ETSU Bureau of Business and Economic Research

Tri-Cities Retail Sales Report

East Tennessee State University + Second Quarter 2015 + College of Business and Technology

THE TRI-CITIES

During the second quarter, retail performance in the Tri-Cities was the best in three years. Compared to 2014, Bristol sales jumped 15.2% to $290 million, Kingsport sales rose 6.3% to $413 million, and Johnson City sales were up 6.2% to $507 million. Due to lower energy prices, the overall price level remained unchanged on a year-to-year basis. With no inflation, sales volume increases were also 15.2% in Bristol, 6.3% in Kingsport, and 6.2% in Johnson City. In comparison, retail activity rose 6.9% in the metro area, 7.9% in Tennessee, and 1.8% 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
 2014 1040.1 3.8 1965.1 2.6 1587.9 4.3
 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
 15:1 250.4 4.4 457.6 2.1 379.2 4.4
 15:2 290.3 15.2 507.2 6.2 413.1 6.3
 

THE METROPOLITAN AREAS

During the April to June quarter, dollar sales in the Tri-Cities Combined Statistical Area (CSA) rose 6.9% to $1,862 million, marking the best retail growth since the winter of 2012. With no price inflation, sales volume was up by the same amount. All of the seven metro counties enjoyed strong retail growth. Dollar sales and real sales gains were led by Sullivan County, followed by Washington (TN), Scott, Unicoi, Carter, Hawkins, and Washington (VA).

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
 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
 15:1 1641.0 2.7 3013.2 5.4 1899.5 5.9
 15:2 1862.1 6.9 3382.0 7.3 2134.1 7.0
 

Retail performance continued to improve in all three East Tennessee metro areas during the spring months. Dollar sales rose 7.3% in Knoxville, followed closely by 7.0% in Chattanooga and 6.9% in the Tri-Cities. Adjusted for the zero rate of inflation, real volume increased 7.3% in Knoxville, 7.0% in Chattanooga, and 6.9% in the Tri-Cities. This marks the fifth quarter of real sales growth in East Tennessee.

UNITED STATES AND TENNESSEE

 
 UNITED STATES TENNESSEE 
 Period  Sales  Y-Y%Ch  Sales  Y-Y%Ch 
 2007 4,439,733 3.4 85,997 3.7
 2008 4,392,750 -1.1 83,612 -2.8
 2009 4,066,822 -7.4 77,155 -7.7
 2010 4,288,339 5.5 79,284 2.8
 2011 4,601,788 7.3 84,030  6.0
 2012 4,831,131 5.0 87,711 4.4
 2013 5,011,740 3.7 90,245 2.9
 2014 5,208,443 3.9 94,874 5.1
 11:1 1,061,098 7.5 19,141 5.4
 11:2 1,162,500 7.5 21,210 5.4
 11:3 1,155,125 7.8 21,202 6.5
 11:4 1,223,065 6.5 22,477 6.6
 12:1 1,142,659 7.7 20,829 8.8
  12:2 1,213,524 4.4 22,189 4.6
 12:3 1,200,672 3.9 21,628 2.0
 12:4 1,274,276 4.2 23,065 2.6
 13:1 1,174,124 2.8 21,014 0.9
 13:2  1,263,200 4.1 22,907 3.2
 13:3 1,256,485 4.7 22,360 3.4
 13:4 1,317,931 3.4 23,965 3.9
 14:1 1,196,532 1.9 21,772 3.6
 14:2 1,323,428 4.8 23,646 3.2
 14:3 1,314,034 4.6 23,799 6.4
 14:4 1,374,449 4.3 25,656 7.1
 15:1 1,225,102 2.4 22,458 3.2
 15:2 1,346,761  1.8 25,504 7.9
 

The national retail expansion lost momentum during the second quarter. Dollar sales in the United States rose 1.8% to $1,347 billion. With no inflation, sales volume was also higher by 1.8%, which is the lowest real increase since the winter of 2014. Dollar sales in the country have now risen for twenty-three quarters in a row. Adjusted for inflation, retail volume has now increased for twenty-two consecutive quarters. (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 7.9% to $25.5 billion. Adjusted for zero inflation, sales volume in the state was also 7.9% above 2014 levels. With the exception of the first quarter of 2013, the state has enjoyed higher levels of retail activity in twenty of the last twenty-one quarters. (During the Great Recession period, state sales volume declined for ten consecutive quarters.)

ANALYSIS

During the second quarter, retail performance continued to be good in all of the markets covered in this report. At the national level, the retail expansion has now reached twenty-two quarters, surpassing the twenty quarters of growth achieved in the previous 2002-2007 business cycle. Of possible concern is the lower rate of growth in the second quarter. The robust retail expansion in recent years has been one of the key drivers in the ongoing recovery from the 2008-2009 Great Recession.

In the region and the state, retail merchants reported the highest sales activity in years. Compared to 2014, all three East Tennessee metro areas saw growth around seven percent. State sales volume was up nearly eight percent. In the Tri-Cities, Bristol was again the sales leader (in double digits!) as additional stores open in the Pinnacle shopping center. Even so, the growth in the Johnson City and Kingsport retail markets is above six percent. So far, there has been no retail cannibalism.

The strong retail growth in the regional economy matches the continued employment growth in the Tri-Cities. As discussed in the last labor market report, both the CES payroll data and the CPS household data are finally in sync and both show strong job gains. With job growth we will have the income growth needed to sustain continued sales growth.

The business outlook for the region and the nation remains positive. At the national level, production and employment and income and retailing continue to increase. In the region, employment and retailing have been growing. The ongoing national business expansion will continue to boost business activity in the Tri-Cities.

Technical Note. This report was prepared in September 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.