were reported to have come under investigation for alleged bribery, according to a June 2011 article in The New York Times.

The Times article detailed memos that alleged possible payments in order to keep inspectors at Tyson's Mexican plants  "from making problems." Investigations by the United States Department of Justice and the Securities and Exchange Commission followed, though no charges were ever filed against Fox or any of the other Tyson executives who were investigated.

Additional phone calls and e-mails to O.K. Foods seeking comment for this story were not returned.

No matter your thoughts about the global retail giant that is Wal-Mart Stores Inc., there is no denying the boost this Bentonville-based company can have on a small supplier’s balance sheet.

Latham, N.Y.-based green energy company Plug Power Inc. announced that it recently received a purchase order from Wal-Mart to roll out its hydrogen fuel cell technology that will power electric fork lifts at six of Wal-Mart’s North American distribution centers.

Wall Street took notice of the deal and pushed Plug Power shares 13% higher in heavy trading on Wednesday (Feb. 26). Power Plug shares (NASDAQ: PLUG) closed at $4.41, up 51 cents from the prior day. One year ago PLUG shares were 12 cents, surpassing the $1 range in December.

Chris Sultemeier, executive vice president of logistics at Walmart U.S., announced various energy project and efforts to reduce costs at distribution centers during the retailer’s annual sustainability milestone meeting in Bentonville last week.

The Plug Power technology has been used in an Ohio distribution center and in Canada, but the first of six more sites will come online by the second quarter of 2014, the company said. Wal-Mart ordered 1,738 GenDrive fuel cell units to be deployed over the next two years, along with GenFuel infrastructure construction and hydrogen fuel supply and a six-year service contract for each site using the green energy.

Sultemeier said the logistics division continues to strive for energy savings that help improve the retailer’s overall bottom line. He said all distribution center warehouses and fulfillment centers are converting to LED lighting that will save $10 million annually in utility costs. This expansion in hydrogen fuel cell will also drive profits higher.

“We have 2,000 of these in use in our distribution centers in the U.S. and Canada, the largest fleet of its kind in the world,” Sultemeier said. “By doubling the fleet efficiency of our trucking operations we shipped 658 million more cases, driving 300 million less miles and saving 43 million gallons of fuel.”

Power Plug noted in its statement that GenDrive hydrogen fuel cells “have universal appeal in material handling applications because they can contribute to an increase in productivity.” The company said workers will spend less time fueling or powering up the forklift and more time operating the machine. GenDrive fuel cells also have no exhaust emissions so that they can be a component in implementing corporate environmental initiatives, the release states.

"This agreement is a tripling of Walmart's commitment to Plug Power's fuel cells, and is encouraging because it comes from a company with so much experience using our product," Andy Marsh, CEO at Plug Power, said in the statement. “This is a milestone for Plug Power and its ongoing business relationship with Walmart. Plug Power's GenDrive products have a positive impact on the productivity of our customer's operations. We have proven to be a trusted partner and are confident that GenKey will enhance Walmart's material handling operations."

Plug Power also provides products to Sysco, Procter & Gamble and Mercedes Benz.

Thousands of December and January flight cancellations around the country because of winter weather did not have a negative impact on travel out of the Northwest Arkansas Regional Airport (XNA).

Between Dec. 1 and Feb. 18, there were 102,000 weather-related flight cancellations, according to masFlight tracking data. These events not only frustrated travelers, but are expected to cost airlines between $250 million and $500 million, according to industry analysts.

Regional carriers like those that serve XNA were the most impacted from the onslaught on cancellations. ExpressJet led in cancellations with 11,658, according to FlightAware. American Eagle has been the second hardest hit with 11,235 cancellations during the 11-week period.  Other airlines impacted include: Southwest with 7,323 cancellations; American, 6,954; United, 6,731; Delta, 6,253; Skywest, 4,760; US Air, 3,496; and JetBlue, 3,378.

However, XNA reported December enplanements rose 2.9% from the prior year and total passenger count was up 7.97% in December. In January, XNA reported 39,990 enplanements, up 7.25% from a year ago. Total passengers served by the airport equaled 74,102 last month, an increase of 6.97% from a year ago.

