How we buy and sell things has changed a lot, with a growing trend of people turning to websites that feature a variety of sellers in one centralized marketplace. In the US, sales from these online marketplaces are expected to reach 603.2 billion USD in 2027, making up about 35% of all online sales. These websites connect many sellers to many buyers all over the world, making shopping easier for everyone. Small sellers especially can reach new customers and get help in growing their businesses through these online marketplaces.
The year 2024 started with more hope compared to 2023. People feel more confident about spending but are still cautious. The focus has shifted to needs instead of wants, reflected in an 11% uptick in spending on personal care and health products from last year. Consumers also tend to increase their spending right before Valentine’s Day, the Super Bowl, and Easter.
The retail industry contributes over 5 trillion USD to the US economy annually. It is also the largest employer in the private sector, providing jobs for more than 55 million people. Retail accounts for over 25% of all jobs in the country, and there are more than 4.6 million retail stores in the US.
The Economic Contribution of the US Retail Industry
The PwC and NRF report how and what the US retail industry contributes to total employment through direct, indirect, and induced means:
Item | Total National Contribution | Percent of US Economy |
Employment (Jobs) | 55 million | 26.0% |
Labor Income | $3.0 trillion | 20.0% |
GDP | $5.3 trillion | 20.4% |
*Source: PwC calculations using the IMPLAN modeling system (2022 database) for the retail industry, including food services and drinking places.
The Economic Footprint Of The Retail Industry
Two years ago, there were nearly 4.6 million retail establishments (including food services and drinking places) across the country, counting both those with paid employees and non-employees. These retail businesses accounted for:
Item | Direct National Contribution | Percent of US Economy |
Retail Establishments | 4.6 million | 11.1% |
Retail Employment (Jobs) | 32.2 million | 15.2% |
Retail Labor Income | $1.3 trillion | 8.5% |
Retail GDP | $2.2 trillion | 8.6% |
*Source: US Bureau of Economic Analysis.
Shifts in Retail Employment and Growth Trends
As mentioned above, the way people shop has changed a lot in recent years. More and more people are finding things online, and stores are using more automation. When boomers started retiring, younger people’s shopping habits became more impactful. Furthermore, the COVID-19 pandemic has led to even faster changes, one being stores started offering curbside pickup.
Analyzing the employment changes in different parts of the retail industry reveals its intricacies, evolution, and influence. Between 2010 and 2022, the retail businesses that grew the fastest were recreational vehicle dealers, followed closely by snack and nonalcoholic beverage bars and coffee shops. This growth has been driven by more people working from home and an increased focus on self-care, online sales, and social media marketing.
During this time, the retail sectors that have seen the most growth are used car dealers, nurseries, garden centers, and farm supply retailers. These sectors have expanded much more than the retail industry as a whole, which has grown at an average of 1.3 percent annually.
Direct Economic Contributions in 2022
The retail industry’s direct economic impact is measured by its jobs, labor income (including wages, salaries, benefits, and business income), GDP, and number of establishments in the US. In 2022, the US retail industry made a significant direct contribution to the national economy:
4.6 million retail establishments, 11.1% of the US economy;
32.2 million jobs, 15.2% of national employment;
1.3 trillion USD labor income, 8.5% of national income;
2.2 trillion USD retail GDP, 8.6% of the national GDP.
*Source: PwC
In 2022, nearly 4.6 million retail businesses operated in the United States, generating 32.2 million jobs, accounting for 15.2% of the country’s total jobs. These businesses also paid out 1.3 trillion USD in wages, salaries, and benefits while generating 2.2 trillion USD in GDP. The US retail industry was the biggest employer in the private sector in 2022 and was ranked third in its contribution to the national GDP among all industries. These numbers are still valid in 2024, in fact, they only continued to grow.
US Retail Industry’s Total Economic Contribution
The total economic contribution includes the direct, indirect, and induced contributions:
Direct Contribution: The US retail industry creates jobs, income, and GDP within the country.
Indirect Contribution: The economic activity created in other industries because of the US retail industry buying materials for production (not including items for selling and long-term assets).
Induced Contribution: The spending by households of income earned directly or indirectly from the economic activities of the US retail industry stimulates economic activity.
At the national level, PwC estimates the total economic contribution of the US retail industry supported:
Item | Total National Contribution | Percent of US Economy |
Employment | 55 million | 26.0% |
Labor Income | $3.0 trillion | 20.0% |
GDP | $5.3 trillion | 20.4% |
*Source: PwC
Consumer Resilience and Economic Outlook for 2024
The economy is heavily reliant on resilient consumers, leaving us with only the most optimistic thoughts on their behavior. Now that we are approaching the end of 2024, the uncertainty that remains is the very durability of consumer spending. The robust job market, which has supported consumer spending, is expected to slow down in 2024. As a result of that deceleration, we might see 100,000 fewer jobs per month compared to 2023. However, the annual unemployment rate will remain around 4%.
Still, the National Retail Federation’s forecast predicts a growth of 2.5% to 3.5% in retail sales, with the total expected to reach between 5.23 trillion and 5.28 trillion USD. This projection was presented during the NRF’s fourth annual State of Retail & the Consumer virtual discussion. They anticipate consumer resilience to fuel steady, although moderate, growth throughout the year. The state of retail in 2024 is in line with the average annual sales growth of 3.6% seen in the decade prior to the pandemic.
Closing Remarks
In 2024, online marketplaces are changing how consumers shop and businesses sell. Predictions suggest these platforms will significantly impact online sales by 2027. People are spending carefully, focusing on essentials and self-care, leading to growth in specific retail sectors.
The retail industry remains valuable, contributing over 5 trillion USD each year and supporting a workforce of more than 55 million. It has a big economic impact, with millions of establishments and significant contributions to GDP and labor income.
The outlook for the future of retail is good, but you should expect some obstacles because the job market is slower, and people are worried about prices going up. The retail industry and how much people can keep spending will be really important in shaping the economy in 2024 and thereafter. The evolving online marketplaces are expected to drive retail sales and influence economic trends.
