ETSU Bureau of Business and Economic Research

Tri-Cities Retail Sales Report

East Tennessee State University + First Quarter 2014 + College of Business and Technology

THE TRI-CITIES

Kingsport reported the best retail performance during the first quarter. On a year-to-year basis, dollar sales increased 3.0% to $363 million, and after adjustment for inflation, sales volume was up 1.6% as well. In contrast, retail activity declined in the other two cities. Johnson City saw a 0.9% drop in retail revenues to $448 million, and a 2.3% drop in sales volume. In Bristol, dollar sales were down 1.3% to $240 million, with a 2.6% decline in real sales. Overall, inflation adjusted retail activity decreased 0.8% in the metro area, while sales volume was up 2.2% in Tennessee and 0.9% in the United States.

 
 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
 14:1 239.8 -1.3 448.4 -0.9 363.3 3.0
 

THE METROPOLITAN AREAS

Retail activity in the Tri-Cities Combined Statistical Area (CSA) continued to be mixed during the winter months. Dollar sales rose by 0.6% $1,599 million, while retail sales volume decreased 0.8% below the first quarter of 2013. Inflation adjusted retail activity has now decreased in the metro area during seven of the last eight quarters. Among the seven metro counties, dollar sales and real sales both increased in Scott and Carter Counties. Hawkins saw higher sales but retail volume declined. Dollar sales and real sales were lower in Unicoi, Sullivan, Washington (TN), and Washington (VA) 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
  14:1 1598.9 0.6 2859.7 0.6 1793.2 0.1
 

Retail performance was also mixed in the East Tennessee metro areas during the January to March period. Dollar sales rose 0.6% in the Tri-Cities, 0.6% in Knoxville, and 0.1% in Chattanooga. However, as in the previous quarter, all these increases were the result of higher prices. Sales volume was down in all three metros – falling 0.8% in the Tri-Cities, 0.8% in Knoxville, and 1.3% in Chattanooga. Retail activity has been declining in East Tennessee for the past seven quarters.

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 4,627,809 7.4 84,030 6.0
  2012 4,869,032 5.2 87,711 4.4
 2013 5,067,874 4.1 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 1,066,443 7.6 19,141 5.4
 11:2 1,169,075 7.6 21,210 5.4
 11:3 1,161,426 7.9 21,202 6.5
 11:4 1,230,865 6.6 22,477 6.6
 12:1 1,150,433 7.9 20,829 8.8
 12:2 1,223,324 4.6 22,189 4.6
 12:3 1,209,901 4.2 21,628 2.0
 12:4 1,285,374 4.4 23,065 2.6
 13:1 1,185,543 3.1 21,014 0.9
 13:2 1,277,921 4.5 22,907 3.2
 13:3 1,270,482 5.0 22,360 3.4
 13:4 1,333,928 3.8 23,965 3.9
 14:1 1,212,719 2.3 21,772 3.6
 

The national retailing recovery continued to weaken during the winter months. Dollar sales in the United States did increase for the eighteenth quarter in a row – rising 2.3% to $1,213 billion. However, inflation adjusted sales were higher by only 0.8%, marking the weakest retail performance since the fourth quarter of 2009. Retail volume has now increased for seventeen consecutive quarters at the national level. (During the Great Recession period, U.S. retail activity declined for seven quarters, after increasing for twenty consecutive quarters during the 2002 to 2007 business expansion.)

In Tennessee, dollar sales rose 3.6% to $21.8 billion. Adjusted for inflation, sales activity in the state was 2.2% above 2013 levels. With the exception of the first quarter of 2013, the state has enjoyed higher levels of retail activity in fifteen of the last sixteen quarters. (During the Great Recession period, state sales volume declined for ten consecutive quarters.)

ANALYSIS

Retail performance was generally weaker across the board in the first quarter of 2014. At the national level, the growth in dollar sales and retail volume was well below the pace of previous periods. Within the region and the three cities, retail revenues and real sales continued to decline.

Several factors are at work here. The harsh winter depressed retail activity in all the areas covered by this report. At the national level, another factor was the troubling decline in real GDP during the first quarter - marking the first drop in production and income in three years. And locally, there has been an ongoing loss of jobs for two years, leading to lower incomes and reduced consumer spending.

The diverging national and regional trends in retail performance can be illustrated by comparing retail activity in 2013 with the prerecession highpoint in 2007. The following table compares the percent changes in dollar sales and real (inflation adjusted) sales over the six years.

 US TN CSA BR JC KP
 Dollar Change +14.0% +4.3% +1.3% -10.4% +3.2% +8.1
 Real Change +1.5% -6.6% -9.8% -20.3% -8.1% -3.7%

Between 2007 and 2013 the dollar value of retail sales in the United States increased by a healthy 14.0%. Adjusted for inflation, real sales are now 1.5% above the prerecession peak in 2007. In Tennessee and the metro area (CSA), retail sales are higher but sales volumes are still below the levels in 2007. Among the three cities, dollar sales increased in Kingsport and Johnson City but fell in Bristol. Adjusted for inflation, retail activity has fallen in all three cities over the past six years.

The weaker performance of the first quarter has made the business outlook even more uncertain. The retail recovery in the United States has been one of the drivers of the otherwise weak business recovery from the Great Recession of 2008-09. The first quarter decline in production and the simultaneous slowing of retail growth is a red flag. Locally, we have been looking to a revival in the national economy to drive a turnaround in area business conditions. Our wait may have been extended.

Technical Note. This report was prepared in June 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.

Data Note. The U.S. Census Bureau has revised the national retail sales data back to 2011. These revisions occur each year and tend to be small. For example, U.S. retail sales for 2013 have been reduced from $5,085 billion to $5,068 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.