“All I can say is we have been busy here. The parking lot has stayed full and we have had just a few cancellations dating back to December, “ said Scott Van Laningham, executive director at XNA.

He said while there were business travelers who could not fly to Northwest Arkansas from other other cities, those return flight seats were filled by others traveling business class.

CARRIER RECRUITMENT
Van Laningham said the local airport officials continue to meet with any carrier they can to try and secure more routes for XNA and help reduce fares. Airfare is typically up to 30% higher at XNA than other local airports because of limited seat capacity and strong business demand.

“We are well-aware that more competition is needed to bring down overall fares at XNA.  But there really is very little expansion going on now. While the economy is stronger and improving here locally, most airlines don’t feel that’s the case on the national level. That is holding back expansion, in my opinion.” Van Laningham said.

Southwest and Frontier Airlines have agreed to talk to XNA officials, according to local sources, but there is no indication that either of the carriers will add an XNA route.

Southwest Airlines is pulling out Branson and Jackson, Miss., in June, citing the level of local demand does not fit the carrier’s profitability standards. Key West, Fla., also is being dropped from Southwest. Key West and Branson were picked up with the company’s merger of AirTran Airways.

Van Laningham said one major difference between the Branson market and Northwest Arkansas is the business base that travels to and from Highfill during the week. Branson is largely entertainment based, with more leisure and vacation oriented travelers, he said.

The experiment stopover in Branson was a short one for Southwest, who just began flying there in March of last year. Those routes include two flights to Chicago and one to Houston and Dallas. The Northwest Arkansas business community would love to capture those routes, but XNA officials are tight-lipped on how the talks are going.

Van Laningham did say that while airline expansion is nearly non-existent these days, Frontier recently announced six new routes, including three new nonstop routes from St. Louis. Frontier is taking hub space vacated by American Airlines and will compete with Southwest, which operates nearly three dozen destinations from St. Louis.

Despite declining overall revenues, Windstream Corp. saw its bottom line improve as cost savings and strategic growth areas boosted its fourth quarter and full year profits.

Little Rock-based Windstream Corp. posted 2013 fourth quarter earnings of $118.4 million, a huge improvement from $10.1 million one year ago. Revenues for the quarter ended Dec. 31, 2013 were $1.49 billion, down three percent from $1.534 billion in 2012′s fourth quarter.

For the full year, Windstream reported net income of $241 million on revenue of $5.988 billion compared to a $168 million profit on revenue and sales of $6.139 billion one year ago.

“2013 was a solid year for Windstream. Our business team finished the year strong, generating sequential revenue growth again, and our consumer team continued to grow broadband revenue and deliver steady results, all of which better position us to achieve our goals and deliver value to shareholders,” said Jeff Gardner, president and CEO.

Windstream announced last week that it would slice 400 jobs from its nationwide workforce in an effort to remain lean and to position the communications firm for future growth, particularly in its broadband and business services which showed steady growth.

Traditional landline revenues – under heavy pressure from the wireless industry – continued to slump. Gardner said Windstream’s efforts are to keep the legacy business in the black, but to capitalize on business services and broadband growth.

“We are executing a growth-oriented strategy while also managing our legacy business for profitability. This combination is gradually stabilizing top-line trends and generating substantial cash flow. It is our continued belief that our capital allocation strategy strikes the right balance among investing in the growth drivers of the business, paying an attractive dividend to our shareholders and reducing debt over time,” Gardner said.

Financial notes included:
• Total business and consumer broadband revenues now represent 73% of the company’s total revenues.

• The company deployed fiber to approximately 2,000 wireless towers, opened three data centers and expanded and enhanced its broadband network throughout the year.

• During the year, Windstream reduced its debt by more than $200 million.

• The company also refinanced almost $4 billion in debt in 2013, which extended debt maturities and lowered cash interest expense.

• Paying $594 million in dividends to shareholders.

Windstream shares (NASDAQ: WIN) closed trading on Wednesday (Feb. 26) at $7.93. The company’s stock has traded between a low of $7.18 and a high of $9.17 in the past year.

Condoleezza Rice, former U.S. secretary of state under President George W. Bush, will speak at 7 p.m. Wednesday, March 5, in Barnhill Arena at the University of Arkansas.

