ETSU Bureau of Business and Economic Research

Tri-Cities Retail Sales Report

East Tennessee State University + First Quarter 2013 + College of Business and Technology

THE TRI-CITIES

Retail performance slumped in all three cities during the first quarter. After enjoying the strongest retail growth in the area for nearly two years, Bristol saw a sales drop of 6.5% during the winter months. Smaller declines were reported in Johnson City and Kingsport. Johnson City sales have fallen for three quarters in a row while Kingsport has seen two down quarters out of the last three. Over the January to March period, inflation adjusted retail sales decreased 8.0% in Bristol, 2.1% in Kingsport, and 1.8% in Johnson City. In comparison, sales volume dropped 4.8% in the metro area, 0.8% in Tennessee, while rising 1.4% in the United States.

 
 BRISTOL TN-VA JOHNSON CITY KINGSPORT 
 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 2006 1018.9 6.8 1747.2 4.2 1398.7 5.7
 2007 1119.0 9.8 1855.4 6.2 1407.7 0.7
 2008 1070.8 -4.3 1848.1 -0.4 1445.0 2.7
 2009 982.8 -8.2 1760.2 -4.8 1349.6  -6.6
 2010 972.8 -1.0 1791.8 1.8 1379.9 2.2
 2011 1014.5 4.3 1888.2 5.4 1456.0 5.5
 2012 1088.0 7.3 1910.3 1.2 1491.2 2.4
 09:1 231.2 -12.2  409.6 -5.2 318.2 -2.8
 09:2 236.2 -3.8 432.5 -5.6 336.4 -10.0
 09:3 258.5 -4.9 431.6 -4.9 330.4 -8.3
 09:4 256.8 -11.5 486.5 -3.5 364.7 -5.0
 10:1 232.1 0.4 414.7 1.3 317.9 -0.1
 10:2 228.6 -3.3 433.7 0.3 342.0 1.7
 10:3 248.7 -3.8 437.9 1.5 331.0 0.2
 10:4 263.5 2.6 505.5 3.9  388.9 6.7
 11:1 228.4 -1.6 426.8 2.9 326.5 2.7
 11:2 248.1 8.6 457.5 5.5 364.6 6.6
 11:3 260.8 4.9 471.3 7.6 369.1 11.5
 11:4 277.2 5.2 532.7 5.4 395.7 1.8
 12:1 259.9 13.8 453.6 6.3 354.3 8.5
 12:2 264.3 6.5 463.5 1.3 368.4 1.0
 12:3 265.7 1.9 464.1 -1.5 361.0 -2.2
 12:4 298.2 7.6 529.1 -0.7 407.5 3.0
 13:1 243.0 -6.5 452.7 -0.2 352.7 -0.5
 

THE METROPOLITAN AREAS

Reflecting the pattern in the retail centers, sales activity declined in the region as well during the first quarter. Dollar sales in the Tri-Cities Combined Statistical Area (CSA) fell 3.2% to $1,589 million, while inflation adjusted retail sales declined 4.8%. Retail volume in the metro area has now fallen for four quarters in a row. The county data reflect the regional weakness as not a single county reported any increase in dollar sales and all counties suffered lower real sales. The largest drop in retail volume occurred in Scott, followed by Unicoi, Washington (VA), Carter, Sullivan, Hawkins, and Washington (TN).

TRI-CITIES CSA KNOXVILLE MSA CHATTANOOGA MSA

 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 2006 6379.4 6.3 11817.0 8.3 7025.5 6.8
  2007 6643.2 4.6 12265.8 3.8 7293.2 3.8
 2008 6567.9 -1.1 11528.9 -6.0 7078.6 -2.9
 2009 6166.5 -6.1 10543.6 -8.6 6566.6 -7.2
 2010 6346.7 2.9 10875.7  3.2 6947.7 5.8
 2011 6635.5 4.6 11827.7 8.8 7341.4 5.7
 2012 6762.3 1.9 12105.0 2.4 7629.1 3.9
 09:1 1444.9 -7.4 2455.2 -11.3 1539.1 -8.8
 09:2 1544.1 -7.6 2688.3 -9.8 1652.7 -9.6
 09:3 1566.4 -5.8 2610.1 -9.5 1597.7 -8.4
 09:4 1611.1 -3.6 2790.0 -3.6 1777.0 -2.3
 10:1 1439.3 -0.4 2464.4 0.4 1625.7 5.6
 10:2 1604.9 3.9 2741.7 2.0 1756.2 6.3
 10:3 1599.7 2.1 2740.1 5.0 1718.9 7.6
 10:4 1702.8 5.7 2929.4 5.0 1846.9 3.9
 11:1 1507.8 4.8  2587.1 5.0 1670.3 2.7
 11:2 1685.9 5.0 2941.7 7.3 1842.3 4.9
 11:3 1684.6 5.3 3057.0 11.6 1878.7 9.3
 11:4 1757.2 3.2 3241.9 10.7 1950.1 5.6
  12:1 1641.7 8.9 2883.7 11.5 1818.6 8.9
 12:2 1692.0 0.4 3043.0 3.4 1939.6 5.3
 12:3 1670.4 -0.8 2992.7 -2.1 1883.7 0.3
 12:4 1758.1 0.1 3185.7 -1.7 1987.2 1.9
 13:1 1589.2 -3.2 2843.1 -1.4 1790.7 -1.5
 

Retail activity was also down in the other East Tennessee metro areas. During the first quarter, Chattanooga dollar sales fell 1.5% to $1,791 million, while Knoxville reported a 1.4% decrease to $2,843 million. Adjusted for inflation, sales volume declined 4.8% in the Tri-Cities, 3.2% in Chattanooga, and 3.0% in Knoxville. Retail volume has been falling across East Tennessee since last summer.

