Retail Sales: Definition, Measurement, Components

Retail price wars are one of the most intense wars in the sales industry. Special days like Black Friday, Cyber Monday are used to exhausting the stocks. The other most common practice in retail sales is psychological pricing where buy a $10 product would be price does $9.99. Managing stocks of products are one of the biggest challenges faced by retailers.

  1. Retail accounts for almost 20% of annual sales for many retailers.
  2. Consumer spending accounts for more than two-thirds of the U.S. economy.
  3. Retailers rely on a system that supplies them with merchandise to market to consumers.
  4. Retailers with points of sale across multiple platforms, such as online and in-store, are known as omnichannel retailers.
  5. These are the ones who carry perishable foodstuffs such as dairy vegetables and other products which require cold storage facilities.

That makes the core retail sales number (and the more comprehensive retail sales numbers) important indicators of the health of the overall economy. Wholesalers buy goods in bulk from manufacturers at lower prices and then sell them to retailers. For instance, a book wholesaler might buy thousands of copies of a new novel from a publisher, and then distribute them to bookstores nationwide. The word “retail” refers to a type of business where merchants sell products or services to individual consumers for personal use. It’s worth also looking at year-over-year retail sales in addition to the monthly percentage changes. Retail sales growth since the prior year will give you a better indication of GDP growth which is also compared to the prior year.

Understanding Core Retail Sales

Two monthly retail sales numbers are commonly reported by the financial news media—retail sales and core retail sales. As a broad economic indicator, the retail sales report is one of the timeliest reports because it provides data that is only a few weeks old. Individual retail companies often provide their own sales figures at the same time every month, and their stocks can experience volatility as investors process the data. As a leading macroeconomic indicator, healthy retail sales figures typically elicit positive movements in equity markets. Higher sales are good news for shareholders of retail companies because it means higher earnings.

These careers exist in many industries, including retailers that sell motor vehicles or parts, appliances, sporting goods, and food stores. With the boost in e-commerce companies, retail sales have moved from brick and mortar concept to online stores. As a result, the modern definition of retail would include both online and offline purchase in trends of the customer. A part of retailing involves window shopping which does not result in any kind of purchase. The report, which is released in the middle of every month, shows the total number of sales in the measured period, usually the prior month, and the percentage change from the last report. The report also includes the year-over-year change in sales to account for the seasonality of consumer-based retail.

Warehouse Retailers

In a physical store, this could be a cash register or a self-check-out lane. For ecommerce, it’s the online checkout where you enter your credit card information to complete the purchase. Retailers buy goods in large quantities from wholesalers or directly from manufacturers, then sell those goods in smaller quantities to the end users.

How to Read the Retail Sales Numbers

Manufacturers calculate the cost of making a product and add a profit percentage before selling to wholesalers. Retailers having automobiles furniture appliances sporting goods etcetera comprise of hardline retailers. For many consumers, this represents a major purchase decision. The buying cycle for hardline retailers is not very regular. For example, one may purchase a tablet PC or an iPad once every three or four years, automobile every 10 years and so on.

When that happens, it seems like retail sales are skyrocketing. Sales seem to drop like a stone in the late summer or autumn. Retail accounts for almost 20% of annual sales for many retailers. The holiday shopping season customarily begins on Black Friday, the day after Thanksgiving.

Internet shopping websites ship the purchases directly to customers at their homes or workplaces, without the expenses of traditional brick-and-mortar retailers. The beginning of the supply chain includes commodities and other raw materials. Wholesalers purchase merchandise from manufacturers at negotiated prices. They then mark up their prices to cover their purchasing and generate profit—retailers, in turn, do the same.

The core retail sales number for January 2024, which is a 2.15% decrease from the December 2023 number of $386.83 billion. It is important to note that retail sales include both the sale of goods and services. For example, a retailer selling electronics may generate revenue from selling devices and also providing installation and repair services.

Core retail sales are a segment of the broader monthly retail sales number. Both retail sales and core retail sales are released in the middle of the month about the previous month’s data. The percentage increase or decrease from month to month gives a good indication of whether the economy is contracting or expanding, and how fast. Very strong or very weak retail sales can put upward or downward pressure on prices. The retail sales figures are compiled monthly by the Census Bureau, which is part of the U.S.

An accurate measure of retail sales is incredibly vital for gauging the economic health of the U.S. This is because consumer spending, or Personal Consumption Expenditure (PCE), accounts for two-thirds of gross domestic product (GDP). Core retail sales are an important measure of consumer spending, complementing determining the best scalping trading strategy the broader monthly retail sales number. Overall monthly retail sales show the big picture of consumer spending, but the core number strips out food, energy, and other fluctuating figures. Positions in the retail trade industry include cashiers, customer service representatives, salespersons, and managers.

It also includes other big shopping days, such as Cyber Monday, Green Monday and every other shopping day through Christmas. Some retailers have a «Christmas in July» sale to stir up sales during the slow summer season. Once the presentation is given the salesperson may help the customer with decision making. Customers who have made up their mind of purchasing a particular product do not indulge in any other product presentations.

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