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
Jan 15, 2025 - Rise in In-Store Pick Up
- Shoppers continued to flex their omnichannel shopping muscles in the 2024 holiday shopping season, with a 7.5% increase year over year in Buy Online, Pick Up in Store (BOPIS) and Reserve Online, Pick Up in Store (ROPIS) transactions, according to Chain Store Age. The report from Locally found that nearly 50% of online shoppers abandoned their carts when local pickup wasn’t an option. Over 90% of leading retailers are expected to adopt ominichannel strategies. According to Locally CEO Mike Massey, "The data shows a clear and sustained shift toward local retail as a preferred choice. Consumers increasingly demanded the flexibility to browse and buy on their terms, and local retailers were quick to respond with omnichannel strategies that bridged the gap between digital and physical commerce.”
- US retailers will have to monitor minimum wage changes in 2025, as 21 states and 50 local jurisdictions increased their minimum wages, according to Chain Store Age. States with the highest minimum wage in the US are Washington ($16.66 per hour), California ($16.50), and New York ($16.50). Nearly 30 cities in California and seven towns in Washington will raise minimum wages in 2025, with Tukwila, Washington, offering the highest minimum hourly wage in the US at $21.10. According to the Economic Policy Institute, the minimum wage change will affect more than $9 million workers and raise pay by a combined $5.7 billion. Unchanged since 2009, the federal minimum wage is $7.25 an hour, and some 20 states, primarily located in the South and the Midwest, use the federal minimum as their wage floor.
- Shoppers are expected to return $890 billion worth of merchandise in 2024, accounting for approximately 16.9% of retailers’ annual sales, according to a report in Retail Dive by the National Retail Federation (NRF) and UPS’s Happy Returns subsidiary. In 2023, retailers accepted $743 billion in returns and lost $101 billion in returns fraud, per the NRF. More than three-quarters of shoppers surveyed factor free returns into their shopping decisions, and over two-thirds of shoppers say a negative returns experience at a retail store would dissuade them from doing business with them in the future, per the report. About 51% of Gen Z shoppers said they had purchased multiple items with the intent to return some of them, a practice known as bracketing. According to a separate survey by NRF, retailers are taking measures to address the higher-than-expected volume of returns during the winter holidays by seeking additional support from third-party logistics providers (40%) and hiring additional seasonal staff to specifically handle returns (34%).
- Consumer confidence levels declined in December 2024, falling by 8.1 points from the previous month, according to The Conference Board. The Consumer Confidence Index was 104.7 in December 2024 from 112.8 in November 2024. Dana Peterson, chief economist at The Conference Board, noted that those remaining most confident on a six-month moving average basis confidence were those aged under 35 and those in the income category of over $100,000. Per Peterson, “The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years.” Purchasing plans for homes decreased while plans to buy new cars and big-ticket items rose in December 2024 on a six-month average basis.
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