Latest study shows heightened importance of retail to the U.S. economy

The retail industry’s health impacts the health of American workers and the U.S. economy
Executive Director, Research
July 20, 2020
Retail's Impact Study

Explore the economic impact of retail in the United States and see state-by-state breakdowns in the Retail's Impact Report.

Prior to the COVID-19 pandemic, NRF commissioned PwC to update our 2014 study on retail’s impact on the U.S. economy. The latest results are in — and they profoundly illustrate the retail sector’s importance. And though the economic impact of the coronavirus pandemic will drastically reduce the numbers overall, they do emphasize the enduring importance of retail to the economy and any successful plan to rebuild.

Across each measurement — employment, labor income and GDP contribution — retail’s total impact on the U.S. economy has grown significantly since our last report.

Over the six-year period between reports, retail has grown its employment impact by a staggering 10 million jobs. While an element of the growth is attributable to the economic strengthening we saw over the intervening period, retail nonetheless grew its share of U.S. employment from 23 percent to 26 percent. As the nation’s largest private-sector employer, retail supports more than one in four U.S. jobs — 52 million working Americans.

Understanding direct and total economic impact

This report measures both the direct and total impact of the retail industry on the U.S. economy. Direct impact refers to activity within the retail industry. For example, direct employment includes only workers who are employed directly by retail firms. Total impact includes direct impact as well as two other categories — indirect and induced impact. Indirect impact includes jobs, labor income and GDP that occurs in other industries as a result — primarily — of intermediate purchases by the retail industry. This would include goods and services purchased by retailers including raw materials and services such as utilities. Finally, induced impacts result from the household spending from income earned either directly or indirectly from the U.S. retail industry’s economic activities.

Likewise, both GDP contribution — $3.9 trillion annually — and share of labor income rose from 16 percent to 19 percent* of the U.S. economy. Since 2010, retail has been the top contributor to the jobs gains in the U.S. economy, accounting for 15.9 percent of the 28 million increase in private sector jobs.

Despite a persistent media narrative around a perceived weakness in the retail economy — most often fixating on department stores, which represent only 1 percent of retail sales and 3 percent of employment the report demonstrates that retail was healthy and thriving prior to the current coronavirus crisis. Retail grew across all measures mentioned above, and grew the number of establishments across the U.S. Since our last study, the number of retail establishments rose to 4.2 million, increasing by almost 400,000. It’s important to note that the vast majority of these establishments — 98.5 percent — are operated by small businesses.

There is no doubt that retail, like most sectors of our economy, has been dramatically impacted by the COVID-19 crisis. In particular, nonessential retailers that have had to close their stores are facing incredible challenges. While consumers can still make purchases online, the fact is that only 11 percent of retail sales happened online in 2019.

Retail has been one of the major engines of growth for the U.S. economy since the great recession, contributing dramatically to the well-being of our nation. We cannot meaningfully recover from this current crisis without a resilient retail sector to support our economy.

As we navigate our way toward recovery, many retail businesses will need continued financial support from our government and a sensible pathway to reopening and remaining viable. The health of the retail industry impacts the health of American workers and the U.S. economy overall.

* These figures represent the total impact of retail on the U.S. economy including direct, indirect and induced impacts.