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The retail industry is the second largest industry in the U.S. (responsible for approximately 12% of all US employment) with over $3.8 trillion in sales annually ($4.2 trillion if food sales are included). Although the vast majority of all retail stores in the U.S. (approximately 90%) are single-store businesses, however these single-store businesses account for substantially less than half of all retail sales. Thus the majority of the revenue in the retail industry is generated by companies that run retail "chains". The biggest retailer in the world is Wal-Mart, which generated over $344 billion in revenue in its last fiscal year. There are two basic forms of retailers: wholesale and specialty. Wholesale retailers, also known as "big box" retailers or department stores, are companies like Wal-Mart and Target that sell a wide variety of items at discounted prices. Specialty retailers offer a limited scope of products in order to serve a smaller market more effectively, such as consumer electronics retailers like Best Buy or office supply retailers such as Staples.
[edit] Retail Industry SectorsThe retail industry can be divided into a number of smaller sectors or "sub-industries": [edit] Department Stores[edit] Discount Stores[edit] Off-Price RetailersOff-price retailers purchase retail merchandise directly from suppliers, taking advantage of manufacture overruns and canceled orders to acquire retail goods at an opportunistic discount. They also utilize "packaway", items purchased at discount at the end of a season, then held in inventory until the next appropriate season for sale. The off-price retail sector as a whole is growing faster than most other retail segments, with a CAGR greater than 10% over the past five years, well above the 4% average annual growth rate for apparel retail.
[edit] Apparel
[edit] Consumer Electronics[edit] Home Improvement[edit] Office Supplies[edit] Pharmaceuticals[edit] Home Products[edit] Sporting Goods[edit] Footwear[edit] Jewelry[edit] Retail Industry Trends[edit] Wal-Mart's ImpactWal-Mart is by far the largest retailer (and company) in the U.S. and the world in terms of revenue generated. The company operates a chain of discount wholesale stores that emphasize incredibly low prices and efficiency that enables the company to offer such low prices. Wal-Mart's successful business model has pushed down prices throughout the retail industry, forcing companies to adapt their business models in order to effectively operate in the new landscape, and forced small single-store businesses out of the markets which Wal-Mart enters. [edit] Increasing Importance of E-CommerceIn the past ten years the Internet has changed the landscape of the retail industry. The Internet has enabled consumers to shop for and purchase goods online from the comfort of their home. This type of E-Commerce has created successful companies such as Amazon.com and eBay. Also, E-commerce has added new dimensions to traditional retailers as nearly every major company in the retail industry sells products through their own website (note that some retailers choose to run E-commerce operations in-house while others outsource the operations to E-commerce specialists). The profitable e-commerce market has served as a launch pad for companies like GSI Commerce (GSIC) that provide e-commerce services for retailers. These companies design, create and manage e-commerce sales for retailers that do not wish to run online sales in-house. E-commerce currently represents approximately 2.7% of total retail industry revenue ($104 billion annually), a number that has steadily grown in past years. As younger, Internet-savvy customers mature and Internet-usage becomes more widespread over time among consumers of all ages, E-commerce will become increasingly relevant. [edit] Product CyclesOne of the most influential growth factors for retailers is product cycles. In many cases, newly innovated products (such as new flat-panel TVs or an updated line of iPods are released with high prices to maximize profits early on. Competition between consumer retailers and increased supply from manufacturers drive down prices over time until each retailer makes little profit by the end of a product's life cycle. How quickly product cycles mature drives the profit a retailer makes. There are many product cycles co-occurring at any given point in time, and these product cycles vary between retail industry sub-sectors; for example, an important product cycle in consumer electronics retail currently is flat panel HDTVs). [edit] Credit CrunchThe 2007 credit market squeeze caused by the subprime lending crisis has hurt consumer confidence which has begun to make significant negative impacts on retail sales. A range of retailers such as Target, Office Depot, Dick's Sporting Goods, J. Crew Group (JCG), and AnnTaylor Stores (ANN) have reported falling same store sales and challenging selling environments due to the economy's struggles. Also, trouble in the US housing market has intensified due to the credit crunch. Downturns in the housing market hurt retailers like Home Depot and Lowe's directly, but also hurts consumer electronics retailers like Best Buy and Circuit City because consumers who have recently purchased a home are more often to purchase new home theater and entertainment products to complement their new residence. Companies in the Retail Industry (248) |
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