ETSU Bureau of Business and Economic Research

Tri-Cities Retail Sales Report

East Tennessee State University + Second Quarter 2016 + College of Business and Technology

THE TRI-CITIES

The retail picture changed over the spring months. After two years of solid growth in retail activity, the three cities reported mixed results for the second quarter. Dollar sales increased 10.4% in Bristol to $323 million, while Johnson City sales were up 2.2% to $543 million, and Kingsport sales rose only 0.8% to $410 million. Adjusted for inflation, real sales were up 9.3% in Bristol, 1.2% in Johnson City, while falling 0.2% in Kingsport. In comparison, second quarter retail volume rose 1.0% in the metro area, 3.5% in Tennessee, and 1.5% 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 1071.7 -4.2  1860.4 0.3 1441.9 2.4
 2009 985.0 -8.1 1792.7 -3.6 1341.3 -7.0
 2010 976.4 -0.9 1846.2 3.0 1366.0 1.8
 2011 1019.6 4.4 1968.0 6.6 1435.6 5.1
 2012 1094.3 7.3 2000.8 1.7 1467.7 2.2
 2013 1008.0 -7.9 2006.3 0.3 1498.1 2.1
 2014 1046.0 3.8 2058.3 2.6 1562.9 4.3
 2015 1178.8 12.7 2150.0 4.5  1647.0 5.4
 12:1 261.4 13.9 475.1 7.3 348.7 8.2
 12:2 265.7 6.6 485.5 2.0 362.6 0.8
 12:3 267.2 1.9 486.1 -1.2 355.3 -2.4
 12:4 299.9 7.6 554.2 -0.6 401.1 2.9
 13:1 244.4 -6.5 474.1 -0.2 347.1 -0.5
 13:2 250.3 -5.8 495.2 2.0 369.1 1.8
 13:3 252.2 -5.6 480.9 -1.1 380.5 7.1
 13:4 261.1 -12.9 556.1 0.4 401.3 0.1
 14:1 241.2 -1.3 469.7 -0.9 357.5 3.0
 14:2 253.4 1.3 500.4 1.1 382.6 3.7
 14:3 270.6 7.3  505.6 5.1 391.7 2.9
 14:4 280.8 7.5 582.6 4.8 431.1 7.4
 15:1 251.8 4.4 479.3 2.1 373.2 4.4
 15:2 292.0 15.2 531.3 6.2 406.6 6.3
  15:3 299.8 10.8 526.5 4.1 415.3 6.0
 15:4 335.2 19.4 612.9 5.2 451.9 4.8
 16:1 301.0 19.5 515.6 7.6 383.6 2.8
 16:2 322.5 10.4 543.1 2.2 409.9 0.8
 

THE METROPOLITAN AREAS

During the April to June quarter, dollar sales in the Tri-Cities Combined Statistical Area (CSA) rose 2.0% to $1,992 million. Adjusted for inflation, real metro sales were up only 1.0%. Retail performance became mixed among the seven metro counties. Dollar sales and sales volume increased in only three counties - Sullivan, Washington (TN), and Carter. Unicoi County had a small increase in dollar sales, but real volume declined. Dollar sales and sales volume were lower in Hawkins, Washington (VA), 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 6620.3 -0.4 11694.8 -4.7 7112.5 -2.5
 2009 6305.3 -4.8 10975.2 -6.2 6655.5 -6.4
 2010 6582.6 4.4 11609.0 5.8 7102.1 6.7
 2011 6977.2 6.0 12938.5 11.5 7568.7 6.6
 2012 7091.1 1.6 13236.6 2.3 7810.4 3.2
 2013 7059.3 -0.4 13281.4 0.3 7785.9 -0.3
 2014 7279.7 3.1 13762.1 3.6 8060.9 3.5
 2015 7649.4 5.1 14701.8 6.8 8612.0 6.8
 12:1 1721.5 9.2 3153.7 12.5 1862.0 8.5
 12:2 1774.1 0.2 3327.9 3.8 1986.0 4.7
 12:3 1751.5 -1.3  3272.0 -2.4 1928.2 -0.5
 12:4 1844.0 -0.6 3483.0 -2.6 2034.2 0.9
 13:1 1666.4 -3.2 3108.4 -1.4 1833.0 -1.6
 13:2 1799.7 1.4 3359.6 1.0 1991.4 0.3
  13:3 1747.1 -0.3 3301.3 0.9 1924.8 -0.2
 13:4 1846.1 0.1 3512.1 0.8 2036.7 0.1
 14:1 1675.8 0.6 3126.6 0.6 1835.6 0.1
 14:2 1826.9 1.5 3445.8 2.6 2042.2 2.6
 14:3 1835.0 5.0 3471.8 5.2 2015.8 4.7
 14:4 1941.9 5.2 3717.9 5.9 2167.3 6.4
 15:1 1719.7 2.6 3294.4 5.4 1944.4 5.9
 15:2 1952.5 6.9 3697.6 7.3 2184.6 7.0
 15:3 1945.0 6.0 3750.3 8.0 2197.9 9.0
 15:4 2032.3 4.7 3958.4 6.5 2285.2 5.4
 16:1 1812.2 5.4 3531.7 7.2 2102.8 8.2
 16:2 1991.6 2.0 3819.2 3.3 2235.3 2.3
 

Retail growth slowed in the three East Tennessee metro areas during the spring months. Dollar sales rose 3.3% in Knoxville, 2.3% in Chattanooga, and 2.0% in the Tri-Cities. Adjusted for inflation, sales volume increased 2.2% in Knoxville, 1.3% in Chattanooga, and 1.0% in the Tri-Cities. While real growth was lower in the second quarter, the East Tennessee metro areas have now recorded eight quarters of real sales growth.

