8 Oct

How US Retail Sales Changed in Two Decades

WRITTEN BY Rekha Khandelwal, CFA

Retail sales represent the purchase of goods by the end consumers during a particular period. It includes merchandise sold by establishments that are mainly involved in retail trade. Also, retail sales are indicative of the level of economic activity during a given period. The US retail sales rose from $3.3 trillion in 2000 to $6.0 trillion in 2018. This includes food services, auto, and gasoline station sales.

Excluding auto and gasoline station sales, the retail sales for 2018 were $4.3 trillion. From January to July 2019, the retail sales in this category rose 3.5% over the comparable period in 2018. This is a positive indicator for the economy amid the US-China trade war.

How US Retail Sales Changed in Two Decades

For the year 2018, sales by motor vehicle and parts dealers accounted for 20% of the total US retail sales. This category includes automobile dealers and auto parts, accessories, and tire stores. Additionally, food and beverage stores accounted for 12.5% of the total US retail sales. Food and beverage stores include grocery stores and supermarkets as well as liquor stores. Examples of retailers in this category are Kroger (KR) and Sysco (SYY).

Type of retailers

The above graph shows the breakup of the US retail sales by category. Restaurants and other eating and drinking establishments made up 12.3% of the total US retail sales. Additionally, general merchandise stores, including department stores, discount stores, warehouse clubs, and superstores, made up 11.7%. Large retailers in this category include Macy’s (M), Kohl’s (KSS), Walmart (WMT).

Nonstore retailers, which primarily include online retailers, made up 11.4% of the total US retail sales. Amazon (AMZN) and eBay (EBAY) are among the largest online retailers in the US. In comparison, gasoline stations accounted for 9% of the sales.

Other contributors to retail sales include:

  • building material and garden equipment and supplies dealers, such as Masco (MAS) and Home Depot (HD)
  • health and personal care stores, such as Walgreens Boots Alliance (WBA)
  • clothing and accessories stores, such as V.F. Corp. (VFC) and TJX (TJX)
  • furniture, home furnishings, electronics, and appliance stores, such as Mohawk Industries (MHK) and Best Buy (BBY)
  • sporting goods, such as Foot Locker (FL), hobby, musical instruments, and bookstores
  • other miscellaneous store retailers

The other miscellaneous stores include office supplies, stationery, gift stores, and used merchandise stores. It’s interesting to see how the composition of retail sales in the US has changed over time. Let’s compare the 2018 US retail sales with that from 2000. The first change is the rise in the contribution of online retail sales.

The rise of online retail and retail sales

The number of non-store retailers that contribute to the total US retail sales has risen from 5.5% in 2000 to 11.4% in 2018. This reflects growth in online retail. Electronic shopping and mail-order houses accounted for 88% of the non-store retailers in 2018. From 2000 to 2018, the total US retail sales grew at a CAGR (compound annual growth rate) of 3.4%. In comparison, online retail sales grew at a CAGR of 9.7% during the same period.

Amazon (AMZN) and eBay (EBAY) are the two largest online retailers in the US. Additionally, traditional retailers, such as Walmart (WMT), are also selling online. Walmart earned roughly $25 billion from online sales in 2018. Learn more about the top online retailers in Must-Know: The World’s Top Online Retailers.

More Americans are eating out

Restaurants and drinking outlets have captured a growing higher share of people’s food dollars in the last few decades. The share of food services and drinking places in the total retail sales rose to 12.3% in 2018 from 9.3% in 2000. Rising income levels, better hospitality, changing lifestyles, and a variety of menu options have added to the rising trend of eating out.

Among the eating options, the share of both full-service restaurants and limited-service eating places rose. However, the share of limited-service eating places rose more than that of full-service restaurants during the same period.

Increased spending on health and personal care

Another category that has seen a rise in the share of US sales is health and personal care stores. The segment’s share rose from 4.7% of the total US sales in 2000 to 5.7% in 2018. More specifically, the share of pharmacies and drug stores rose from 4.0% to 4.7%. Also, higher drugs and test prices are believed to be the main reasons behind the high healthcare costs in the US.

Gasoline stations

Another category that saw a rise in the share of retail sales was gasoline stations. Their share rose from 7.6% in 2000 to 8.5% in 2018. And, a rise in both the number of vehicles as well as gasoline prices likely added to the increased share of gasoline station sales.

All other categories saw a fall in their percentage contribution to the total US retail sales. Obviously, the sales in dollars of all these categories still rose. Notably, more retail sales happened online. That means a share of other categories’ sales moved under non-store sales. That’s partially a change in the means of sales rather than a change in its composition.

Top US retailers and retail sales

Walmart (WMT), Amazon (AMZN), Costco (COST), Home Depot (HD), and Target (TGT) are the top five retailers in the US by 2018 revenue. Walmart tops the list with massive sales of $514 billion in 2018. Also, Amazon is the leader in online sales. Its 2018 total sales stood at $232 billion. Costco Wholesale and Target operate discount stores offering a broad range of merchandise. Costco has operations in the US, Canada, Mexico, the UK, and a few other countries.

Latest articles

Is the technology sector due for a correction? Twitter (TWTR) and Intel Corporation (INTC) will release their Q3 2019 stock earnings on October 24.

The Dow Jones Industrial Index (or DJIA) is trading just 2.2% below its all-time high. But is the stock bubble about to burst?

Renaissance Technologies had a strong investment in the healthcare sector in Q2 2019. The healthcare sector makes up 18.16% of the firm's total portfolio.

This week, semiconductor equipment suppliers Teradyne Inc. (TER) and Lam Research (LRCX) will report their quarterly earnings.

Major chip companies Texas Instruments (TXN) and Xilinx (XLNX) released their earnings last week and saw their stocks fall.

On October 18, CNBC reported Bill Gross top picks. His top stock picks were Annaly Capital (NLY), Invesco (IVZ) and Allergan (AGN).