US Retail Sector

The 645,400 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.

Oct 9, 2026 - Online Holiday Sales Forecast to Reach Record $275B

• US online holiday retail sales are projected to increase 6.7% year over year to a record $275.1 billion during November and December 2026, according to Adobe's September forecast. Cyber Monday sales are expected to reach $15.1 billion, up 6.2%, while Black Friday spending could climb 9.2% to $12.9 billion. Grocery and toy sales are forecast to grow 10.3% and 9.6%, respectively, outpacing electronics at 5.9% and apparel at 4.7%. Adobe also expects traffic to retail websites originating from AI tools to increase 130%, reflecting changing shopping behavior. For US retailers, the outlook suggests continued consumer demand but growing pressure to offer competitive discounts, strengthen digital shopping capabilities, and manage inventory carefully. The shift toward AI-assisted shopping could also reshape online customer acquisition strategies.
• US retail sales increased for the 12th consecutive month in September 2026, according to the CNBC/NRF Retail Monitor. Total sales excluding automobile dealers and gasoline stations rose 0.28% month over month and 4.05% year over year, reaching $560.8 billion. Core retail sales, which also exclude restaurants, increased 0.27% monthly and 3.73% annually to $453.1 billion. Electronics and appliance retailers led annual category growth at 8.41%, while furniture and home furnishings retailers were the only category reporting a decline, falling 2.7%. The results indicate resilient consumer spending despite higher gasoline prices and continued household budget pressures. However, uneven category performance suggests retailers selling discretionary merchandise face greater challenges, reinforcing the importance of competitive pricing, promotions, and inventory management.
• Digital fatigue is creating an opportunity for US retailers to strengthen physical-store traffic, with nearly 75% of consumers saying they would shop more often in quieter, lower-stimulation stores, according to an August JLL report in Facilities Dive. JLL found that more than 80% of consumer spending still occurs in stores, while more than 80% of shoppers enjoy discovering products they would not have searched for online. The findings suggest retailers may benefit from reducing screen clutter and emphasizing comfortable layouts, product discovery, and spaces that encourage shoppers to linger. The trend is especially notable among younger consumers: 53% of Gen Z actively reject online shopping, while 78% of millennials would shop more in quieter stores. For retailers, store design is becoming a competitive tool for increasing visits, engagement, and potentially dwell time.
• Weakening consumer confidence points to a softer outlook for US retailers as households become more cautious about discretionary spending. The University of Michigan Index of Consumer Sentiment fell 7.5% in September to 47.8, down 13.2% year over year. Its Current Economic Conditions Index declined 1.9% to 50.9, down 15.7% annually, while the Consumer Expectations Index dropped 11.1% to 45.8, down 11.4% year over year. Separately, the Conference Board Consumer Confidence Index edged down in August to 89.4 from 90.2. Its Present Situation Index rose to 121.2, but the Expectations Index fell to 68.2, signaling greater concern about future jobs, income, and business conditions. Together, the readings suggest greater price sensitivity and softer discretionary retail demand.

Industry size & Structure

The retail sector is comprised of 1 million establishments that employ 17.7 million workers and generate $7.1 trillion in annual revenue, according to government sources.

• The retail sector represents 6.3% of the nation's Gross Domestic Product (GDP) and employs 12% of the country's workers.
• The sector is concentrated at the top with the 20 largest retail firms representing a third 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; ecommerce; grocery products; clothing stores, and automobile dealers. The owners of nonemployer establishments typically perform the work and may outsource support functions like marketing and accounting.
• The retail sector is forecast to reduce its employment base by 0.2% overall in 2025-2035, which is lower than the national average of 3.5% growth for all jobs, according to the Bureau of Labor Statistics.