ETSU Bureau of Business and Economic Research

Tri-Cities Retail Sales Report

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

THE TRI-CITIES

Retail performance in the three cities was very weak during the critical holiday selling season. Dollar sales increased only 0.4% in Johnson City to $531 million. Kingsport sales were unchanged at $408 million while Bristol sales plunged 12.9% to $260 million. Adjusted for inflation, sales volume was down 0.9% in Johnson City, 1.2% in Kingsport, and 14.0% in Bristol. For comparison, inflation adjusted sales volume was down 1.1% in the metro area, but higher by 2.6% in Tennessee and 2.7% in the United States.

The annual data for 2013 show mixed results for the year. In terms of dollar sales, Kingsport retailing rose 2.1% to $1,522 million. Sales were also higher in Johnson City by 0.3% to $1,916 million, but decreased 7.9% in Bristol to $1,002 million. Adjusted for inflation, the annual sales volume increased 0.6% in Kingsport, but fell 1.2% in Johnson City and 9.2% in Bristol.

 
 BRISTOL TN-VA JOHNSON CITY KINGSPORT 
 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 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
 2013 1002.3 -7.9 1915.5 0.3 1522.1 2.1
 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
 13:2 248.9 -5.8 472.8 2.0 375.0 1.8
 13:3 250.8 -5.6 459.1 -1.1 386.6 7.1
 13:4  259.7 -12.9 531.0 0.4 407.7 0.0
 

THE METROPOLITAN AREAS

In the fourth quarter, retail activity in the Tri-Cities Combined Statistical Area (CSA) was mixed. Dollar sales rose slightly by 0.1% $1,760 million, while retail sales volume decreased 1.1% below the fourth quarter of 2012. Inflation adjusted retail sales have now decreased in the metro area during six of the last seven quarters. Among the seven metro counties, dollar sales and inflation adjusted sales were higher in Carter and Hawkins Counties. Washington (TN) saw higher sales but retail volume was flat. Dollar sales and real volume were lower in Sullivan, Washington (VA), Scott, and Unicoi Counties.

TRI-CITIES CSA KNOXVILLE MSA CHATTANOOGA MSA

 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 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
 2013 6732.3 -0.4 12147.6 0.4 7606.1 -0.3
 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
 13:2 1716.6  1.5 3072.8 1.0 1945.4 0.3
 13:3 1666.3 -0.3 3019.5 0.9 1880.3 -0.2
 13:4 1760.2 0.1 3212.3 0.8 1989.7 0.1
 

Retail performance was mixed in the East Tennessee metro areas during the fourth quarter. Dollar sales rose 0.8% in Knoxville, 0.1% in Chattanooga, and 0.1% in the Tri-Cities. However all these increases reflected higher prices due to inflation. Sales volume was down across the board – falling 0.4% in Knoxville, 1.1% in Chattanooga, and 1.1% in the Tri-Cities. Retail activity has been declining in East Tennessee since the summer of 2012.

The annual data for 2013 show a down year for retail activity in East Tennessee after three good years. Knoxville reported higher annual dollar sales, up 0.4% to $12,148 million. Sales fell 0.3% in Chattanooga sales to $7,606 million, and 0.4% in the Tri-Cities to $6,732 million. Adjusted for inflation, retail volume decreased 1.1% in Knoxville, 1.7% in Chattanooga, and 1.9% in the Tri-Cities.

UNITED STATES AND TENNESSEE

 
 UNITED STATES TENNESSEE 
 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 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
 2013 5,084,853 4.2 90,245 2.9
 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 1,188,117 3.1 21,014 0.9
 13:2 1,280,607 4.5 22,907 3.2
 13:3 1,275,399 5.1 22,360 3.4
  13:4 1,340,730 4.0 23,965 3.9
 

The national recovery in retail activity lost some momentum during the fall quarter. Dollar sales in the United States increased for the seventeenth quarter in a row – rising 4.0% to $1,341 billion. Inflation adjusted sales were higher by 2.7%, marking the sixteenth 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 rose 3.9% to $24.0 billion. Adjusted for inflation, sales activity in the state was 2.6% above 2012 levels. With the exception of the first quarter of 2013, the state has enjoyed higher levels of retail activity in fourteen of the last fifteen quarters. (During the Great Recession period, state sales volume declined for ten consecutive quarters.)

The annual data for 2013 show slower retail growth in the nation and the state compared to previous years. Dollar sales were up 4.2% in the United States and 2.9% in Tennessee. Adjusted for inflation, retail volume increased 2.7% in the nation and 1.4% in the state. Compared to the pre-recession year of 2007, real sales volume in the United States is 1.8% above pre-recession levels, while Tennessee sales are still 6.6% below the high point in 2007.

ANALYSIS

Retail performance in the fourth quarter is more critical to the overall success of the retail industry than other quarters in the year due to the holiday selling season. For many types of retail stores, the holiday selling season can represent up to forty percent of overall annual sales and their profit or loss for the year. The fourth quarter of 2013 was mixed, and the earlier trends in the year continued into the fall and winter months.

The retail recovery in the United States achieved the sixteenth consecutive quarter of real growth. As we have noted in previous retail reports, these four years of retail expansion have been a bright spot in the otherwise weak business recovery from the Great Recession of 2008-09. However, the annual data do show slower retail growth for the year as a whole.

Tennessee has been enjoying a state-level retail recovery – based on the strength of sales growth in Middle and West Tennessee which has more than offset declining retail performance in East Tennessee. The state government lives off of sales tax collections, so the state-level retail growth has been a welcome financial relief to the pressures on the state budget.

The retail sector in the Tri-Cities area economy has been in a slump for seven quarters. As shown by the quarterly and annual data, the decline in retail activity has afflicted all of the cities and counties in the region. These negative retail trends have been driven by the parallel decline in employment levels and its effect on local consumer confidence.

The business outlook has become more uncertain with the mixed performance of the fourth quarter. Retail and employment data show the Tri-Cities regional economy in a slump. Production, income, employment, and retail data show the U.S. national economy stuck on a sluggish growth path out of the Great Recession. This has been the story of the past two years, and is likely to continue to be the story in the immediate future.

Technical Note. This report was prepared in March 2014. The “Retail Sales” figures used in this report are “Retail and Food Service Sales” which are 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.

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.