Retail Sector
Description
Companies in this sector sell a wide range of products to consumers and businesses, from food and apparel to hardware, household goods, and office supplies. Major companies include Costco, Kroger, and Walmart (all based in the US); as well as ALDI and Schwarz Gruppe (Germany); Carrefour (France); and Tesco (UK).
Global retail sales amounted to $30 trillion in 2025 according to Kyndryl. The US and Europe continue to dominate the market lead, according to Deloitte Global Retail Outlook 2025 report.
The US retail industry includes about 1 million outlets with combined annual revenue of about $5 trillion. The industry includes auto dealers and internet and catalog retailers, but generally excludes food and drinking establishments, such as restaurants and bars.
COMPETITIVE LANDSCAPE
The internet and increasing consumer connectivity are transforming the retail sector, with physical stores losing market share to online operators. Even segments once assumed to be relatively safe from online competition, such as grocery and auto parts retail, are facing increasing competition from e-tailers (especially Amazon) and reimagining their businesses in response. The US industry is fragmented; the 50 largest companies account for about 40% of revenue.
Worldwide retail e-commerce sales are estimated to exceed $3.6 trillion in 2025, according to Statista. Per recent industry calculations, India will rank first among 20 countries worldwide in retail e-commerce development between 2025 and 2030. Other major markets for online retail include Japan, Indonesia, Turkey, and China.
To survive, traditional retail chains are scrambling to grow their own online businesses, right-size their store counts, and optimize supply chains to meet consumers' evolving expectations, which increasingly include free shipping, and next-day (or even same-day) delivery. Retailers large and small are focusing on providing compelling in-store experiences to draw foot traffic to stores and combat online rivals.
While large companies dominate some retail sectors (such as mass merchandisers and grocery stores), other US sectors (such as auto dealers and convenience stores) are fragmented. Many specialty retailers are single-store operations.
Imports are a significant part of the US market for many retail categories, including apparel, shoes, computers, electronics, toys, and cut flowers. Due to low labor costs, manufacturers in Asian countries, such as China and India, play an important, and sometimes controversial, role in the supply chain for many retailers.
Competitive Advantages:
Omni-Channel Business Model - As consumers migrate online, retailers that successfully merge their in-store and digital operations to offer home delivery and in-store pickup for items ordered online will come out ahead, especially among younger, tech-savvy consumers.
Private-Label Brands - From apparel, to groceries, to auto parts, private-label brands (aka store brands) are increasingly popular with consumers. Private label dollar sales grew 5.8% in 2018, outpacing national brands by a wide margin, according to Information Resources Inc. Exclusive store brands typically are less expensive than national brands, more profitable for retailers, and increase customer loyalty. Some retailers, including Trader Joe's, build their business around private brands.
Identifying Market Segments - Premium retailers have seen revenues rise 81% over the last five years, while price-based retailers have seen their revenues climb 37% over the same period. In contrast, balanced (or mid-priced) retailers managed only a 2% increase in sales and have been closing more stores than they open, according to Deloitte Insights.
Compelling In-Store Experience - To draw customers to stores in the Digital Age, chains are focusing on creating unique and compelling in-store experiences for shoppers that can't be matched online. Toy stores create play areas for children, home improvement chains host in-store DIY workshops, while department stores stage fashion shows. Beauty retailer Sephora has thrived in part by offering hands-on beauty bars and in-store makeovers.
Supply Chain Efficiency - Rapidly changing consumer tastes and pressure to provide different delivery options to multiple destinations, is pressuring retailers to optimize their supply chains like never before. Retailers who can't deliver products to customers how and when they want it quickly will lose sales to those who can.
Companies to Watch:
Walmart, the world's largest retailer, is playing catch up with Amazon in online sales. The company operates more than 11,300 stores in 27 countries worldwide and e-commerce websites in 10 countries. Walmart is the #1 seller of groceries in the US and Mexico and a leading seller of food in Canada, Central and South America, Japan, and the UK. In 2018, Walmart acquired a controlling stake in India's Flipkart for $16 billion and in 2013 it bought Jet.com for $3.3 billion to transform its lagging digital operation and keep pace with rival Amazon.
Amazon, the world's largest online retailer, pioneered retail e-commerce and continues to disrupt and drive innovation in the retail sector. The company captured about 10% of total US retail sales, according to PYMNTS. Major categories for the online giant include electronics, home, and apparel, but in sells almost everything. The company is expanding in high-growth categories such as grocery and pharmacy. The company rocked the US grocery industry with its $13.7 billion purchase of Whole Foods Market in 2017.
