In the world today, the US economy is one of the strongest around. The dollar is growing stronger against the Euro and may even overtake it in value by 2016. Part of this strength comes from the confidence that can be found in the retail sector.
Total US retail sales dropped three consecutive months from November 2014-January 2015, marking the first time this has happened since 2012.
US Retail Sales
Overall the strength of retail sales, which often includes food sales, has been outpacing GDP. In 2013, for example, the total amount of US sales were $4.5 trillion. This sets up a bright future for the industry in the coming years, especially when considering the growth of the e-commerce industry.
- Retail sales in the US are expected to grow an average of 4% every year through the end of 2018.
- $5.52 trillion. That’s the estimated amount of sales that are expected to occur in 2018 if current trends stay accurate.
- 16.9%. That’s the amount of growth that the e-commerce industry experienced in 2013, which represents $40 billion in additional sales.
- In 2013, retail represented 27.0% of nominal US GDP, up from 26.8% in 2012.
- By 2017, US e-commerce retail sales are expected to account for over $440 billion in total revenues.
- E-commerce only represents 5.8% of the total retail sales market.
- The US market averages about $380 billion in total retail sales every month.
Why are retail sales down in January and December 2014 when they were expected to increase? Blame the weather. With nearly 95% of retail shopping occurring at physical store locations, cold weather patterns changed the expected behavior patterns of shoppers. Fewer people went out to shop, which meant fewer sales were experienced. The changing value of the dollar is also a factor. With European goods cheaper than they have been in nearly a decade, Americans are looking to expand their retail reach as well.
Not Every Retail Industry Is Struggling
- Receipts at online stores climbed 2.2% and sales at sporting goods and hobby shops increased 2.3% in February 2015 compared to the month before.
- In total, 8 of 13 major categories showed declines in February.
- The internet is expected to account for 11% of the total retail receipts in the industry by 2018.
- Consumers between 25-33 years old already spend more online than any other age group, an average of $563 per quarter.
- 69% of US adults that regularly buy online purchase about 16% of their products online.
- By 2017, 1 in 4 online purchases is expected to originate from a mobile device.
- Mobile e-commerce is expected to account for over $100 billion in retail sales for the first time in 2017.
- 1 in 5 e-commerce purchases in the United States is made for electronics or appliances.
- New orders for manufactured goods increased by $800 million in February 2015 when compared to the same time the year before.
- New residential sales were up 4.4% in February 2015.
The retail marketplace in the US is strong, but it is the e-commerce industry that is going to power the most growth. With electronics and appliances leading the way, along with whatever sector is in the highest demand for consumables, retail sales will stay strong for the next 5 years if the statistics and estimates from them remain true. This should give even more people confidence in how the US economy has been able to recover since 2009 and a hope for a bright near future. Will US retail sales be able to maintain for the long run beyond 2018? A lot of that depends on the global market.
What Is Changing About US Retail Sales?
- 83% of Americans who have access to the internet say that they have purchased at least one thing online within the past year.
- The percentage of people who have made multiple purchases in the last year from e-commerce platforms: 56%.
- Between November 1-December 14, more than 40% of the total e-commerce retail sales will be completed.
- Amazon receives 164 million unique visitors every month. That is 3x more than what Walmart receives and almost 2x more than what eBay receives.
- More than 250 million people will visit Walmart in some way in the next 7 days, supporting 2.2 million employees.
- For the fiscal year ended January 31, 2014, Walmart increased net sales by 1.6% to $473.1 billion. $12.8 billion was returned to shareholders.
Much of what the US retail industry does is the same thing it does every year. Items that are discounted will inspire some spikes in sales. Ongoing rotational sales throughout the industry keep driving traffic into stores. The ability to experience a product before having to purchase the product will continue to keep high traffic levels. What is changing is the online experience. People can purchase just about anything they want from Amazon or they can use a niche provider. They can shop for auctions and bargains on eBay or order something directly from Walmart if they prefer. More choices might wind up diluting individual revenues, but for the industry at large, this variety is a good thing.
The US Food Retail Market Drives The Industry
- The US food retail portion of total retail sales dominates the industry, with grocery stores by themselves accounting for $578 billion of the overall total.
- There are 37,000+ active grocery stores in the United States right now.
- The average amount of retail sales a grocery store in the US produces: $16.5 million.
- 72. That’s the number of people who are employed, on average, in every grocery store because of the levels of spending that are seen.
- $51,000. That’s the median household income in the US right now.
- The amount per household that is spent on retail food sales every year that will be consumed at home: $3,921.
- Consumers also spend $2,678 per household on retail food sales away from home.
The food portion of the retail market in the United States will always provide fuel for this industry. People always need to eat, which means people will always be shopping for food. There is a direct link between the amount of money that households spend on food away from home and the amount of household income that is generated. When people make more in the US, they spend more on food. As the US economy continues to strengthen through 2018 and the dollar stays strong, this total amount of spending may even beat all of the expectations and estimations that have been made.