The lecture is free, open to the public, and no tickets are needed to attend, according to the UA release. The event is part of the student-funded Distinguished Lecture Series at the university.

Barnhill Arena will be open at 5:30 p.m. for people who are able to arrive early. Free parking will be available after 5 p.m. for those attending the lecture in lot 44, the Stadium Avenue parking garage, and the Baum Stadium East parking lot, on south Razorback Road.

University Transit and the lecture series committee will provide bus shuttle service from Baum East for people attending the Rice event only. Return shuttle service will also be available.

Cameras and personal items will be checked. Pocket knives, large bags, backpacks, strollers, baggage, signs, banners, posters and noise-makers will not be permitted inside the arena.

Goodwill Industries of Arkansas continues its aggressive growth next month as it opens its eighth Northwest Arkansas location location in Siloam Springs on March 6.

The 15,000 square-foot donation center, career services center and retail store, located at 1001 South Mount Olive St., in the Highland Park Shopping Center, will be the non-profit's 36th location in the state.

"Goodwill continues to expand in northwest Arkansas because we want to make it as convenient as possible for people to be able to shop and donate with us," said GIA President and CEO Brian Itzkowitz.

According to Goodwill's Public Relations and Community Engagement Manager Rebecca Brockman, the growth of the organization has been not only steady, but rapid, since the financial collapse in 2008 and the subsequent Great Recession.

In figures Brockman provided to The City Wire, just from 2008 to 2009, Goodwill saw a 110% increase in the number of individuals served through the organization's career services centers and retail stores. From 2008 to 2013, that number ballooned 683.8% from 1,068 served in 2008 to 8,371 served in 2013.

During the same period, the number of people placed in jobs grew from 89 in 2008 to 1,279 in 2013, an increase of 1,337.08%. She added that "Goodwill has created approximately 500 jobs in the last five years. We are growing due to meet the demand of people in need."

The jobs created vary, but consist of of many individuals staffing the retail locations where anyone can purchase donated goods at discounted prices. Earnings from the donated goods, which are tax deductible, go back into Goodwill's career training services provided at their locations across the state.

"Three pairs of jeans equals 30 minutes of career training at Goodwill," she said.

Brockman said as the economy has continued to be shaky, those donations have been vital to the organization's mission, with a goal this year to serve 10,000 people.

"But we can’t meet that goal without donations," she said.

Among the programs Goodwill has been active in promoting is one that helps individuals leaving jail or prison to transition back into cities and towns "and make positive contributions."

According to the organization's web site:
• TEO (Transitional Employment Opportunity) participants are employed at Goodwill’s donation processing center where they acquire marketable skills processing donated textiles and computers and working on sub-industrial contracts from local businesses;
• Beyond building a resume and developing positive work behaviors, participants earn a weekly paycheck; and
• Once considered job ready (in no more than 16 weeks), a team of career specialists help them to search for competitive employment in the community.

The TEO program is just one of many that sees a constantly revolving door of staff at Goodwill's various locations, though Brockman has previously said an employee/trainee giving notice that they have found a new job is a sign that the company's training is working and helping those individuals move on to fulfilling careers to support themselves and their families, adding that Goodwill views turnover as a good thing.

As the organization prepares for its Siloam Springs opening, Brockman reminded the public that Goodwill's need is greater than ever, especially since donations have been down this year.

"Goodwill’s donations were severely affected by the winter weather this past season. We are need of donations and encourage people to do some pre-spring cleaning and get in those closets, garages and storage spaces."

Itzkowitz echoed Brockman's sentiments.

"Donations are the lifeblood of the organization. The funds generated through the sale of goods go right back into the Siloam Springs community to help people who need job readiness training and education."

Goodwill's grand opening of the Siloam Springs location will occur at 8:45 a.m. on March 6. Grand opening festivities will include the chance to win a 42" high definition television, as well as gift cards to Goodwill.

Arkansas’ residential real estate sector ended 2013 on a good note and the miserable winter weather of January was not enough to slow the pace of home sales in the state’s four largest markets.