Germany's Schwarz Group -- operator of the Lidl and Kaufland chains -- is the leading seller of groceries in Central Europe and the third-largest retailer in the world. The company's deep-discount Lidl grocery chain has upended Europe's grocery industry and is poised to do the same in the US and beyond. Schwarz Group has operations in more than 30 countries.
French hypermarket operator Carrefour is the largest retailer in France and #2 in Europe (after Schwarz Group). Carrefour pioneered the hypermarket format more than 50 years ago but is a late arrival to the online retail party. The company is aggressively modernizing its vast network of more than 15,000 stores across 40 countries and adopting an omni-channel approach to its business.
Alibaba is China's top e-commerce firm and second in the online world behind Amazon. One of Asia's most valuable companies, Alibaba is thriving as China's 1.1 billion internet users buy more and more online. While most of its revenue is generated from online sales, the company, like Amazon, has a cloud computing business.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major components of the retail sector include retail sales of automobiles and light-duty trucks (account for about 15% of revenue), medicines, vitamins, minerals, and supplements (about 10%), automotive fuels (about 10%), and food dry goods and other foods purchased (about 5%).
Retailers buy goods from suppliers or wholesalers and resell them for a profit. The industry includes national and regional chains, franchises, and independent retailers. Franchises allow independent operators to leverage a well-known brand name and benefit from the parent company's purchasing and operational efficiencies. Because franchise owners pay royalties and bear much of the financial burden of opening a retail outlet, franchising is a cost-effective way for companies to expand.
The degree of specialization differentiates types of retailers. Department and general merchandise stores offer a wide range of items, while specialty retailers offer a broad selection within a product category. Numerous market segments can exist within a category. For example, clothing stores may focus on a particular gender (men, women, children); price tier (high, medium, low); style (traditional, contemporary, designer); or size (petite, tall, plus-size). At some discount retailers, such as dollar stores, merchandise can vary from week to week.
For brick-and-mortar retailers (those with physical stores), location is key to driving customer traffic. Typical sites include enclosed, outdoor, and strip malls, and stand-alone sites. Large retailers typically occupy desirable anchor spots in shopping malls. When selecting locations, retailers consider local demographics (population growth, income); traffic patterns; proximity to complementary and competitive retailers; and lifestyle. Retail format can vary: gigantic superstores offer massive selections, while kiosks allow companies to set up scaled-down versions of retail operations in small spaces. Pop-up stores allow both large and small retailers to take over vacant space for a limited period of time, as short as a one-day event, to take advantage of high traffic locations and build product buzz. Specialty retailers may also lease locations within larger retailers.
Selecting the appropriate merchandise is critical. Buyers may attend trade shows or search through product catalogs or supplier websites to review upcoming new products. Vendors may set up individual meetings with large retailers to review product offerings. Because most companies place orders many months in advance of product receipt, buyers must have thorough knowledge of market and consumer trends to make good buying decisions. Volume discounts are common and favor large retailers. In industries where suppliers are numerous, retailers often buy from distributors or wholesalers, which consolidate merchandise and simplify purchasing. Retailers with multiple stores often operate their own warehouses or distribution centers to receive and store merchandise from suppliers.
Effective supply chain management controls the flow of merchandise from suppliers to individual retail outlets and helps keep operating costs low. Many companies, particularly large retailers, have implemented sophisticated information systems that integrate data from manufacturers, distributors, warehouses, transporters, and retail outlets to track merchandise movement, monitor inventory levels, and ensure timely delivery of stock to stores. Inventory management helps companies identify slow- and fast-moving items and spot shrinkage due to damage, spoilage, or theft. Rapid inventory turnover is especially critical for retailers selling perishable items, such as fresh foods or dairy products. Retailers periodically discount or "mark down" items that aren't selling to clear floor space for new merchandise.
When developing store layouts, retailers allocate space to basic merchandise, special promotions, checkout, and storage. Companies evaluate how efficiently they're using space by monitoring sales per square foot. Most retailers group similar merchandise and may place complementary items adjacent to one another to generate incremental sales. Well-designed layouts and window displays attract and maximize store traffic. Store atmosphere can vary significantly, based on the type of shopping experience retailers want to deliver. For example, a high-end clothing store may feature lavish decor and expensive fixtures, while warehouse clubs offer little more than the basics. Checkout procedures can also vary: high volume retailers, such as grocery stores, typically have a centralized checkout area with multiple lanes to process as many transactions as possible. Department stores usually have checkout stations throughout the store. More retailers are offering self-checkout. Newer check-out options include mobile contactless payments using smartphones, a method already popular in other countries such as Japan.
