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What Is Retailing?

Why It's Important to the Economy

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Retail contributes nearly 6% to the economy.

Photo: Tetra Images/Getty Images

Retailing is how producers of goods and services get their products to consumers. Examples of manufactured goods include automobiles, apparel and groceries. Examples of retailers include brick-and-mortar stores, such as Best Buy or Wal-Mart, small kiosks, or online retailers, such as Amazon and eBay. Some retailers focus on home sales (such as Avon or Schwan's), while others rely on TV (such as the Shopping Network).

According to the most recent estimate, retailing generates $966 billion a year, or 5.7% of U.S. Gross Domestic Product (GDP). Since it provides a way for products to get to consumers, retailing also supports the $1.008 trillion wholesaling industry and parts of the $2 trillion manufacturing industry. (Source: BEA, GDP by Industry, Q1 2014 estimate)

Retailing includes stores that sell: Motor Vehicles and Parts, Furniture and Home Furnishings, Electronics and Appliances, Building Materials, Food and Beverage, Health and Personal Care, Apparel and Footwear, and all other merchandise including sporting goods, books and music.

The most important time of the year in retailing is the holiday shopping season, which starts the day after Thanksgiving. Nearly 20% of retail sales occur from Black Friday through Christmas.

Trends

The latest trends show that retailing is experience two shifts. The first is technological. Although shoppers will never completely abandon brick-and-mortar stores, they are expecting retailers to offer a convenient online alternative. Most stores are responding while still trying to get shoppers into their stores for pick-up of large items. For more, see Retail Trends for 2014.

The other technological shift will occur in the years to come. 3D printing allows people to print small plastic and metal toys and other objects. Although the printers are too expensive right now to have much of an impact, over time they will become as affordable as cell phones. People will merely need to purchase or lease a software program that they download into the printer to produce whatever they want. Toymaker Hasbro has already partnered with 3D printermaker Shapeways to produce popular toys. Here's more in Why You Won't Even Need a Job by 2040.

The second is a change in consumer spending. The recession forced many people back into school to improve their job prospects. As a result, education loans rose while credit card use dropped. In addition, shoppers underwent a Shift to Thrift. They sought deals and discovered that many low-priced items were just as good as more costly products. Retailers found they had to offer value in the form of higher service and convenience in addition to lower prices. Here's more in What Are Some Consumer Spending Trends and Habits?

Retailing FAQ

Updated July 25, 2014
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