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
Oct 17, 2024 - Prices Mixed for Major Retail Segments
- According to the Consumer Price Index by the US Bureau of Labor Statistics (BLS), prices for major retail segments were mixed in September 2024 compared to the previous year. Prices for food at home were up 1.3% in September compared to a year ago and were up 0.4% compared to the previous month. Meanwhile, new vehicle prices fell 1.3% in September 2024 compared to a year ago and were down 0.1% from the previous month. Employment by retailers was flat in August 2024 compared to a year ago, according to the BLS. Average wages for nonsupervisory employees at retailers rose 2.2% in August 2024 year over year, reaching $21.00 per hour.
- The US retail industry is projected to grow at a CAGR of 4.1% between 2024 and 2028, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. The expected growth rate is comparable to the overall economy‘s anticipated growth. The report noted that consumer confidence is expected to improve in the forecast period, which bodes well for the retail and wholesale industries. Factors that continue to limit consumer spending are lower consumer sentiment levels, higher interest levels, and elevated price levels. On a positive note, inflation is subsiding, which supports a moderate increase of real disposable income by about 1.9% in 2024 and 2.4% in 2025. Retailers have seen internet sales increasingly grow in share since the pandemic, growing from 12.8% of total sales in February 2020 to 17.9% in April 2024.
- Consumers plan to lean more on Buy Now, Pay Later (BNPL) services during the upcoming holiday season, with nearly a third of respondents considering using the option for their shopping, according to a new holiday survey by Morning Consult and Afterpay. About 23% of respondents said BNPL helps them stretch their holiday budget, and nearly 60% said they plan to use the BNPL even more in the upcoming holiday season. Demographically, millennial parents (42%) and Gen Z (41%) shoppers are more likely to consider BNPL for their holiday shopping. According to Afterpay, "As holiday shopping trends continue to evolve, these findings offer valuable insights into consumer behavior, spending patterns, and the growing reliance on flexible payment options like BNPL. Retailers and brands that adapt to these trends are likely to resonate with today's early-shopping consumers." The survey also revealed that nearly half of shoppers plan to buy from brands with free shipping to reduce the burden of shipping costs. Consumers planning to shop online say they are most likely to make purchases on a store/brand website (69%), apps (60%), ecommerce platforms (47%), and social media (18%) during this holiday season.
- 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.
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