Discuss the importance of retailing in the U.S. economy.
Retailing plays a vital role in the U.S. economy for two main reasons. First, retail businesses contribute to our high standard of living by providing a vast number and diversity of goods and services. Second, retailing employs a large part of the U.S. working population-over 15 million people.
To fully appreciate the role retailing plays in the U.S. economy, it may be helpful to review a selection of press articles related to the retailing industry. Search for articles pertaining to retailing. Read a selection of articles, and report your findings to the class.
Alexander, N., & Doherty, A. M. (2009). International retailing. Oxford university press.
Guptill, A., & Wilkins, J. L. (2002). Buying into the food system: Trends in food retailing in the US and implications for local foods. Agriculture and Human Values, 19(1), 39-51.
Kent, T., & Omar, O. (2003). Retailing in the Economy. In Retailing (pp. 3-31). Palgrave, London.
Kim, H. Y., Jolly, L., & Kim, Y. K. (2007). Future forces transforming apparel retailing in the United States: An environmental scanning approach. Clothing and Textiles Research Journal, 25(4), 307-322.
Matthews, H. S., Williams, E., Tagami, T., & Hendrickson, C. T. (2002). Energy implications of online book retailing in the United States and Japan. Environmental Impact Assessment Review, 22(5), 493-507.
The importance of retailing in the U.S. economy:
Since 2010, retail has been the leading contributor to employment growth in the US economy, accounting for 15.9% of the 28 million new jobs created in the private sector.
In a persistent media myth of the retail economy's supposed vulnerability — most commonly focusing on department stores, which account for just 1% of retail revenue and 3% of jobs — the study shows that retail was stable and flourishing until the recent coronavirus epidemic. Retail sales increased across the board, as did the number of stores across the country. After our previous survey, the number of retail stores has increased by almost 400,000 to 4.2 million. It's worth noting that small businesses account for the vast majority of these establishments (98.5 percent).
There is no question that the COVID-19 crisis has had a major effect on retail, as it has on most other areas of our economy. Nonessential retailers, in particular, who have had to shutter their doors, are facing enormous difficulties. Despite the fact that shoppers can already make purchases digitally, only 11% of retail transactions were made online in 2019.
After the Great Recession, retail has been one of the most important engines of growth for the US economy, adding significantly to our country's well-being. Without a strong retail market to sustain our economy, we will be unable to rebound meaningfully from the ongoing recession.
Many retail companies would need sustained financial assistance from our government as we work our way toward rehabilitation, as well as a sensible route to reopening and staying viable. The state of the retail sector has an influence on the well-being of American workers and the economy as a whole.
The US economy is dependent on the labor market, which is influenced by the state of the retail industry. Consumer spending and shifts in the labor market, among other factors, have an effect on retail sales. As a result, the supermarket sector, as well as developments in retail trade and services, are positive indicators of the economy's wellbeing. As a result, the retail sector benefits the US economy in two ways:
(i) Increasing the number of people employed.
(ii) Increases the country's GDP (Rucker, 2012).
There are three ways to look at how the retail sector affects the economy:
- Measuring direct influence on the retail market.
- Indirect effects- the activity in other sectors as a result of supermarket buying inputs.
- Induced effect- is described as the behavior that results from the spending of money earned as a result of the retail industry's operations. 2012 (Rucker).
Whichever strategies are used, studies show that retail has a major effect on the economy in the United States, as mentioned below:
- In terms of employment alone, it supports 28, 113, 476 jobs, and the retail industry's indirect and mediated results provide about 41, 620, 604 jobs, or nearly a quarter of all eligible jobs in the United States. Retail employment alone produced about 1.49 trillion dollars in the United States (Rucker, 2012).
- GDP Contribution: Retail has a major impact on the economy. It adds $1.20 trillion to the economy. After real estate and construction, it ranks third in the top three GDP determinants. Another $1.28 trillion is contributed by industries that are directly or indirectly affected by retail. 2012 (Rucker).
Retail revenues have increased by 0.2 percent and are up 0.7 percent from previous levels, according to the latest report, and customer confidence and consumption are also improving, which is good news for the economy. 2012 (Rucker)
- Over a ten-year period, retail revenues have decreased by an almost average of 4.64 percent, with the sharpest fall occurring in December 2008, when they fell by -11 percent. In 1993, retail revenue hit an all-time high of 11 percent. (2013, "United States Retail")
Improving trade and health conditions in the countries:
The aim is to promote domestic development and employment prospects in sectors that are protected. Partner countries in trade, on the other hand, could retaliate, affecting exporting industries in the long run.
Retail and food service revenue in the United States totaled $431.9 billion in December, up 0.2 percent from the previous month. (2013, "United States Retail").
This is backed up by more business earnings, stronger labor markets, and less layoffs. The financial market has also improved as a result of the improving retail data statistics, with the big stock indexes all showing progress. 2014 (Scaggs) However, the main source of concern remains the high unemployment rate of 7.3 percent, which necessitates more robust development. Since the retail industry has such a strong influence on the economy, US companies can seek more opportunities by investing in sectors outside the US.
This will help combat the current lack of viable options by boosting growth rates and attracting more workers to the workforce, lowering unemployment and improving the economy further. Given the retail industry's significant contributions to GDP, this will be the best course of action. Some of America's largest retailers may consider expanding their footprint by opening locations outside the country. Also, with an emphasis on computers, consumer electronics, and apparel and accessories, the e-commerce retail market is expected to expand. By 2016, their contribution is expected to climb to 45.6 percent.