ETSU Bureau of Business and Economic Research

Tri-Cities Retail Sales Report

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

THE TRI-CITIES

The summer surge in retail activity continued into the fourth quarter in all three cities, marking the best holiday selling season in recent years. Compared to 2013, Bristol sales increased 7.5% to $279 million, while Kingsport sales rose 7.4% to $438 million and Johnson City sales were up 4.8% to $556 million. Adjusted for inflation, sales volume increased 6.2% in Bristol, 6.2% in Kingsport, and 3.5% in Johnson City. In comparison, retail activity rose 3.9% in the metro area, 5.8% in Tennessee, and 3.0% in the United States.

The annual data for 2014 reflect the summer and fall turnaround in retail performance. For the year, dollars sales increased 4.3% in Kingsport to $1,588 million, 3.8% in Bristol to $1040 million, and 1.0% in Johnson City to $1965 million. Adjusted for inflation, the 2014 sales volume rose 2.7% in Kingsport, 2.1% in Bristol, and 1.0% in Johnson City.

 
   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
 2014 1040.1 3.8 1965.1 2.6 1587.9 4.3
 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
 14:2 252.0 1.3 477.8 1.1 388.7 3.7
 14:3 269.1 7.3 482.7 5.1 398.0 2.9
 14:4 279.2 7.5 556.2 4.8 438.0 7.4
 

THE METROPOLITAN AREAS

During the October to December period, retailers across the Tri-Cities Combined Statistical Area (CSA) enjoyed the best retail performance in four years. Dollar sales rose by 5.2% to $1,852 million, while inflation adjusted sales volume increased 3.9%. This growth during the critical holiday selling season is especially welcome. All seven metro counties saw significant gains in dollar sales and sales volume. The largest increase occurred in Sullivan County, followed by Hawkins, Unicoi, Washington (VA), Washington (TN) , Carter, and Scott 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
 2014 6942.9 3.1 12587.2 3.6 7874.8 3.5
 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
 14:2 1742.4 1.5 3151.6 2.6 1995.1 2.6
 14:3  1750.2 5.0 3175.4 5.2 1969.2 4.7
 14:4 1851.5 5.2 3400.5 5.9 2117.3 6.4
 

Retail performance improved again across all three East Tennessee metro areas during the October to December period. Dollar sales rose 6.4% in Chattanooga, followed by 5.9% in Knoxville and 5.2% in the Tri-Cities. Adjusted for inflation, real sales increased 5.1% in Chattanooga, 4.6% in Knoxville, and 3.9% in the Tri-Cities. This marks the third quarter of real sales growth in East Tennessee.

Turning to the annual data, 2014 was an up year in East Tennessee thanks to the second half retail rebound. Knoxville reported higher annual dollar sales, up 3.6% to $12,587 million. Sales rose 3.5% in Chattanooga to $7,875 million, and 3.1% in the Tri-Cities to $6,943 million. Adjusted for inflation, retail volume increased 2.0% in Knoxville, 1.9% in Chattanooga, and 1.5% 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 4,627,809 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
 2014 5,271,913 4.0 94,874 5.1
 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 1,211,824 2.2 21,772 3.6
 14:2 1,340,545 4.9 23,646 3.2
 14:3 1,329,137 4.6 23,799 6.4
 14:4 1,390,407 4.2 25,656 7.1
 

The national retail expansion continued to roll along during the winter months and the very important holiday selling season. Over the fourth quarter, retail sales in the United States rose 4.2% to $1,390 billion. Dollar sales in the country have now risen for twenty-one quarters in a row. Adjusted for inflation, real sales were higher by 3.0% over the same period in 2013. Retail volume has now increased for twenty 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 a strong 7.1% to $25.7 billion. Adjusted for inflation, sales activity in the state was 5.4% above 2013 levels. With the exception of the first quarter of 2013, the state has enjoyed higher levels of retail activity in eighteen of the last nineteen quarters. (During the Great Recession period, state sales volume declined for ten consecutive quarters.)

The annual data for 2014 show the continuing retail strength in the nation and the state. Dollar sales were up 4.0% in the United States and 5.1% in Tennessee. Adjusted for inflation, retail volume increased 2.4% in the nation and 3.5% in the state. Compared to the pre-recession year of 2007, real sales volume in the United States is now 3.9% above pre-recession levels, while Tennessee sales are still 3.3% below the high point in 2007.

ANALYSIS

Retail performance was very good across the board during the fourth quarter. In the region and the state, the summer retail rebound continued into the holiday selling season. At the national level, the retail expansion racked up another quarter of significant growth.

The holiday selling season is the most important quarter of the year for many types of retail businesses. Sales in November and December are their profit or loss for the year. From this perspective, it is very good news that holiday sales in Tri-Cities metro area and the state of Tennessee were the best in recent years. And since retail sales drive tax collections in Tennessee, these branches of government are getting some relief from tight public budgets.

In the retail report for the third quarter, we noted retail sales were higher but there was no corresponding increase in employment. Without higher job levels, there is no higher income to sustain higher retail sales. In this report for the fourth quarter, the retail recovery has not only continued, but become stronger. Where are the jobs?

In the fourth quarter labor market report, we discussed the data available for employment. The BBER labor reports are based on the Current Population Survey (CPS) which has been showing declines in regional and local job levels. A second data source is Current Employment Statistics (CES) and this source shows employment growth in the metro area which matches the turnaround in retail activity. So the jobs are there, and the retail recovery does have a secure foundation.

At the national level, the retail expansion has now clocked twenty quarters of real growth – matching the growth period in the 2002 to 2007 business expansion. Retailing has been the strongest element in the on-going economic recovery from the Great Recession of 2008 and 2009. And it is important that retail growth continue as production and employment are now – finally – showing significant improvement.

The business outlook for the region and the nation has become positive. At the national level, production and employment and income and retailing are upward bound. In the region, employment and retail activity have turned around. The national business recovery will provide ongoing support for better business conditions in the Tri-Cities.

Technical Note. This report was prepared in March 2015. 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.