ETSU Bureau of Business and Economic Research

Tri-Cities Retail Sales Report

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

THE TRI-CITIES

Building on the impressive second quarter performance, retail activity remained strong over the summer months. Compared to 2014, third quarter dollar sales jumped 10.8% in Bristol to $298 million, while Kingsport sales rose 6.0% to $422 million, and Johnson City sales were up 4.1% to $503 million. Due to lower energy prices, the overall price level was barely above 2014 levels. Sales volume increases were 10.7% in Bristol, 5.9% in Kingsport, and 4.0% in Johnson City. For comparison, retail activity rose 5.9% in the metro area, 7.4% in Tennessee, and 2.3% in the nation.

 
 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
 15:3 298.1 10.8 502.7 4.1 422.0 6.0
 

THE METROPOLITAN AREAS

During the July to September quarter, dollar sales in the Tri-Cities Combined Statistical Area (CSA) rose 6.0% to $1,855 million. Adjusted for the mild inflation rate, real metro sales were up 5.9%. The last two quarters mark the best retail performance since 2012. Among the seven metro counties, dollar sales and sales volume were up in Sullivan, Washington (TN), Unicoi, Washington (VA), Scott, and Carter Counties. Retail activity was lower in Hawkins County.

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
 15:3 1854.7 6.0 3430.2 8.0  2147.1 9.0
 

Retail performance remained strong in all three East Tennessee metro areas during the summer months. Dollar sales rose 9.0% in Chattanooga, 8.0% in Knoxville, and 6.0% in the Tri-Cities. Adjusted for the low rate of inflation, real volume increased 8.9% in Chattanooga, 7.9% in Knoxville, and 5.9% in the Tri-Cities. This marks the sixth 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 1,346,657 1.8 25,504 7.9
 15:3 1,343,760 2.3 25,580 7.5
 

The national retail expansion regained some momentum during the third quarter. Dollar sales in the United States rose 2.3% to $1,344 billion. With little inflation, sales volume was higher by 2.2%. Dollar sales in the country have now risen for twenty-four quarters in a row. Adjusted for inflation, retail volume has now increased for twenty-three 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 7.5% to $25.6 billion. Adjusted for near zero inflation, sales volume in the state was 7.4% above 2014 levels. With the exception of the first quarter of 2013, the state has enjoyed higher levels of retail activity in twenty-one of the last twenty-two quarters. (During the Great Recession period, state sales volume declined for ten consecutive quarters.)

ANALYSIS

Retail performance in the third quarter remained strong in the markets covered in this report. At the national level, the retail expansion has added another quarter and now totals twenty-three consecutive quarters, easily surpassing the twenty quarters of growth achieved in the previous 2002-2007 business cycle. However, U.S. retail growth so far in 2015 has fallen slightly below the rate of recent years.

In the state and the region, third quarter sales performance was generally as good as the second quarter. And the second quarter was the best quarter in years! So the state and the region have now racked up six months of impressive retail growth. Sales growth (adjusted for inflation) continued to average seven percent in Tennessee and the three metro areas of East Tennessee.

In the Tri-Cities, Bristol retail performance continues to be driven by store openings in the two new shopping centers in the Tennessee and Virginia parts of the Twin Cities. Retail growth in Johnson City and Kingsport also continues to be robust.

The outlook for the holiday selling season is very positive. At the national level, production and employment and income and retailing continue to increase. In the region, employment and retailing have recorded very strong growth. The ongoing national business expansion will continue to boost business activity in the Tri-Cities.

RETAIL RECOVERY SCORECARD

The current retail picture looks very good and is the best in years. However, the recovery from the Great Recession is still very uneven in the retail markets covered by this report. The following table compares the last twelve months of retail sales with the retail sales reached in 2007, the high point of the 2002-2007 business expansion. The dollar sales are in millions.

Twelve Month Dollar Sales Percent Change

 Market Area Jan07–Dec07 Oct14–Sep15 Dollar Volume
 Bristol TN-VA 1,119 1,118 -0.10 -12.50
 Johnson City 1,855 2,024 +9.07 -4.39
 Kingsport  1,408 1,652 +17.37 +2.84
 Tri-Cities CSA 6,643 7,209 +8.52 -4.92
 Knoxville MSA 12,266 13,226 +7.83 -5.54
 Chattanooga MSA 7,293 8,298 +13.78 -0.32
 Tennessee 85,997 99,198 +15.35 +1.05
 United States 4,443,807 5,305,926 +19.40 +4.61
 

The highest retail growth is actually in the nation as a whole. U.S. dollar sales increased by 19.4% from $4.44 trillion to $5.31 trillion. Adjusted for inflation, sales volume was higher by 4.6%. Tennessee saw retail dollar sales jump 15.4% from $86.0 billion to $99.2 billion. In real terms, state sales were up only 1.1% over the eight years since the pre-recession high point.

All three East Tennessee metro areas have yet to recover to 2007 levels. Chattanooga is closest, where sales volume is down only 0.3%. Knoxville and the Tri-Cities are still about five percent below the 2007 retail peak. Among the Tri-Cities, Kingsport has had the best retail recovery and real sales are up three percent. Johnson City retail volume is down by 4.4%, and surprisingly, Bristol retail volume is 12.5% below the pre-recession highpoint.

Technical Note. This report was prepared in December 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.