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
Jul 8, 2024 - Sales Growth in May
- Total retail sales, excluding automobiles and gasoline, increased 3% unadjusted year over year in May 2024 and 1.3% 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 May compared to a year ago, led by online sales, health and personal care stores, and clothing and accessory stores. Total retail sales for the first five months of the year were 2.1% higher year over year. According to NRF President and CEO Matthew Shay, “Consumers have clearly retained their ability to spend and are driving solid economic growth. Spending is being supported by the job market and real wage gains. Inflation remains stubborn but is almost entirely in services rather than retail goods.” 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.
- Parents plan to spend 22% more on back-to-school shopping in 2024 compared to a year ago, with Walmart, Amazon, and Target as the top destinations, according to a new JLL survey of 1,026 parents in Retail Dive. Parents expect to spend $475 per child in 2024 compared to $390 in 2023. While parents in most income brackets plan to spend more than last year, parents earning less than $50,000 are expected to decrease their budgets due to inflation concerns and seek out sales and coupons. Higher-income parents are turning to private labels to save money during their back-to-school spending. Wealthier households (earning over $150,000) are increasing their budgets the most. The stores shopped at the most for back-to-school are Walmart (46%), Amazon (35%), and Target (32%), while other major destinations include Costco (6.5%), Old Navy (3.8%), and Dollar General (2.8%). About a quarter of shoppers have already started their back-to-school shopping, with another 22% beginning shopping in June, 20% in July, and almost 17% in August.
- Global online retail sales are forecast to grow at an 8.9% CAGR from 2023 to 2028, reaching $6.8 trillion, according to a Forrester report in Retail Dive. In the US, online sales are expected to grow from $1 trillion in 2023 to $1.6 trillion in 2028. China and the US make up about two-thirds of global ecommerce volume. Online sales growth has moderated somewhat since the pandemic but is still robust. Growth is coming from the rise in marketplaces, social commerce, livestream selling, direct-to-consumer selling, online grocery buying, and buy online pick up in store (BOPIS). According to Jitender Miglani, principal forecast analyst at Forrester, “Looking ahead at 2024 and beyond, we expect that online sales will regain momentum from shopping offers and generative AI initiatives.”
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