UNITED STATES AND TENNESSEE

 
 UNITED STATES TENNESSEE 
 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 2006 4,296,871 5.1 82,925 5.7
 2007 4,443,807 3.4 85,997  3.7
 2008 4,402,508 -0.9 83,612 -2.8
 2009 4,082,092 -7.3 77,155 -7.7
 2010 4,307,947 5.5 79,284 2.8
 2011 4,631,122 7.5 84,030 6.0
 2012 4,881,385 5.4 87,711 4.4
 09:1 941,740 -11.3 18,241 -9.0
 09:2 1,026,312 -10.6 19,439 -10.4
 09:3 1,030,668 -8.0 19,155 -8.5
  09:4 1,083,372 1.0 20,320 -3.0
 10:1 991,137 5.3 18,168 -0.4
 10:2 1,086,431 5.9 20,115 3.5
 10:3 1,076,186 4.4 19,907 3.9
 10:4  1,154,193 6.5 21,093 3.8
 11:1 1,066,683 7.6 19,141 5.4
 11:2 1,169,633 7.7 21,210 5.4
 11:3 1,162,358 8.0 21,202 6.5
 11:4 1,232,448 6.8 22,477 6.6
 12:1 1,152,703 8.1 20,829 8.8
 12:2 1,226,070 4.8 22,189 4.6
 12:3 1,213,092 4.4 21,628 2.0
 12:4 1,289,520  4.6 23,065 2.6
 13:1 1,188,231 3.1 21,014 0.9
 

The pace of the national retail recovery slowed again during the winter months with the poorest growth performance in three years. Dollar sales in the United States increased for the fourteenth quarter in a row – rising 3.1% to $1,188 billion. Inflation adjusted sales were higher by 1.4%, marking the thirteenth consecutive quarter of real growth. (U.S. retail activity declined for seven quarters during the 2008 to 2009 recession, after increasing twenty consecutive quarters during the 2002 to 2007 business expansion.)

In Tennessee, dollar sales increased only 0.9% to $21.0 billion. Once adjusted for inflation, sales activity in the state fell 0.8% below 2012 levels. This marks the end of eleven straight quarters of real growth in retail sales. During the preceding recession period, state sales volume declined for ten consecutive quarters.

ANALYSIS

This report describes a troubling turn in retail performance at the national, state, and local levels. In the weak recovery from the Great Recession of 2008-09, retail growth has been one of the positive elements in the overall business picture. We may be seeing the end of that retail recovery.

At the national level, the U.S. economy did report an increase in sales volume during the winter months, but that increase was only 1.4% which is less than half of the growth rate in the preceding twelve quarters. Inflation adjusted sales were down in the cities and counties of the Tri-Cities region, the metro areas of East Tennessee, and the state as a whole.

Analysts have linked the decline in retail performance to severe winter weather and weaker employment conditions. But even after these factors are taken into account, there seems to be a significant drop in consumer confidence and level of spending.

As discussed in the first quarter labor market report, the economic outlook is now more uncertain. Both the labor markets and the retail markets are showing signs of fatigue after nearly three years of driving the economic recovery.

Technical Note. This report was prepared in June 2013. The “Retail Sales” figures used in this report are “Retail and Food Service Sales” which is the total sales in NAICS Sector 44, Sector 45, and Subsector 722. The national retail sales estimates are issued by the U.S. Census Bureau. The state, region, county, and city retail sales estimates are based on state sales tax collections and are benchmarked to the 2007 U.S. Census of Retail Trade and the 2002 U.S. Census of Retail Trade. The Consumer Price Index (CPI) from the U.S. Bureau of Labor Statistics is used to adjust the dollar value of retail sales into "real" or volume terms where the effects of price inflation are removed. The sales data are not adjusted for seasonality so comparisons should be made on a year-to-year basis. The dollar figures in the retail sales tables are in millions of dollars.

Data Note. The U.S. Census Bureau has revised the national retail sales data back to 2009. These revisions occur each year, and tend to be small. For example, U.S. retail sales for 2012 have been reduced from $4,892 billion to $4,881 billion.

More Information. This report was prepared by Dr. F. Steb Hipple, Professor of Economics, and Research Associate, BBER. For more information, please contact Dr. Hipple c/o Department of Economics and Finance, Box 70686, East Tennessee State University, Johnson City, Tennessee 37614. Phone/Voicemail: 423-439-5304. Fax: 423-439-8583. E-Mail: Hipples@etsu.edu. Website: http://faculty.etsu.edu/hipples.