The number of homes sold in Arkansas’ four largest metro areas totaled 20,644 during 2013, the first time since 2007 that the tally topped 20,000 and the first the value of the homes sold in the four markets topped $3 billion.

The City Wire’s Arkansas Home Sales Report captures home sales data in the state’s 14 most populated counties within the state’s four largest metro areas — Central Arkansas, Fort Smith area, Jonesboro/Northeast Arkansas and Northwest Arkansas. The report, which records closed sales, accounts for between 70% and 75% of total Arkansas home sales.

The report, which counts the number of sales closed in January, is sponsored by Fort Smith-based Weather Barr.

JANUARY NUMBERS
January home sales totaled 1,204, up 6.55% in the four markets. Although the combined home sales activity was up in all four markets during January, the combined average price was down. The average price per home in the four markets was $144,599, down 5.58% compared to January 2013, and down 8.03% compared to January 2012.

There were 577 homes sold in central Arkansas, up 3.96% compared to January 2013, and up 30.84% compared to January 2012.

January home sales totaled 393 in Northwest Arkansas, up just 0.26% compared to January 2013, and up 15.25% compared to January 2012.

Jonesboro area home sales totaled 122, up 17.31% compared to January 2013 and up 48.78% compared to January 2012.

In the Fort Smith area, home sales totaled 112, up 41.77% compared to January 2013, and up 43.59% compared to January 2012.

The value of the sales during January were down 3.68% in central Arkansas, up 0.47% in Northwest Arkansas, down 0.97% in the Jonesboro area, and up 44.29% in the Fort Smith region.

THE REGIONAL PICTURE: 2013
Central Arkansas — Home sales
January 2014: 577
January 2013: 555
January 2012: 441

Fort Smith area — Home sales
January 2014: 112
January 2013: 79
January 2012: 78

Jonesboro area — Home sales
January 2014: 122
January 2013: 104
January 2012: 82

Northwest Arkansas — Home sales
January 2014: 393
January 2013: 392
January 2012: 341

The top five counties in terms of January 2014 home sales:
Pulaski — 259, up compared to 238 in 2013
Benton — 253, up compared to 232 in 2013
Washington — 140, down compared to 160 in 2013
Saline — 105, up compared to 88 in 2013
Craighead — 98, up compared to 81 in 2013

Link here for a PDF document of the January 2014 data.

SALES, PRICES SHIFT
Perhaps one of the more perplexing things about the January report is that sales were up 6.55% compared to January 2013, but average sales prices were down by 5.58% – a drop of slightly more than $10,500 from the same time last year. More intriguing still is the fact that sellers didn't generally slash their asking prices for homes to attract buyers.

Pulaski County, for example, is typical in that regard. Sellers averaged 95.91% of their list prices for homes, a number that is slightly better than 95.88% a year ago. The size of the homes sold didn't decrease dramatically either, but the sales prices did. The average price per square foot of homes sold in Pulaski County was $74.38, significantly lower than $81.25 a year ago.

The City Wire Economist Jeff Collins said one can't read too much into January's numbers because it is just one month and factors such as cold winters keeping people from shopping for homes can skew the data a bit. He said it's safer to get the data from the first quarter of the year in place before looking for trends.

Still, he said one of the things driving the market could be that incomes haven't increased substantially, unemployment numbers have remained steady, and some people may be more cautious about taking on debt than they were a few years ago before the recession took hold. Those factors, he said, could add up to a situation where there is downward pressure on home prices – people are only willing to pay so much and sellers are simply adjusting to the market when pricing their homes.

The end result is no surprise, he said, which is that lower prices mean more homes are sold.

RENTAL DEMAND IMPACT
Jackie Twillie of Twillie Realty in Little Rock said it is difficult to pin down what exactly was driving markets in January. She said the numbers are coming up and people are still able to get loans, so that is good news and reflects well on the overall economy.

One phenomenon she's seen is that the cost of new homes dropped in 2013 a bit as builders rushed to meet the demand for mid-priced homes. At the same time, investors looking for deals on foreclosures snapped up a lot of homes and then turned those into rental properties. Twillie said the demand for rental homes is rising and that has prompted investors to start pulling foreclosed homes off the market to meet that demand.