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 4,391,778 -1.1  85,558 -0.5
 2009 4,064,965 -7.4 82,254 -3.9
 2010 4,285,782 5.4 87,910 6.9
 2011 4,597,569 7.3 96,750 10.1
 2012 4,826,390 5.0 101,534 4.9
 2013 5,001,242 3.6 105,170 3.6
 2014 5,211,542 4.2 110,564 5.1
 2015 5,330,044 2.3 117,816 6.6
 12:1 1,141,856 7.7 24,115  11.0
 12:2 1,212,679 4.4 25,689 5.8
 12:3 1,199,528 3.9 25,033 2.2
 12:4 1,272,327 4.1 26,697 1.8
 13:1 1,171,113 2.6 24,489 1.6
  13:2 1,260,067 3.9 26,695 3.9
 13:3 1,253,506 4.5 26,058 4.1
 13:4 1,316,556 3.5 27,928 4.6
 14:1 1,196,520 2.2 25,373 3.6
 14:2 1,323,389 5.0 27,557 3.2
 14:3 1,314,789 4.9 27,735 6.4
 14:4 1,376,844 4.6 29,899 7.1
 15:1 1,228,297 2.7 26,173 3.2
 15:2  1,349,061 1.9 29,722 7.9
 15:3 1,344,967 2.3 29,810 7.5
 15:4 1,407,719 2.2 32,111 7.4
 16:1 1,274,575 3.8 28,553 9.1
 16:2 1,384,267 2.6 31,077 4.6
 

At the national level, retail sales continued to increase at a moderate rate during the second quarter. Dollar sales in the United States rose 2.6% to $1,384 billion. Adjusted for inflation, sales volume was higher by 1.5%. Dollar sales in the country have now risen for twenty-seven consecutive quarters. Adjusted for inflation, retail volume has now increased for twenty-six quarters in a row. (During the 2008 to 2009 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 4.6% to $31.1 billion. Adjusted for inflation, sales volume in the state was 3.5% above 2015 levels. With the exception of the first quarter of 2013, the state has enjoyed higher levels of retail activity in twenty-four of the last twenty-five quarters. (During the Great Recession period, state sales volume declined for ten consecutive quarters.)

ANALYSIS

During the second quarter, the retail expansion slowed in the state and the region. In contrast, the United States saw the second best retail growth since early 2015. At the national level, the retail expansion now totals twenty-six consecutive quarters, easily beating the twenty quarters of growth achieved in the 2002-2007 business cycle.

In the state and the region, retail sales growth moved to a lower track. Dollar sales in Tennessee were up a solid 4.6%, but this is below the eight percent pace of recent quarters. Reflecting the state performance, the East Tennessee metro areas also saw slower retail growth. Still, the state and the region have now achieved eight consecutive quarters of higher retail activity.

In the Tri-Cities, Bristol continues to benefit from the opening of new retail outlets, while Kingsport saw the first drop in retail activity since 2013. From a county perspective, retail growth was centered in the urban counties of Sullivan, Washington (TN), and Carter. The other metro counties suffered declines in retail volume.

The outlook for the future has become uncertain due to these second quarter results. The positives are (1) the continued retail expansion at the national level, and (2) employment growth at the national and regional levels. So the fundamentals are in place for continued retail growth. Against this are the increasingly volatile political and business situations – domestic and foreign. When uncertainty increases, consumers tend to reign in their spending.

RETAIL RECOVERY SCORECARD

The following table compares retail sales in the last twelve month period 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 Jul15–Jun16 Dollar Volume
 Bristol TN-VA 1,119 1,258 +11.07  -2.14
 Johnson City 1,855 2,198 +15.59 +3.09
 Kingsport 1,408 1,661 +15.23 +2.63
 Tri-Cities CSA 6,643 7,781 +14.62 +1.94
 Knoxville MSA 12,266 15,061  +18.56 +6.44
 Chattanooga MSA 7,293 8,821 +17.32 +5.04
 Tennessee 85,997 121,552 +29.25 +18.73
 United States 4,439,733 5,411,528 +17.96 +5.76
 

Both the state and the nation show solid retail growth. U.S. dollar sales increased by 18.0% from $4.44 trillion to $5.41 trillion. Adjusted for inflation, sales volume was higher by 5.8%. Tennessee saw retail dollar sales increase 29.3% from $86.0 billion to $121.5 billion. In real terms, state sales were up 18.7% over the eight year period since the pre-recession high point.

The three East Tennessee metro areas also reported retail gains. Knoxville sales volume is 6.4% above the 2007 level, while Chattanooga shows an increase of 5.0%, and the Tri-Cities has a 1.9% gain. Among the three cities, Johnson City and Kingsport are back to pre-recession levels. Adjusted for inflation, Johnson City retail volume is up 3.1% and Model City retail activity is up 2.6%, compared to the 2007 highpoint. Despite recent retail leadership, Bristol retail volume is still 2.1% below pre-recession levels.

Technical Note. This report was prepared in September 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 2012 U.S. Census of Retail Trade, 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 (Ret), and Research Associate (Ret), BBER. Dr. Hipple will continue to prepare the retail sales reports on an interim basis. 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.