Tri-Cities retail sales enjoyed a robust third quarter with one very notable exception.
Kingsport’s retail expansion that began in 2012 seems to have run out of steam.
ETSU Economist Steb Hipple’s Q3 analysis shows the Model City has reported two consecutive quarters of lower sales. If that wasn’t discouraging enough to Kingsport residents, the retail sales trend line shows five straight quarters of growth rate decline since a Q2 2015 peak. That’s a peak-to-Q3 decline of $15.8 million. It’s also the first year-over-year comparison that has been negative since the beginning of 2013. The long-view of this retail sales trend is another example of the area-wide reset from the Great Recession and shifting influencers for the regional economy.
Region wide, retail actively improved by almost a full point during the summer. Sales volume encompassed six of the seven area counties and two of the three cities, Hipple reported.
Adjusted for inflation, retail sales were up 8.7% in Bristol TN-VA, 2.6% in Johnson City. “In comparison, retail volume rose 1.9% in the metro area, 2.6% in Tennessee and 1.4% in the nation.”
Dollar sales in the seven-county area totaled $2,004 million during the July-to-September period. That’s a 3% increase. When adjusted for inflation metro sales were up 1.9%, and “the gains were widely spread among the seven counties,” according to Hipple. The largest increase was in Sullivan, followed by Carter, Washington Co. VA, Washington Co. TN, Unicoi, and Hawkins. Scott County saw a small dollar sales increase, but real volume declined.
The trend charts plotting each area’s share of total Tri-Cities’ retail sales show the area outside the three cities remains dominant. Those rural areas command a 36.8% share of all Q3 retail sales, and that has increased for two straight quarters.
Johnson City remains the dominant city area with a 27.3% share. That’s down from a Q4 2015 peak.
Kingsport’s share dropped below the 20% mark for the first time since 2014. Q3 was also the third straight quarter the Model City’s sales has declined.
Despite all the attention focused on the Pinnacle, Bristol TN-VA claims the smallest share of the region’s retail shares. And it has basically plateaued at a little better than a 16% share.
“The outlook for the future remains somewhat uncertain. The third quarter retail results suggest that retail recovery may be losing momentum due to consumer fatigue. But retail growth continues at the national and state levels coupled with continued employment expansion. The political and business situations remain volatile as the new
Trump administration takes form,” Hipple wrote in his analysis. “Looking forward to the holiday selling season, it is apparent that positive and negative elements are at work. The consensus projections are for a modest increase over 2015 levels. Early national data from the “black Friday” weekend show limited gains for conventional stores while on-line sales were strong. There is a long-term trend away from “bricks” and into the “clicks” format. This will hurt local retail activity and the critical sales tax collections.”
The day before Hipple’s Q3 report was available seasonally adjusted sales tax collections showed a continuation of a Tri-Cities slump that began in October. Sears’ announcement that it was closing the Bristol and Kingsport stores came the next day followed by Macy’s announcement that it was closing stores nationwide and Kohl’s began making noise about following suit.