US Retail Sector
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 1,041,555 retail establishments in the US purchase goods from manufacturers and distributors and sell a mix of those goods to consumers and businesses. Specialty retailers sell a particular type of merchandise, such as furniture or jewelry, broad line retailers sell a wide variety of merchandise and include department stores, sporting goods stores and gift and souvenir stores. Big box stores (Walmart, Target) and wholesale clubs (Costco, Sam’s) are competition for a wide range of retailers.
Competition from Online Retailers
The coronavirus pandemic shut down brick-and-mortar stores and accelerated the adoption of online shopping by consumers.
Battling Against Inventory Obsolescence
The retail sector is in a constant state of change, driven by trends, fads, seasonality and perishability.
Industry size & Structure
The retail sector is comprised of 1,041,555 establishments that employ 15.6 million workers and generate $6.9 trillion in annual revenue, according to government sources.
- The retail sector represents 6.4% of the nation's Gross Domestic Product (GDP) and employs 10.1% of the country's workers.
- The sector is concentrated at the top with the 20 largest retail firms representing 30% of revenue, but it is fragmented at the bottom.
- In addition to employer establishments, the retail sector has 2.1 million owner-operated establishments with no employees. Subsectors with the highest numbers of nonemployer establishments are direct selling establishments, which include door-to-door sales, home parties, fuel (heating oil and propane) delivery, and meat and meal plans (39%); ecommerce (8%); grocery products (8%); clothing stores (6%) and automobile dealers (5%). The owners of nonemployer establishments typically perform the work and may outsource support functions like marketing and accounting.
- The retail sector shed about 73,000 establishments in 2022, which equals about 7% of existing establishments, according to the Bureau of Labor Statistics. In comparison, the sector added 70,000 new establishments in 2022.
- The retail sector is forecast to reduce its employment base by 0.3% overall in 2022-2032, which is lower than the national average of 5.3% for all jobs, according to the Bureau of Labor Statistics.
Industry Forecast
US Retail Sector Industry Growth
Recent Developments
Aug 8, 2024 - Profits, Sales Up in Q1
- After-tax profits of retail corporations with assets of $50 million and over totaled $33.8 billion in Q1 2024 seasonally adjusted, up 0.7% compared to a year ago and down 1.1% from the previous quarter, according to the latest data from the Census Bureau. Sales for the quarter were $1 trillion seasonally adjusted, up 9.7% from a year ago and flat compared to the previous quarter. Employment by retailers continued to grow throughout the first half of the year following a brief downturn in February, according to the US Bureau of Labor Statistics (BLS). Average wages at retailers rose during the first half of the year, reaching $21.05 per hour for nonsupervisory employees in June 2024.
- US retailers are advancing their overseas orders to avoid potential shipping disruptions later in the year during peak shopping season, according to the Wall Street Journal. Import containers of clothing, furniture, and other products are arriving at US ports in much larger numbers than normal as companies try to manage higher freight rates, geopolitical tensions, and shipping delays. Import volumes at the Los Angeles and Long Beach ports in June 2024 reached their strongest level since the pandemic-related heights of July 2022. In addition, container rates have reached levels not seen since the pandemic. The short-term contract rate to ship a container from Asia to the US West Coast on July 17 was $7,806, four times greater than last year, according to transportation analytics firm Xeneta. The WSJ report noted that the ratio of inventories to sales at US retailers increased to 1.31 in May 2024, the highest level since May 2020. Importers are counting on consumers to increase their spending in the second half of the year to avoid being stuck with excess inventories.
- Total retail sales, excluding automobiles and gasoline, increased 3.4% unadjusted year over year in June 2024 and were up 0.4% seasonally adjusted month over month, according to the CNBC/NRF Retail Monitor released by the National Retail Federation. Five out of nine retail categories were higher in June compared to a year ago, led by online sales, general merchandise stores, and clothing and accessory stores. Total retail sales for the first six months of the year were 2.3% higher year over year. According to NRF President and CEO Matthew Shay, “Consumers are being thoughtful about their spending, prioritizing non-discretionary purchases as they continue to face high interest rates and lingering inflation.” The CNBC/NRF Retail Monitor uses actual, anonymized credit and debit card purchase data compiled by Affinity Solutions.
- A new Placer.ai report in Chain Store Age reveals that mall traffic is inching closer to pre-pandemic levels. During the pandemic, visits to all mall types tracked by Placer.ai’s Mall Index ranged from 10.7% to 15.3% lower than in 2019. Shoppers began returning to their mall shopping habits as the pandemic lessened, narrowing the traffic falloffs to 5.8% for enclosed malls in 2023 and only 1% for open-air malls. Flexible worker schedules may have contributed to higher weekday mall visits in the afternoon and early evening hours over the 2019 to 2023 period. New entertainment and restaurant tenants entering the malls in recent years have also helped to boost traffic. A new Scheels store that opened in September 2023 at the Chandler Fashion Center in Arizona, featuring a Ferris wheel and 16,000-gallon aquarium, helped drive traffic up by 45% in October and continued to be 30% higher in November and December.
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