Every month locals can get an update on how the Tri-Cities retail economy is performing by sales tax collections. And every quarter, ETSU economist Steb Hipple’s retail sales analysis is available. They are good indicators. But there’s another way to look at retail trade and its role in the Tri-Cities’ economy.
If you use real retail GDP, you can track the total value produced using constant prices to get an accurate gauge of changes.
The most current local real GDP data from the Bureau of Economic Analysis is for 2015, and when you look at 2001-to-2015 comparisons, it shows regional pretty good retail growth. But here in NE Tenn. anything regional is almost always trumped by parochial concerns, and the GDP comparisons show just how strong the Johnson City Metropolitan Area’s growth has been compared to Kingsport-Bristol.
Before we get to those numbers, they’re a couple of benchmarks to keep in mind.
- Kingsport-Bristol’s retail trade has a greater real dollar value that the Johnson City MSA. In 2015 it was 28% higher.
- The effect of the Pinnace is growing, but from a regional perspective it hasn’t made the Bristol TN VA area the dominate regional In fact, it commands the smallest share of the total retail pie. It has added to the Kingsport-Bristol MSA retail trade position, but it hasn’t moved the real retail trade needle much. We’ll need a couple more years to see how that works out.
The 2015 real retail trade for the Tri-Cities was 14.4% higher than it was in 2001. But the growth wasn’t evenly distributed.
In the thee-county Johnson City MSA, it was 29.4% higher. And, retail employment during the same period grew by 1,700 jobs.
In the four-county Kingsport-Bristol MSA 2015, it was 5.7% better than 2001, and retail employment increased by 700 jobs.
It’s noteworthy that the retail share of total nonfarm jobs isn’t as dramatic as the growth. Employers are finding ways to get by with fewer employees just as they are in most other job sectors.
During 2001 retail had a 2.7% share of nonfarm jobs in the Johnson City MSA. In 2015 it grew to 3.4%.
Kingsport-Bristol’s 2001 share was 1.8%. In 2015 it was 2%.
Retail jobs are the whipping boy in most job growth discussions. Most are not classed as “good-paying” jobs, and the benefits are usually skimpy when compared to other sectors. But while online sales have taken a big bite out of local sales, technology hasn’t had the diminishing effect on retail jobs that it has in other sectors. But that is beginning to change. Self check-outs are now common at grocery stores and table top kiosks to order and pay your bill are showing up in local restaurants. Look for more such things in the future, and yes it will reduce the number of retail jobs.
As we head into 2017, there are some retail headwinds worth watching.
In his second quarter retail analysis, Hipple noted some softness in the retail growth rates at all levels. “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.
And while there are signs that commercial retail real estate activity is increasing and projected to increasing its recovery expansion into areas outside major metro markets there is a wealth of inventory already on the market here.
According to the Northeast Tennessee Association of Realtors’ Commercial Market Listing Service (CMLS), they’re over 1 million square feet of retail space currently listed for lease or sale in the Tri-Cities. That doesn’t include the new and redevelopments projects underway or property not listed on CMLS.
Retail is a prime local concern because it is a major contributor to city and county budgets since there is no income tax in Tennessee. That’s why the competition by local governments for new residents is growing in an era when natural population growth is negative. An often-cited formula for new residents show each accounts for an economic impact of $25,000 a year in local retail sales and local services consumption.
Population projects put most of the future population growth in the Johnson City MSA. And, the most current Census report shows Washington County was the only area county with population growth in 2015.