Tri-Cities retail sales may have finally reached a new normal.
According to the ETSU Economist Steb Hipple’s Q4 Retail Sales Report – online HERE – “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.
Hipple wrote in his analysis that retail recovery is ongoing “broadly speaking” 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,” the analysis concludes.