ETSU Bureau of Business and Economic Research

Tri-Cities Retail Sales Report

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

Announcement: This report is the last release in the current BBER retail sales report series for the Tri-Cities. Please refer to the note at the end of the report.

THE TRI-CITIES

The Tri-Cities saw record setting holiday sales in the fourth quarter. Compared to 2014, dollar sales increased 19.4% in Bristol to $333 million, while Johnson City sales were up 5.2% to $585 million, and Kingsport sales rose 4.8% to $459 million. Bristol has enjoyed double-digit sales growth for the last three quarters. Lower energy prices continued to keep the overall price level barely above 2014 levels. Thus the sales volume increases were a stunning 18.8% in Bristol, overshadowing the solid growth of 4.7% in Johnson City and 4.3% in Kingsport. In comparison, retail activity rose 4.2% in the metro area, 6.9% in Tennessee, and 1.7% in the nation.

The annual data for 2015 reflect the strong retail performance in recent quarters. For the year, dollar sales increased 12.7% in Bristol to $1,172 million, 5.4% in Kingsport to $1,673 million, and 4.5% in Johnson City to $2,053 million. Adjusted for the mild rate of inflation, sales volume rose 12.5% in Bristol, 5.2% in Kingsport, and 4.3% in Johnson City. Overall, 2015 was the best year in local retailing since the Great Recession of 2008-09.

 
   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
 2015 1172.0 12.7 2052.7 4.5 1673.3 5.4
 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
 15:4 333.3 19.4 585.2 5.2 459.1 4.8
 

THE METROPOLITAN AREAS

During the October to December period, dollar sales in the Tri-Cities Combined Statistical Area (CSA) rose 4.7% to $1,938 million. Reflecting the low rate of inflation, real metro sales were up 4.2%. As the table shows, there has been strong retail growth during the past six quarters. Among the seven metro counties, dollar sales and sales volume were up in Sullivan, Carter, Washington (TN), Scott, and Washington (VA) Counties. Retail activity was lower in Unicoi and Hawkins 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
 2015 7295.8 5.1 13446.7 6.8 8413.1 6.8
 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
 15:4 1937.9 4.7 3621.4 6.5 2232.4 5.4
 

Retail growth remained strong in the three East Tennessee metro areas during the fall months. Dollar sales rose 6.5% in Knoxville, 5.4% in Chattanooga, and 4.7% in the Tri-Cities. Adjusted for inflation, real volume increased 6.0% in Knoxville, 4.9% in Chattanooga, and 4.2% in the Tri-Cities. This marks the seventh quarter of real sales growth in East Tennessee.

Turning to the annual data, 2015 recorded the best retail performance in East Tennessee since the Great Recession of 2008-09. Knoxville saw annual dollar sales grow 6.8% to $13,447 million. Sales also rose 6.8% in Chattanooga to reach $8,413 million, while Tri-Cities sales were up 5.1% $7,295 million. Adjusted for inflation, retail volume increased 6.7% in Knoxville, 6.7% in Chattanooga, and 4.9% in the Tri-Cities.

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
 2015 5,319,773 2.1 101,097 6.6
 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 1,343,779 2.3 25,580 7.5
 15:4 1,404,235 2.2 27,554 7.4
 

Retail sales at the national level continued to increase in the fourth quarter, but it was the lowest growth rate for the period in several years. Dollar sales in the United States rose 2.2% to $1,404 billion. With low inflation, sales volume was higher by 1.7%. Dollar sales in the country have now risen for twenty-five quarters in a row. Adjusted for inflation, retail volume has now increased for twenty-four 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 7.4% to $27.6 billion. Adjusted for inflation, sales volume in the state was 6.9% above 2014 levels. With the exception of the first quarter of 2013, the state has enjoyed higher levels of retail activity in twenty-two of the last twenty-three quarters. (During the Great Recession period, state sales volume declined for ten consecutive quarters.)

The annual data for 2015 show a mixed pattern for the nation and the state. Retail growth in the United States, while continuing, has slowed. Dollar sales increased 2.1% to $5,320 billion. In contrast, Tennessee retail growth remains strong, growing 6.6% to $101 billion. Adjusted for inflation, retail volume increased 2.0% in the nation and 6.4% in the state. Compared to the pre-recession year of high point of 2007, real sales volume in the United States is now 4.8% above pre-recession levels, while Tennessee sales are 2.9% above the high point in 2007.

