ETSU Bureau of Business and Economic Research

Tri-Cities Retail Sales Report

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

THE TRI-CITIES

There were significant changes in the retail picture over the fall months. Dollar sales increased 2.4% in Johnson City to $628 million and 2.2% in Bristol to $343 million. Retail activity was down again in Kingsport where sales declined 1.7% to $444 million. Adjusted for inflation, real sales were up 0.6% in Johnson City and 0.4% in Bristol, while falling 1.7% in Kingsport. The impressive retail growth in Bristol linked to new retail outlets may be over for the present. And there has been a shift in retail market share away from Kingsport merchants to the new Bristol shopping centers just down the road. In comparison, retail volume rose 1.4% in the metro area, 1.8% in Tennessee, and 2.1% 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
 2016 1295.5  9.9 2232.9 3.9 1628.0 -1.15
 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
 16:3 329.4 9.9 546.3 3.8 390.5 -6.0
 16:4 342.7 2.2 627.9 2.4 444.0 -1.7
 

THE METROPOLITAN AREAS

Retail performance remained strong in the metro area during the October to December period. Dollar sales in the Tri-Cities Combined Statistical Area (CSA) rose 3.2% to $2,097 million, and adjusted for inflation, real metro sales were up 1.4%. Dollar sales and sales volume increased in all seven metro counties. The largest increase was in Scott County, followed by Carter, Washington (TN), Sullivan, Washington (VA), Unicoi, and Hawkins.

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
 2016 7905.0 3.3 15193.1 3.3 8861.7 2.9
 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
 16:3 2003.7 3.0 3818.6 1.8 2167.6 -1.4
 16:4 2097.4 3.2 4023.7 1.6 2356.0  3.1
 

The retail picture remained mixed in the three East Tennessee metro areas during the critical holiday selling season. Dollar sales rose 3.2% in the Tri-Cities, 3.1% in Chattanooga, and 1.6% in Knoxville. The higher sales in Chattanooga offset the unexpected decline in the previous quarter. Adjusted for inflation, fourth quarter sales volume increased 1.4% in the Tri-Cities, 1.3% in Chattanooga, while falling 0.2% in Knoxville. For the second quarter in a row, one of the East Tennessee metro areas has suffered a real decline in retail performance.

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
 2016 5,503,859 3.3 123,846 5.1
 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
 16:3 1,382,004 2.8 30,919 3.7
 16:4 1,463,013 3.9 33,296 3.7
 

At the national level, the retail expansion gained modest strength during the fourth quarter. Dollar sales in the United States rose 3.9% to $1,463 billion and inflation adjusted sales volume was higher by 2.1%. (The comparable third quarter figures were 2.8% and 1.6% respectively.) Dollar sales have now risen for twenty-nine consecutive quarters. Adjusted for inflation, retail volume has now increased for twenty-eight 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 increased 3.7% to $33.3 billion. Adjusted for inflation, sales volume in the state was 1.8% above 2015 levels. With the exception of the first quarter of 2013, the state has enjoyed higher levels of retail activity in twenty-six of the last twenty-seven quarters. (During the Great Recession period, state sales volume declined for ten consecutive quarters.)

ANALYSIS

Broadly speaking, the retail recovery is ongoing, but the state and regional picture is changing. At the national level, retail volume grew 2.1% in the fourth quarter, and 2.0% for the year as a whole. This pace is consistent with recent years. At the state level, Tennessee retail growth is slowing – real growth was 3.8% in 2016 compared to 6.6% in 2015. The fourth quarter growth of only 1.8% is the lowest in several years.

The slowdown in the state retail recovery can be seen in the data for the three East Tennessee metro areas. After two years of higher retail dollar sales and retail volume, retail performance has become mixed. In the third quarter Chattanooga saw lower retail activity, and then in the fourth quarter Knoxville suffered lower sales volume. Retail growth has been slowing in the Tri-Cities metro area.

Among the three cities, the data show significant changes in market shares and retail growth. For over two years, Bristol has seen unprecedented increases in retailing linked to new retail outlets on both sides of the state line. But that growth stopped in the fourth quarter. Until recently, retail sales increased across the region and there was no shift in market shares. But that changed over the summer months as Kingsport saw two quarters of lower sales and smaller market share.

Will these new trends in retail performance continue into 2017? Retail purchases reflect both labor market employment conditions and the level of consumer confidence. As noted in the last labor market report, both the region and the nation show continuing employment growth. But consumer confidence is harder to understand. There does seem to be some growing consumer fatigue, and the political and business situations remain volatile under the new Trump Administration. So the outlook remains murky.

Technical Note. This report was prepared in March 2017. 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.