The increased number of investors picking up homes for a bargain may have had a small impact on prices, she said. The same may be true of tight credit standards and slightly rising interest rates – factors that directly influence how much financing buyers can get when applying for mortgages.

Amber Gill of Exit Realty in Paragould said prices in the Jonesboro area may have been impacted by the popularity of the federal Rural Development program. Under that program, people are typically buying homes with no money down and, as such, sellers are holding stronger to purchase prices while still trying to list their homes at prices that will attract buyers.

She said there was a fear that the federal Rural Development loans would dry up in her area this year as the definitions were supposed to change so that cities with populations of more than 25,000 in the 2010 Census were to be removed from eligibility. Paragould was one of those cities that would have lost that eligibility, and Gill said the availability of Rural Development loans have helped attract buyers to that city.

At the end of January, however, Congress passed a measure that will keep all cities eligible for Rural Development loans in that program until Oct. 1. On that date, the population limits for eligibility will be raised from 25,000 to 35,000, meaning that areas where that mortgage program is offered will likely not see it vanish until at least 2020 when Rural Development definitions are to be considered again.

January was laced with some bitterly cold, snowy days but city permit offices across the region report steady activity in residential building and a smattering of commercial projects on tap with the Walton family commercial mixed-use space in downtown Bentonville being one of the largest projects.

Another interesting permit – issued Wednesday (Feb. 26) – in Bentonville was to Walgreens for a store at 1311 S. Walton Blvd., directly across from a Wal-Mart Convenience Store and gas station which is slated for completion later this spring.

While Walgreens is no stranger to Northwest Arkansas, the company has stayed away from Bentonville until now. Walgreens already operates 13 stores in Benton and Washington counties.

The region’s four largest cities in Northwest Arkansas issued permits valued at $46.087 million in January, up 77% from the year-ago period. The bulk of that increase —$20.356 million — is linked to the multi-story, mixed-use development and parking garage project by the members of the Walton family. This new Midtown Center will be anchored by a 31,000-square-foot Walmart Neighborhood Market, that first announced by city leaders in the fall of 2012.

New commercial projects issued by the cities of Fayetteville, Springdale, Rogers and Bentonville were valued at $25.968 million in January. This compared to $5.054 million in new commercial permit values reported a year ago.

There were three new projects slated for Fayetteville:
• Northwest Health Clinic, 3399 W. Black Forrest, $2.288 million;
• Butterfield Trail wellness center, 1923 E. Joyce Ave., $1.219 million; and
• Butterfield Trail assisted living center, 2073 Overland Loop, $2.104 million.

Springdale and Rogers did not issue commercial permits last month. Bentonville’s new commercial permits were the three projects connected to the Walton family.

Troy Galloway, director of economic development for the city of Bentonville, recently said he expects the commercial sector to pick up some steam this year, following on the heels of robust residential activity recorded since the start of 2012.

Western Rogers is a flurry of construction with the Longhorn Steakhouse slated to open by April, the Walmart AMP looking at a summer opening and Great Southern Bank hoping to move into their new location by early fall.

Other proposed permits made to the Arkansas State Health Department in recent weeks include:
• DWS Designer Shoe Warehouse, 2203 Promenade Blvd, Rogers;
• La Favorita Michuaca, 1803 S. Eighth Street, Rogers;
• Mercy of Northwest Arkansas clinic, 1225 E. Centerton Blvd., Centertown;
• One Eyed Jack’s Fine Tobacco Lounge, 2308 S.E. 28th St., Bentonville;
• Popeye’s Chicken, West Sunset Ave., Springdale;
• MedExpress, 1160 S. 40th St., Springdale; and
• Dickey’s Barbeque Pit, 3316 W. Grove Rd., Suite. 4, Fayetteville.

Permits made with the health department generally precede official city issued construction permits by two to three months and provide a forward look.

FLAT RESIDENTIAL PACE
Homebuilders across the regionstayed busy since 2012 and they don’t see that changing this year. The local residential building sector has likely reached a sustainable pace, according to contractors interviewed by The City Wire in recent months.

The region’s four largest cities issued 70 new construction permits last month, down from 90 issued in the year-ago period. That decrease was linked to just 5 new permits issued in Rogers during January, plummeting from the 33 issued a year ago. The other three cities reported flat activity year-over-year.

