Retail Industry And How It Controls The Economy
Retail is a way for producers to deliver their goods and services to the consumer. Retailers typically procure the goods directly from manufacturers, as well as from middlemen such as distributors or wholesalers. Retailers serve as the final point on the supply chain before the product is bought by its end-user.
The Effect Of Pandemic And After Math
The retail sector was hit badly by the COVID-19 pandemic, and buyers avoided visiting malls and stores for several months. This led to 2.1 million job cuts in 2020. However, things started to get better by the end of 2020. The lockdown was eased and consumers started frequenting the stores, albeit with caution. The year-end festivities were muted compared to other years but the buyers still thronged the shops for Black Friday and Christmas. Hopefully, future retail news will be brighter.
Significance of the Retail Industry in the US economy
The role of the retail sector in the US economy is significant. According to the statistics, in 2018 the U.S. retail industry made revenue of $5.3 trillion in sales, compared to $1.8 trillion back in 1992. Automotive is the largest category within retail. It is followed by food and beverage, pegged at $746 billion and general merchandise stores pegged at approximately $706 billion, and the share of online sales has grown significantly during the past years.
The retail sector also plays a key role in driving employment. In 2018, the sector created 4.8 million jobs. In 2019, the median pay per hour was above $12.
Glimpse into the functioning of the retail industry
Retailers, much like others in the supply chain, make profits by increasing price of the final product in multiple ways – by adding distribution, equipment, and labour costs. They also make a profit by buying goods directly from factories, bypassing wholesalers. Certain large retailers also manufacture some of the best-selling items.
Top US retailers
The leading supermarkets and mall chains in the US are prominent examples of retailers. Giants like Target, Wal-Mart, and Best Buy deserve to be mentioned. However, even the smallest kiosks found in a regional mall are examples of retailers. There are also online retail giants such as Netflix and Amazon, eBay. The brick and mortar players still rule the roost in this sector, despite the massive growth of online contenders.
There are retailers that put stress on home sales. Prominent examples are players like Casper mattresses and Schwan’s food. Apart from diverse types of products, the retailers also sell services. Some retailers offer both online and regular distribution models. An example of the blended delivery model follower is Kroger.
Online retailing growing fast, cannibalizing offline model
Online retailing is growing fast – at a rate of almost 9% per year. The prediction is that by 2030, it will reach $1.3 trillion. Online buyers also like the brick-and-mortar stores but they are wooed by the conveniences of buying online. It was in 2018 that Mike Ullman, former CEO of J.C. Penney, said that only one-fourth of US shopping malls will survive after 5 years. In 2019, well known retail brands like Charlotte Russe, Payless, Roberto Cavalli went bankrupt.