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September 10th, 2007 12:00 am by Sharon Caskey Hayes

The closure of Sam’s Club in Kingsport pushed the city’s retail sales performance into the negative column in the second quarter this year. But a local economist says the city’s retailing activity should improve once stores in the new Kingsport Pavilion begin opening their doors next month.

According to the latest retail sales report issued Monday by East Tennessee State University, sales fell 1.8 percent in Kingsport to $312.2 million during the second quarter vs. the same period a year ago.

In Johnson City, sales inched upward 2.3 percent to $423.2 million during the quarter vs. the previous year.

Bristol led retail performance with an 8.9 percent jump in sales to $267.6 million in the quarter vs. the same period a year ago.

“The retail picture in the Tri-Cities is very confused due to a spate of large store relocations and openings,” said ETSU economist Steb Hipple.

He said Kingsport, for instance, lost a major outlet — Sam’s Club — which impacted the city’s retail performance.

But, he said, new stores now being constructed are expected to boost sales in Kingsport over the next year.

In October, Target and Kohl’s are slated to open in the new Kingsport Pavilion on East Stone Drive. In all, the 625,000-square-foot shopping complex will feature about 30 stores and restaurants, including Old Navy, Shoe Carnival, Dick’s Sporting Goods and Books-A-Million.

Reedy Creek Terrace should also boost Kingsport’s retailing activity. The 45,000-square-foot complex being constructed on Eastman Road will include Panera Bread, Starbucks and Talbot’s.

And a new Lowe’s is nearing completion on West Stone Drive, which should also help boost Kingsport’s retailing bottom line.

“Over the next year a number of new retail stores will open and sales will rebound,” Hipple said of Kingsport.

As for the Tri-Cities Combined Statistical Area, retail sales “hit a bump in the spring months,” Hipple said.

Sales in the Tri-Cities rose 2.9 percent. Adjusted for inflation, retail activity was just 0.3 percent in the region vs. the same period a year ago.

Five of the region’s counties — Unicoi, Hawkins, Scott, Carter and Washington County, Tenn. — reported retail sales growth.

Sales declined in Sullivan County and Washington County, Va.

“The retail picture was no better in the other metro areas of East Tennessee,” Hipple said.

In Knoxville, sales grew just 2.1 percent in the second quarter, while sales rose 3.1 percent in Chattanooga.

Hipple said the retail picture in the second quarter was less than stellar across the country. Nationwide, retail sales rose 4.0 percent in the quarter. But when adjusted for inflation, sales volume nationwide rose by just 1.3 percent.

“This is the lowest since 2003 and is well below the desired 3 percent real rate of growth,” Hipple said.

In Tennessee, sales grew 3.6 percent in the period. Adjusted for inflation, the state’s sales volume was just 0.9 percent — the slowest rate of growth since 2004, Hipple said.

“The business situation in the state is a reflection of the events in the national economy,” he said. “There is the added complication that Tennessee state government lives and dies on sales tax collections, and any drop in retail activity could bring havoc to state finances.”

The retail sales report is based on sales tax collections and is benchmarked to the 2002 U.S. Census of Retail Trade. The report is available for viewing at

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