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Kingsport, Bristol 1st quarter retail sales down; Johnson City posts gain

Sharon Caskey Hayes • Jun 17, 2008 at 12:00 AM

High fuel prices and rising food costs apparently prompted some consumers to limit their shopping trips in the first quarter of this year, causing a drop in retail performance in many parts of the region.

According to the latest retail report issued Tuesday by East Tennessee State University, retail sales fell 3.5 percent in Kingsport to $300.5 million in the first three months of the year vs. the same period of 2007.

Sales in Bristol declined 3 percent to $272.3 million in the same period, while sales in Johnson City increased 2.6 percent to $417.1 million in the first quarter.

Adjusted for inflation, sales volume fell in all three cities, declining 1.4 percent in Johnson City, 6.8 percent in Bristol, and 7.3 percent in Kingsport during the quarter.

ETSU professor Steb Hipple said the local picture in retailing activity is “still muddy,” as sales have shifted from one location to another due to store closings and openings.

“Some new businesses have opened in the Model City and the Twin Cities, and would usually replace all or part of the lost retail sales,” Hipple said.

However, he said, with the decline in retailing activity, “there are not enough new retail sales for this to happen.”

“Once the regional economy begins to grow again, we can expect better retail performance in Bristol and Kingsport,” Hipple said.

In Kingsport, spokesman Tim Whaley said the city is already beginning to see an uptick in retailing activity. The city’s latest sales tax report was up 5.8 percent over the previous year. The report, issued this month, was based on April sales tax collections.

“So certainly a very solid result and one that we hope continues,” Whaley said.

“We are obviously in tough economic times both nationally and regionally. We have higher costs that we’re all trying to bear, whether it be in fuel or food or whatever it might be. So that’s obviously going to impact the numbers, and that’s what Dr. Hipple is seeing in his data as well,” he said.

“But we do feel good about where we’re going,” Whaley said.

In the past year, Kingsport has welcomed several new retailers to the city including Lowe’s on West Stone Drive, Starbucks on Eastman Road, and Target, Kohl’s, Old Navy and other shops at the Kingsport Pavilion.

Meanwhile, Sam’s Club off Interstate 81 in Kingsport closed up shop and a new Sam’s opened in Johnson City, taking a big chunk of retail dollars with it.

Later this year, Kingsport will lose another big-name retailer when Goody’s closes its East Stone Commons location. Goody’s announced earlier this month it would close 69 stores as part of a restructuring plan.

But city officials are hopeful that other retailing activity will offset the losses. Whaley noted that the Kingsport Town Center — formerly called the Fort Henry Mall — plans a major renovation and expansion, which will add to the city’s retail base.

“And there are additional retailers that are looking at various locations in the city that we’re very excited about,” Whaley said. “We’re not done yet.”

Back to the first quarter retailing activity, sales in the Tri-Cities region as a whole were up slightly by 0.9 percent in the first quarter. In comparison, sales were down in both Knoxville and Chattanooga, falling 1.2 percent in Chattanooga and 4.7 percent in Knoxville.

Adjusted for inflation, retail activity was down 3.1 percent in the Tri-Cities, 5.0 percent in Chattanooga and 8.5 percent in Knoxville.

Nationwide, retail sales increased 3.8 percent in the first quarter, while sales in Tennessee fell 0.9 percent in the period. Adjusted for inflation, sales volume declined 4.8 percent in the Volunteer State, while sales volume nationwide fell slightly by 0.3 percent in the period.

Hipple said the future of retail sales is uncertain.

“In the optimistic scenario, economic conditions and retail sales will be back to normal in a year. We will have been merely inconvenienced by the slowdown,” Hipple said.

“In the pessimistic scenario, conditions will be awful in a year. We will be in the full ravages of a recession,” he said.

“So today, what should a business leader or a consumer do? It is the old adage, hope for the best but be prepared for the worst,” Hipple said.

The retail sales report is available for viewing online at http://faculty.etsu.edu/hipples.

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