Global retail sales amounted to $30 trillion in 2025 according to Kyndryl. The US and Europe continue to dominate the market lead, according to Deloitte Global Retail Outlook 2025 report.
The US retail industry includes about 1 million outlets with combined annual revenue of about $5 trillion. The industry includes auto dealers and internet and catalog retailers, but generally excludes food and drinking establishments, such as restaurants and bars.
COMPETITIVE LANDSCAPE
The internet and increasing consumer connectivity are transforming the retail sector, with physical stores losing market share to online operators. Even segments once assumed to be relatively safe from online competition, such as grocery and auto parts retail, are facing increasing competition from e-tailers (especially Amazon) and reimagining their businesses in response. The US industry is fragmented; the 50 largest companies account for about 40% of revenue.
Worldwide retail e-commerce sales are estimated to exceed $3.6 trillion in 2025, according to Statista. Per recent industry calculations, India will rank first among 20 countries worldwide in retail e-commerce development between 2025 and 2030. Other major markets for online retail include Japan, Indonesia, Turkey, and China.
To survive, traditional retail chains are scrambling to grow their own online businesses, right-size their store counts, and optimize supply chains to meet consumers' evolving expectations, which increasingly include free shipping, and next-day (or even same-day) delivery. Retailers large and small are focusing on providing compelling in-store experiences to draw foot traffic to stores and combat online rivals.
While large companies dominate some retail sectors (such as mass merchandisers and grocery stores), other US sectors (such as auto dealers and convenience stores) are fragmented. Many specialty retailers are single-store operations.
Imports are a significant part of the US market for many retail categories, including apparel, shoes, computers, electronics, toys, and cut flowers. Due to low labor costs, manufacturers in Asian countries, such as China and India, play an important, and sometimes controversial, role in the supply chain for many retailers.
Competitive Advantages:
Omni-Channel Business Model - As consumers migrate online, retailers that successfully merge their in-store and digital operations to offer home delivery and in-store pickup for items ordered online will come out ahead, especially among younger, tech-savvy consumers.
Private-Label Brands - From apparel, to groceries, to auto parts, private-label brands (aka store brands) are increasingly popular with consumers. Private label dollar sales grew 5.8% in 2018, outpacing national brands by a wide margin, according to Information Resources Inc. Exclusive store brands typically are less expensive than national brands, more profitable for retailers, and increase customer loyalty. Some retailers, including Trader Joe's, build their business around private brands.
Identifying Market Segments - Premium retailers have seen revenues rise 81% over the last five years, while price-based retailers have seen their revenues climb 37% over the same period. In contrast, balanced (or mid-priced) retailers managed only a 2% increase in sales and have been closing more stores than they open, according to Deloitte Insights.
Compelling In-Store Experience - To draw customers to stores in the Digital Age, chains are focusing on creating unique and compelling in-store experiences for shoppers that can't be matched online. Toy stores create play areas for children, home improvement chains host in-store DIY workshops, while department stores stage fashion shows. Beauty retailer Sephora has thrived in part by offering hands-on beauty bars and in-store makeovers.
Supply Chain Efficiency - Rapidly changing consumer tastes and pressure to provide different delivery options to multiple destinations, is pressuring retailers to optimize their supply chains like never before. Retailers who can't deliver products to customers how and when they want it quickly will lose sales to those who can.
Companies to Watch:
Walmart, the world's largest retailer, is playing catch up with Amazon in online sales. The company operates more than 11,300 stores in 27 countries worldwide and e-commerce websites in 10 countries. Walmart is the #1 seller of groceries in the US and Mexico and a leading seller of food in Canada, Central and South America, Japan, and the UK. In 2018, Walmart acquired a controlling stake in India's Flipkart for $16 billion and in 2013 it bought Jet.com for $3.3 billion to transform its lagging digital operation and keep pace with rival Amazon.
Amazon, the world's largest online retailer, pioneered retail e-commerce and continues to disrupt and drive innovation in the retail sector. The company captured about 10% of total US retail sales, according to PYMNTS. Major categories for the online giant include electronics, home, and apparel, but in sells almost everything. The company is expanding in high-growth categories such as grocery and pharmacy. The company rocked the US grocery industry with its $13.7 billion purchase of Whole Foods Market in 2017.
Germany's Schwarz Group -- operator of the Lidl and Kaufland chains -- is the leading seller of groceries in Central Europe and the third-largest retailer in the world. The company's deep-discount Lidl grocery chain has upended Europe's grocery industry and is poised to do the same in the US and beyond. Schwarz Group has operations in more than 30 countries.
