Retail Trade

Performance Highlights

Retailers have faced volatile spending habits and inflationary pressures over the past five years. To combat these challenges, businesses have adopted omnichannel strategies, product and service diversification, and investments in automation. Rising consumer confidence, facilitated by falling inflation and interest rates, will drive retail spending in the next few years. Spending on high-margin products and big-ticket items will sustain profit. Over the coming years, retailers will increasingly target younger consumers with innovative technologies. Brands will employ AI for inventory management and extended reality to build upon the omnichannel experience.

Geographic Distribution

California, Texas, Florida, and New York have the highest concentrations of businesses due to large populations and economic activity. The Southeast region holds the highest share of retailers due to its status as the most populated region, favorable weather conditions, and substantial population attracting both brick-and-mortar and online retailers.

Industry Outlook

Revenue is expected to grow at a CAGR of 3.3% from 2024 to 2029, reaching $8.9 trillion. The performance of the Retail Trade sector will be driven by consumer confidence, technological advancements, and sustainability trends. An anticipated decrease in inflation over the next five years is likely to spur spending on high-margin products, boosting sector profit. Omnichannel commerce will expand, with retailers leveraging AI for sophisticated inventory management and personalized advertisements. Brands will invest in extended reality technologies to attract younger demographics and blend online and in-store shopping experiences.

Competitive Forces

The industry is characterized by low concentration and high competition. Internal competition is more prevalent than external competition due to the homogeneity of products sold by retailers. Barriers to entry are low, but the sector requires significant capital and skilled labor. Successful businesses focus on location, quality of assets, and technology integration.

Major Companies

Notable players include Walmart Inc. (4.7% market share), Amazon.com, Inc. (3.8% market share), The Kroger Co. (1.7% market share), Home Depot, Inc. (1.7% market share), and Best Buy Co., Inc. (0.6% market share).

Revenue

$7.6 trillion

Employees

20 million

Businesses

3 million

Wages

$661.3 billion

Economic and External Factors

The industry operates under varying regulations across the sector. Most retailers are bound by regulations related to fair practice and consumer protection, employee treatment, and safe operations. Industry associations are the main form of assistance across the Retail Trade sector. Major associations include the National Retail Federation.