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
Mar 17, 2025 - Import Cargo Levels Up Amid Tariff Uncertainty
- According to the Global Port Tracker report from the National Retail Federation (NRF) and Hackett Associates, tariff turmoil will contribute to elevated imports at major US container ports in spring 2025, but volume could decrease by the summer. Higher tariffs on goods from China announced by the Trump Administration are driving the elevated imports, with additional tariffs looming. Jonathan Gold, NRF VP for Supply Chain and Customs Policy, said retailers are bringing as much merchandise into the US ahead of rising tariffs as possible, noting, “Retailers have been working on supply chain diversification, but that doesn’t happen overnight.” Tracker data showed that US ports handled 2.2 million 20-foot equivalent units in January 2024, which was up 4.4% month over month and up 13.4% year over year. Imports may also be affected by a proposed fee of $1-$1.5 million for each time a Chinese-built ship docks at an American port.
- According to a report in CFO Dive, consumer confidence levels, indicators of discretionary spending, have fallen due to consumer anxiety about tariff effects and economic uncertainty. The consumer sentiment index from the University of Michigan dropped 11% in March 2025, marking the third straight month of declines and hitting the lowest level since November 2022. In addition, the Conference Board index of consumer sentiment in February 2025 marked the biggest decline since August 2021 and the third straight month of declines. According to Stephanie Guichard, senior economist for global indicators at the Conference Board, “There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019. Most notably, comments on the current administration and its policies dominated the responses.”
- A new tariff on China by the US is also expected to end a trade rule provision known as de minimis that had exempted lower value goods (valued at $800 or less) from duties and tariffs, according to Chain Store Age. When a new 10% tariff on imports from China went into effect on February 4, the executive order by President Donald Trump also ended the de minimis exemption on shipments from China. However, the de minimis change has been put on hold following the backup of packages at port. The rule has become a factor as fast fashion e-commerce retailers like Shein based in China have used the exemption to ship their goods to US buyers. According to government data, the number of shipments entering the US using the exemption in the last decade increased from 140 million per year to over 1 billion per year.
- Long-tail effects from Covid-19 on retailers include fewer hirings, and higher store closures and bankruptcy filings, according to a recent report in Retail Dive. Store closures are expected to be worse in 2025 than in 2020. Per Coresight data, 15,000 stores are expected to permanently close in 2025 compared to 9,698 in 2020 at the height of the pandemic. The high levels of closures are due to a combination of factors including the lingering effects of the pandemic, a weak housing market, the overflow impacts from bankruptcies, and competitive pressures from companies such as Temu. The pandemic environment and its recovery period caused tremendous stress for some retailers, which is still driving retail bankruptcy filings. Hirings in 2024 were 40% lower than in 2019, as the pandemic shifted how firms staff and operate their stores. Retail staffing decisions are also influenced by ongoing economic uncertainty and falling consumer confidence. The pandemic kicked off explosive growth for e-commerce; e-commerce as a percentage of total retail sales (excluding automotive) grew from 15% in Q4 2019 to 22% in Q4 2024. The e-commerce growth curve is maturing and expected to plateau around 35% in the next decade, according to a report from FTI Consulting. In addition, hard-hit categories such as electronics and home goods, which suffered some retail whiplash due to consumers’ pulling back on spending mid-pandemic, may be close to a recovery.
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