French hypermarket operator Carrefour is the largest retailer in France and #2 in Europe (after Schwarz Group). Carrefour pioneered the hypermarket format more than 50 years ago but is a late arrival to the online retail party. The company is aggressively modernizing its vast network of more than 15,000 stores across 40 countries and adopting an omni-channel approach to its business.
Alibaba is China's top e-commerce firm and second in the online world behind Amazon. One of Asia's most valuable companies, Alibaba is thriving as China's 1.1 billion internet users buy more and more online. While most of its revenue is generated from online sales, the company, like Amazon, has a cloud computing business.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major components of the retail sector include retail sales of automobiles and light-duty trucks (account for about 15% of revenue), medicines, vitamins, minerals, and supplements (about 10%), automotive fuels (about 10%), and food dry goods and other foods purchased (about 5%).
Retailers buy goods from suppliers or wholesalers and resell them for a profit. The industry includes national and regional chains, franchises, and independent retailers. Franchises allow independent operators to leverage a well-known brand name and benefit from the parent company's purchasing and operational efficiencies. Because franchise owners pay royalties and bear much of the financial burden of opening a retail outlet, franchising is a cost-effective way for companies to expand.
The degree of specialization differentiates types of retailers. Department and general merchandise stores offer a wide range of items, while specialty retailers offer a broad selection within a product category. Numerous market segments can exist within a category. For example, clothing stores may focus on a particular gender (men, women, children); price tier (high, medium, low); style (traditional, contemporary, designer); or size (petite, tall, plus-size). At some discount retailers, such as dollar stores, merchandise can vary from week to week.
For brick-and-mortar retailers (those with physical stores), location is key to driving customer traffic. Typical sites include enclosed, outdoor, and strip malls, and stand-alone sites. Large retailers typically occupy desirable anchor spots in shopping malls. When selecting locations, retailers consider local demographics (population growth, income); traffic patterns; proximity to complementary and competitive retailers; and lifestyle. Retail format can vary: gigantic superstores offer massive selections, while kiosks allow companies to set up scaled-down versions of retail operations in small spaces. Pop-up stores allow both large and small retailers to take over vacant space for a limited period of time, as short as a one-day event, to take advantage of high traffic locations and build product buzz. Specialty retailers may also lease locations within larger retailers.
Selecting the appropriate merchandise is critical. Buyers may attend trade shows or search through product catalogs or supplier websites to review upcoming new products. Vendors may set up individual meetings with large retailers to review product offerings. Because most companies place orders many months in advance of product receipt, buyers must have thorough knowledge of market and consumer trends to make good buying decisions. Volume discounts are common and favor large retailers. In industries where suppliers are numerous, retailers often buy from distributors or wholesalers, which consolidate merchandise and simplify purchasing. Retailers with multiple stores often operate their own warehouses or distribution centers to receive and store merchandise from suppliers.
Effective supply chain management controls the flow of merchandise from suppliers to individual retail outlets and helps keep operating costs low. Many companies, particularly large retailers, have implemented sophisticated information systems that integrate data from manufacturers, distributors, warehouses, transporters, and retail outlets to track merchandise movement, monitor inventory levels, and ensure timely delivery of stock to stores. Inventory management helps companies identify slow- and fast-moving items and spot shrinkage due to damage, spoilage, or theft. Rapid inventory turnover is especially critical for retailers selling perishable items, such as fresh foods or dairy products. Retailers periodically discount or "mark down" items that aren't selling to clear floor space for new merchandise.
When developing store layouts, retailers allocate space to basic merchandise, special promotions, checkout, and storage. Companies evaluate how efficiently they're using space by monitoring sales per square foot. Most retailers group similar merchandise and may place complementary items adjacent to one another to generate incremental sales. Well-designed layouts and window displays attract and maximize store traffic. Store atmosphere can vary significantly, based on the type of shopping experience retailers want to deliver. For example, a high-end clothing store may feature lavish decor and expensive fixtures, while warehouse clubs offer little more than the basics. Checkout procedures can also vary: high volume retailers, such as grocery stores, typically have a centralized checkout area with multiple lanes to process as many transactions as possible. Department stores usually have checkout stations throughout the store. More retailers are offering self-checkout. Newer check-out options include mobile contactless payments using smartphones, a method already popular in other countries such as Japan.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
Pricing
Currency Rates
Questions or Comments?
Our team has the ability to search within reports to verify it suits your needs. We can also help maximize your budget by finding sections of reports you can purchase.