Permit values among the reporting cities totaled $20.119 million for new residential single family homes. This compared to $20.888 million a year ago. The values were flat year-over-year in spite of the 20 fewer home starts.

The value numbers were skewed slightly during January because of a few custom homes in Bentonville valued between $617,000 and $756,000. In addition, there were more homes valued above $400,000 in Fayetteville and Bentonville than a year ago.

Residential Permit Values (January)
• Bentonville: $8.914 million, up 47%
• Fayetteville $5.170 million, up 23%
• Springdale: $4.979 million, up 6.9%
• Rogers: $1.056 million, down 82.3%

SENTIMENT, RISING COSTS
Local builder Tim McGuire and some of his peers told The City Wire late last year that building costs were rising, and land prices linked to new development would likely produce sticker shock for some consumers looking to buy new in 2014 and beyond.

The Associated General Contractors of America, reported last week that prices for construction materials rose 0.6% in January. The trade group also noted that materials used by contractors such as gypsum jumped 7% and diesel rose 2%. They also warned that the higher prices on a sustained basis could squeeze margins for homebuilders.

“Although contractors on average were able to raise bid prices in line with material cost increase, the results varied widely by commodity, building type and specialty trade,” said Ken Simonson, chief economist for the trade group.

That said, the national builder sentiment survey released last week indicates that harsh winter weather has been a hinderance in many ways. No only are crews unable to work in frigid conditions, many report constraint issues in the supply chain for building materials, a shortage of developed lots and heightened competition for skilled labor. The culmination of these concerns resulted in a huge dip in builder sentiment as reported by the National Association of Home Builders, last week.

Confidence fell 10 points, according to the monthly sentiment index, from 56 to 46 — the largest drop in the history of the survey, which started in 1985.

Building Permit Comparisons (January)
Bentonville
2014: $29.27 million
2013: $6.062 million
382%

Fayetteville
2014: $10.782 million
2013: $5.588 million
92.9%

Springdale
2014: $4.979 million
2013: $4.988 million
0%

Rogers
2014: $1.056 million
2013: $9.305 million
-88.6%

Home Bancshares, parent company of Centennial Bank, is among the top community banks to comprise the 2013 Raymond James Community Bankers Cup Winners, announced Thursday (Feb. 27).

There were 302 publicly traded community banks with assets between $500 million and $10 billion evaluated for this award given to 30 banks. The award recognizes the top 10% of community banks based on various profitability, operational efficiency and balance sheet metrics. 


Home Bancshares stock posted a stellar 126.2% return last year, good enough to snag the No. 3 spot in that metric. The bank stock placed second in three-year return at 239.1%. In the five-year return metric the bank placed fifth at 204.9%, out performing the major market indexes.

"It is an honor for Home Bancshares to be included with the best of the best of community banks," said Randy Sims, CEO.  "Achieving an honor like this is a tribute to the dedication, determination and success of our very talented team of bankers and board of directors."

Shares of Home Bancshares (NASDAQ:HOMB) closed Thursday at $33.87, down 8 cents. For the past 52 weeks the share price has ranged from $16.68 to $38.98.  Analysts with Wunderlich Securities recently upgraded the shares from neutral to buy.

Watching some upstarts continue their startup, the potential contest between Hillary and Huckabee and a power boost for a Wal-Mart supplier are part of the Northwest Arkansas Friday Wire for Feb. 28.

NOTES & ANALYSIS
• Interesting entrepreneurs
Helen and Sam Walton and Don Tyson and J.B. and Johnelle Hunt weren’t feted as the entrepreneurs to watch during their early days of trying to keep the cash flowing and the lights on, but entrepreneurs they most certainly were.

No matter the label, it’s important to support and highlight the wisdom, will and work ethic the aforementioned billionaires used to become the aforementioned billionaires. That’s why we want to spend the remainder of this young 2014 watching a few startup companies with connections to Northwest Arkansas.

