Prepared by Lisa H. Wilson Business & Research Services
Contents of Study
I. II. III. IV. Introduction Industry Size Estimate Retail Industry Growth Retail Industry Structure Potential Competitors Substitute Products Suppliers
Retail Industry Trends
Key Success Factors
VII. Ratios VIII. Customer Information IX. List of Resources
This material is based on work supported by the US Small Business Administration (SBA). Any opinions, findings, conclusions, or recommendations expressed are those of the author(s) and do not necessarily reflect the views of the SBA.
Retailing includes all business activities that involve the sale of goods and services to consumers for personal, family, or household use. It is the final step in the distribution of these goods and services. Today the retail industry is greatly affected by technological advances, demographic shifts and changing perceptions in the U.S. and globally. We are a busier, more convenience-oriented society than previous generations and the retail landscape must change to meet our demands. This study defines the size and scope of the industry on a national and state level, discusses the world of "e-tailing" or e-commerce, and offers suggestions for further research and assistance.
Industry Size Estimate
National According to the National Retail Federation, annual retail sales in the United States totaled $3 trillion in 1999, an increase of approximately 36 percent over sales in 1994. Retail is the economy’s leading creator of entry-level jobs and currently employs over 20 million workers, or one in five American workers. The majority of retailers are small businesses with almost 90 percent of all retail companies employing fewer than 20 employees.1 The retail sector is affected by the state of the economy, enjoying healthy gains over the last several years. The U.S. economy grew at an annual rate of 7.3 percent in the fourth quarter of 1999, which is reflected in the growth of retail sales growth in the last decade.2 Similarly, the economy is heavily dependent on the retail industry, accounting for 32 percent of U.S. gross domestic product (GDP).3 In 1998, according to the U.S. Department of Commerce, most retail sales occurred in December (10%). This is to be expected, and in some sectors an even higher percentage of total sales is collected in this holiday month. For example, in the jewelry industry, over 25 percent of their total store sales were generated in December 1999. Here is a chart showing the monthly sales distribution for total retail sales in 1998.
1998 U.S. Monthly Sales Distribution Total Retail Sales (in millions) 300,000 250,000 200,000 150,000 100,000 50,000 0 sales in millions
Source: U.S. Department of Commerce
National Retail Federation, [Online], (August 17, 2000), Available URL: http://www.nrf.com/services/info/careers/. "Retailing: General", Standard & Poor's, May 25, 2000, p.1. 3 ibid., p. 6.
ly Au Se gus t pt em be r O ct ob N ov er em b D ec er em be r NCSBTDC
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The 1997 Retail Trade Census, released in March 2000 by the U.S. Census Bureau, reports that the two largest retail sectors, as measured by number of establishments, were Clothing and clothing accessories stores, and Food and beverage stores. Other large sectors included Miscellaneous store retailers, Gasoline stations, and Motor vehicle & parts dealers. Below is a table showing the size of each of the major sectors (3-digit sectors of the North American Industry Classification System, [NAICS]):4
Number of Establishments, 1997 Retail Trade Census
NAICS 448 445 453 447 441 446 451 442 454 443 444 452 Sector Clothing & clothing accessories stores Food & beverage stores Miscellaneous store retailers Gasoline stations Motor vehicle & parts dealers Health & personal care stores Sporting goods,...