Q: How do retail sales relate to the overall economy?
A: Retail sales is an important economic indicator closely linked to consumer confidence. When consumers are confident in the economy, they spend money. Retailing is also closely linked to the labor market. Slowing sales can lead to layoffs and even store closings.
Retailers sell both goods and services for private and business use. Common examples of retailers are brick-and-mortar stores like Target, Walmart, Cub Foods and Nordstrom; restaurants, hair salons, locally owned stores, mom-and-pop shops and even vending machines are also part of the retail sector. Other retailers only have an online presence like Amazon and Netflix.
Internet retailing is the fastest growing retail segment, according to Mordor Intelligence. E-commerce alone accounts for nearly one-third of all retail sales in the U.S. The growing popularity of e-commerce is quickly shaping what shopping will look like in the next five to 10 years. Many brick-and-mortar retailers are closing, downsizing or sharing retail space.
Consumer desires are driving many of the changes, whether those desires are for a better shopping experience, a faster shopping experience or a good deal. Knowing what consumers desire is critical to selling both products and services, online and offline. Small brick-and-mortar retailers need to give consumers a reason to shop in their stores. Great customer service, the personal touch, pop-up locations and purchasing locally are all competitive advantages over online merchants. Large retailers need to continue to innovate, providing consumers with shopping efficiency and seamless omnichannel experiences.
Where 2018 was a difficult year for retail, leaving many retailers bankrupt and the rest facing global trade and economic tensions, 2019 is predicted to be a transitional year. Retailers will need to be smart in order to make 2019 a strong year. Retailers need to develop meaningful relationships with consumers, giving them a reason to return often. They also should embrace technology and determine what is best to deploy based on cost and knowing what their consumers want, and, finally, leverage supply chain logistics to get product into consumers’ hands in multiple ways.
Kim Sovell is on faculty at the University of St. Thomas Opus College of Business.