With input from Northwest Arkansas entrepreneurial advocates like Jeff Amerine and Ramsay Ball, The City Wire has tagged five new companies in various early business phases as the ones to watch in 2014. Oh Baby Foods, Overwatch, Silicon Solar Solutions, EcoVet and DataRank were selected because they have talent, capital and ideas — three main ingredients necessary for success. Some of these five startups may thrive for years, some may get acquired and some may fizzle.

Not that we believe we’ve located the next successful multi-billon dollar company, but we do have high hopes for the entrepreneurial efforts growing in a Northwest Arkansas that continues to grow because of the entrepreneurial efforts of the Hunt, Tyson and Walton folks.

ICYMI
Following are a few stories posted this week on The City Wire that we hope you didn’t miss. But in case you missed it ...

• The Supply Side: Plug Power boost
No matter your thoughts about the global retail giant that is Wal-Mart Stores Inc., there is no denying the boost this Bentonville-based company can have on a small supplier’s balance sheet.

• The impact of consumer concerns
More consumers plan to sock away their tax refunds which is bad news for retailers like Wal-Mart who are sitting on higher inventory levels two months removed from what was a disappointing holiday season.

• Bella Vista seeks to raise POA assessment
Bella Vista Property Owners Association is seeking a 62.5% rate increase in the monthly fees paid by homeowners in Bella Vista to combat a $60 million shortfall in reserves by 2023. The rate increase, if approved by a majority vote, will be phased in over the next three years.

NUMBERS ON THE WIRE
46%: Percentage of respondents in a National Retail Federal survey who expect to save more of the money they receive from their tax refund – up from 44% in 2013.

$4.894 million: Combined sales tax collections from Bentonville, Fayetteville, Rogers and Springdale in the January report, down from $5.075 million in the same period of 2013.

6.55%: Increase in number of January home sales in Arkansas’ four largest metro markets compared to January 2013, according to The City Wire’s Arkansas Home Sales Report.

OUTSIDE THE WIRE
• Hillary and Huckabee
The likely 2016 matchup in Iowa if the race were held today would be former Secretary of State Hillary Clinton against former Arkansas Gov. Mike Huckabee, with Clinton ahead, according to a new poll. The former first lady and senator leads all her potential Republican challengers by at least 4 points. She tops Huckabee 46% to 42%, Bush 45% to 41%, Paul 47% to 42% and Christie 45% to 39%.

• Bill and Hillary papers
The Clinton Presidential Library will make its first release on Friday (Feb. 28) of records that were previously withheld from the public under legal provisions that expired early last year, a spokeswoman for the National Archives said. About 4,000 to 5,000 pages will be put online at 1 P.M. Friday, with paper copies becoming simultaneously available at the library in Little Rock, the spokeswoman said. More releases are expected in the next couple of weeks.

• Tough path for states seeking Medicaid expansion
Of the 25 states that already have expanded Medicaid under the Affordable Care Act, all but Arkansas, Iowa and Michigan simply added newly eligible adults to their existing Medicaid programs. That was the easiest approach. In contrast, the states that haven’t yet expanded Medicaid but are considering doing so want to tailor the program to fit their own priorities—and that will take time.

WORD ON THE WIRE
"Donations are the lifeblood of the organization. The funds generated through the sale of goods go right back into the Siloam Springs community to help people who need job readiness training and education."
— Goodwill Industries of Arkansas President Brian Itzkowitz, in speaking about the new Goodwill location set to soon open in Siloam Springs

“I think we’re going to have a good season this year. I think holding on during the bad times was a victory. From what I can tell, if the weather will let us alone for a while, we’re going to have a good year. I think people are a little more sure about the economy. I think they’ve got a little money in their pockets. And I think after this winter, they may have some severe cabin fever they want to solve. So I’m looking forward to a good year.”
— Richard Davies, executive director of the Arkansas Parks & Tourism Department, when asked about the tourism industry performance in 2014

“(A) court facing a defendant arrested with a gun would interpret the statute based upon its plain meaning. When all is said and done, how can the court punish a person for following the literal and unambiguous meaning of the statute? A person should not be expected to consult the history of the law’s passage, or its political context, to understand what it proscribes."
— University of Arkansas law professor Laurent Sacharoff and law student Jacob Worlow, on their review of a law that has allowed for open carry of handguns in Arkansas