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Purely business - Kingsport sees notable stores close and relocate, though sales tax collections remain strong

Matthew Lane • Apr 10, 2016 at 9:00 AM

KINGSPORT — Kingsport has seen a number of high-profile businesses close up shop within the past year, either shutting down for good or — as is the case with Old Navy and Christopher & Banks — packing up and moving 15 minutes up the road to the Pinnacle in Bristol, Tenn.

Although it might seem to some that businesses are fleeing the Model City, the numbers show otherwise. According to city finance records, sales tax collections in Kingsport rose by nearly $2 million from 2014 to 2015. The year before that, sales tax collections rose by just over $1 million.

During the past decade, the only year Kingsport has seen a drop in its year-to-year sales tax collections has been in 2010.

“The trap we all fall into is we look to the national franchises, and we think if we just have one more thing, that it will fulfill our retail market,” explains City Manager Jeff Fleming. “In reality, what we have to step back and look at is retail sales is primarily driven by the population base.”

Within the past year or two, Kingsport has seen Long John Silver’s and Pizza Hut on Stone Drive close their doors and Pier 1 at East Stone Commons shut down and reopen at the Pinnacle. The Kingsport Town Center lost Kirkland’s, Justice and Christopher & Banks, again to the Pinnacle.

Old Navy — one of the bigger name stores at the Kingsport Pavilion — is closing sometime in June and, like the others, opening a location at the Pinnacle.

At the same time, other stores and restaurants have come online in Kingsport, including a Walmart Neighborhood Market, two new Wendy’s, Freddy’s Frozen Custard, Panda Express, Plato’s Closet and Harbor Freight tools. A new Taco Bell is slated for Colonial Heights and a new Mexican restaurant is coming to the old Garfield’s location in the mall.

“There are certain retailers that folks look to and desire to have, but that retailer may not generate as much money as you might think,” Fleming said. “It’s important to not get caught up in a ’Let's keep up with the Joneses’ ” scenario. It's more important to rise above that and say, ’What is the market potential and how are we doing?’ 

“In that regard, Kingsport has done very well as have Johnson City and Bristol.”

Since 2007, Kingsport has seen retail sales increase by $266 million; Bristol by $53 million and Johnson City by $197 million.

“Some doors open and some doors close. It’s really market driven, unless the market is somehow skewed by private incentives,” Fleming said. “That’s why we’ve tried to let the free market do what it does best, which is level. If a store in Kingsport closes, it must be because people aren’t shopping at that particular store.”

Retail is a competitive and changing environment. According to a recent article in Forbes magazine, consumers are continuing with the trend of shopping online; choosing more instant gratification options like Uber and Grub Hub; essentially borrowing mobile devices instead of buying them; and signing up for streaming movie, television and music services rather than purchasing physical copies.

Kingsport has provided incentives for retail developments in the recent past, most notably with East Stone Commons and the Pavilion. Another incentive has been on the table for years for the creation of an IMAX theater at the mall. Smaller developments typically receive no financial incentive to locate or remain in Kingsport.

“We obviously try and do everything we can to remain relevant, but we’re not a developer or a shopping center owner,” Fleming said. “We can try and support those developers and owners in any way possible, but we can’t do it for them.”

Fleming adds that Kingsport can and does build a business case for the city, telling businesses what the market potential is within the city. But, if the company decides to go elsewhere, then that’s a business decision it has to make.

“Our role is to create an environment in which business can succeed. There’s plenty of opportunity for businesses to succeed in Kingsport,” Fleming said. “It’s not anybody’s personal role to insure business succeeds. People either bought goods there and they remain open, or they didn’t and they close. It’s purely business.”