ANALYSIS

The fourth quarter holiday selling season was generally very good in the markets covered by this report. At the national level, the retail expansion has added another quarter and now totals twenty-four consecutive quarters, easily surpassing the twenty quarters of growth achieved in the previous 2002-2007 business cycle. However, U.S. retail growth 2015 slowed from the rate of recent years. As frequently noted, the strong retail recovery from the Great Recession has been one of the main engines of economic growth in the nation.

In the state and the region, fourth quarter sales performance was on a par with the spring and summer quarters. And the second and third quarters were the best in recent years. The state and the region have now achieved nine months of impressive retail growth. Sales growth (adjusted for inflation) continued to average seven percent in Tennessee, and ranged from four to six percent in the three metro areas of East Tennessee.

In the Tri-Cities, Bristol had another quarter of double digit retail growth, 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, while overshadowed, continues to be robust.

The outlook for the future is generally positive, but there are concerns. The slowdown in retail growth in the nation could reflect some consumer exhaustion after six years of ever higher spending levels. The data for the next few quarters will be critical. The regional economy is now plugged into the national business expansion, and we are seeing strong growth in employment and retail trade. Any slowdown in the growth of the national economy will impact regional business conditions as well.

RETAIL RECOVERY SCORECARD

Retail activity continued to improve in recent quarters. But the recovery from the Great Recession is still very uneven in the regional markets covered by this report. The following table compares 2015 dollar sales with the retail sales of 2007, the high point of the 2002-2007 business expansion. The dollar sales are in millions, and the percent changes are shown for the dollar sales and for inflation-adjusted sales volume.

Twelve Month Dollar Sales Percent Change

 Market Area Jan07–Dec07 Jan15–Dec15 Dollar Volume
 Bristol TN-VA 1,119 1,172 +4.73 -8.37
 Johnson City 1,855 2,053 +10.64 -3.16
 Kingsport 1,408 1,673 +18.87 +4.01
 Tri-Cities CSA 6,643 7,296 +9.82 -3.90
 Knoxville MSA 12,266 13,447 +9.63 -4.09
 Chattanooga MSA 7,293 8,413 +15.36 +0.94
  Tennessee 85,997 101,097 +17.56 +2.86
 United States 4,443,807 5,319,773 +19.82 +4.85
 

The highest retail growth is in the nation as a whole. U.S. dollar sales increased by 19.8% from $4.44 trillion to $5.32 trillion. Adjusted for inflation, sales volume was higher by 4.9%. Tennessee saw retail dollar sales increase 17.6% from $86.0 billion to $101.1 billion. In real terms, state sales were up 2.9% over the eight years period since the pre-recession high point.

The three East Tennessee metro areas show a mixed pattern. Chattanooga sales volume is only 0.9% above the 2007 level. Knoxville and the Tri-Cities are still about four percent below their 2007 retail peak. Among the Tri-Cities, Kingsport has matched the national retail recovery – dollar sales are up 18.9% and real sales are up 4.0%. Johnson City retail volume is down 3.2%, and surprisingly, Bristol retail volume is still 8.4% below the pre-recession highpoint. These regional and local figures suggest that there is still ample room for continued retail sales growth.

Last Report Note. Effective with this report, Dr. F. Steb Hipple is retiring, so this will be the last entry in the current BBER retail sales report series for the Tri-Cities. The first report was issued in 1984, and the series has been issued continuously for the past thirty-two years. Contact the Bureau for information regarding future retail sales reports.

Looking Ahead. The retail sales estimates in this BBER report series are benchmarked to the U.S. Census of Retail Trade which is conducted by the U.S. Census Bureau every five years, in years ending in “2” and “7”. Currently, this report is based on the 2002 census and the 2007 census. In October of 2015, the complete results of the 2012 retail census became available. Future retail sales reports will also be benchmarked to the new 2012 U.S. Census of Retail Trade.

Technical Note. This report was prepared in March 2016. 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.