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City sees decline in retail trade in fourth quarter of 2012

Madison Mathews • Mar 12, 2013 at 9:34 PM

Johnson City saw a second decline in retail trade, while both Bristol and Kingsport reported higher sales during the fourth quarter of 2012, according to local economist Steb Hipple.

“Adjusted for inflation, retail sales were down in the Tri-Cities metro area, one of the three cities and five of the seven metro counties. Bristol, Kingsport, and Sullivan County were the only clear winners in the holiday selling sweepstakes,” Hipple said in the report released Tuesday by the East Tennessee State University Bureau of Business and Economic Research.

When adjusted for inflation, retail volume in Johnson City fell 2.5 percent, but grew 5.6 percent in Bristol and 1.1 percent in Kingsport. Real sales dropped 1.8 percent in the Tri-Cities metro area, but increased 0.7 percent in the state and 2.5 percent across the country.

Annual data shows dollar sales in each of the Tri-Cities increased. Bristol’s retail sales rose 7.3 percent to $1.1 million, Kingsport grew 2.4 percent to $1.5 million and Johnson City increased 1.2 percent to $1.9 million.

During the fourth quarter, dollar sales were flat, increasing 0.1 percent to $1.8 million in the Tri-Cities combined statistical area. Inflation- adjusted retail sales decreased 1.8 percent.

“Retail sales in the fourth quarter are more significant than the other periods of the year due to the holiday selling season. For many retail stores, the holiday sales account for 40 percent of total annual activity and determine the profit or loss for the entire year. From this perspective, the holiday selling season was a disappointment in the region and modestly successful in the state and the nation,” Hipple said in the report.

In dollar sales, Hipple said Johnson City has had diminishing retail sales for the past six months.

While the unemployment picture improves in the region, Hipple said people aren’t spending money the way they were before the recession.

“We know that if we look at the region as a whole that employment levels are back at a pre-recession level and that means people are working, people are earning paychecks, they have an income, but it’s very apparent from a regional perspective that they have cut back on spending in the last couple of quarters,” Hipple said.

In Johnson City, employment fell 1.5 percent during the fourth quarter of 2012.

Hipple said that could factor into the low retail sales in Johnson City.

“You do have a link here between a lower employment level in the Johnson City area and the declines in retail spending,” he said.

Chattanooga had the best retail performance, with dollar sales increasing 1.9 percent to $1.9 million, while Knoxville saw a 1.8 percent decrease to $3.2 million. Sales volume adjusted for inflation was down 3.5 percent in Knoxville, 1.8 percent in the Tri-Cities and remained the same in Chattanooga, the report said.

While all three metro areas reported higher dollar sales in 2012, Hipple said the growth rate was lower than that of 2011.

“The national picture is more positive. Employment is growing at the best rate in five years and retail sales are back to 2007 levels. But as we noted in the previous labor market report, 16.7 million workers are still jobless due to the continuing weakness of the U.S. economy. Until these millions are put back to work, further retail growth becomes difficult,” Hipple said in the report.

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