Selling to a Nation of Shoppers

Fuelled by 50 years of rising disposable incomes, the United States retail trade is an alluring market for exporters.

Americans enjoy one of the highest standards of living in the world. The United States ranks fifth in the World Bank’s International Comparison Database for GNI per capita in PPP. The GNI per capita in PPP in the United States in 2012 was $52,610.

GNI (GROSS NATIONAL INCOME) PER CAPITA, PPP (CURRENT INTERNATIONAL $)

Country Name 2008 2009 2010 2011 2012
Norway 61,060 55,610 58,420 62,240 67,450
Luxembourg 66,660 52,190 58,100 61,140 60,950
Singapore 49,620 47,730 57,280 59,950 60,110
Switzerland 44,740 48,380 51,670 51,770 55,000
United States 48,650 47,240 48,880 50,860 52,610
Hong Kong SAR, China 47,430 45,260 48,140 51,430 52,190
Denmark 40,460 39,240 41,860 42,960 44,070
Sweden 41,000 38,320 40,460 42,700 43,960
Austria 39,690 38,890 40,430 42,600 43,850
Netherlands 42,000 40,370 40,940 43,290 43,750

Source: World Bank

This wealth is reflected in their willingness to spend. It’s possible to see exactly what Americans spend their money on from statistics provided by the United States Department of Commerce’s Bureau of Economic Analysis. Though they’re increasingly spending money on services, consumer goods still take a healthy share of their wallets.

PERSONAL CONSUMPTION EXPENDITURE BY TYPE OF PRODUCT (US$-BILLION)

2008 2009 2010 2011 2012
Personal consumption expenditures 10,005.5 9,842.9 10,201.9 10,711.8 11,149.6
Goods 3,375.7 3,198.4 3,362.8 3,602.7 3,769.7
Durable goods 1,102.3 1,023.3 1,070.7 1,129.9 1,202.7
Motor vehicles and parts 339.6 317.1 342.0 368.7 401.7
Furnishings and durable household equipment 268.7 244.3 250.4 260.1 275.1
Recreational goods and vehicles 329.3 303.8 312.7 321.1 334.5
Other durable goods 164.6 158.2 165.6 179.9 191.3
Nondurable goods 2,273.4 2,175.1 2,292.1 2,472.8 2,567.0
Food and beverages purchased for off-premises consumption 772.9 770.0 788.9 833.0 863.3
Clothing and footwear 319.5 306.5 320.6 338.3 354.6
Gasoline and other energy goods 389.1 284.5 333.4 408.9 417.0
Other nondurable goods 791.9 814.2 849.2 892.6 932.1
Services 6,629.8 6,644.5 6,839.1 7,109.1 7,379.9
Household consumption expenditures (for services) 6,347.7 6,368.5 6,563.7 6,831.2 7,089.4
Housing and utilities 1,839.1 1,881.0 1,909.0 1,960.9 2,013.9
Health care 1,556.5 1,627.4 1,690.7 1,767.8 1,847.6
Transportation services 311.7 289.7 292.9 308.2 318.1
Recreation services 384.5 376.0 385.1 399.7 416.6
Food services and accommodations 612.5 600.3 617.7 658.7 701.7
Financial services and insurance 771.5 719.0 763.2 801.1 821.0
Other services 871.9 875.1 905.1 934.8 970.4
Final consumption expenditures of non-profit institutions serving households (NPISHs) 282.1 276.0 275.4 277.9 290.5

Source: US Department of Commerce Bureau of Economic Analysis

Americans clearly love shopping, but what do they spend it on? Thirty percent of retail sales in the United States gets spent on motor vehicles and gasoline. Another 13% is spent in department stores, warehouse clubs and mass merchandise stores. Food services and drinking places take a healthy 11% share of wallet, followed by building materials (6%), health and personal care (6%) and clothing (5%).

ESTIMATED ANNUAL SALES OF U.S. RETAIL AND FOOD SERVICES FIRMS BY KIND OF BUSINESS (US$-MILLIONS)

Kind of business 2008 2009 2010 2011 2012
Motor vehicle and parts dealers 787,079 674,002 746,120 818,703 894,798
Furniture and home furnishings stores 99,560 86,258 87,290 90,124 94,898
Electronics and appliance stores 108,663 98,030 99,128 100,792 102,998
Building mat. and garden equip. and supplies dealers 304,556 266,975 267,950 279,402 294,656
Food and beverage stores 569,735 569,314 581,929 611,006 631,486
Health and personal care stores 246,787 253,245 261,128 272,555 275,645
Gasoline stations 502,983 389,774 445,962 528,937 551,888
Clothing and clothing access. stores 215,776 204,813 213,720 229,327 241,386
Sporting goods, hobby, book, and music stores 84,037 81,040 81,657 82,466 85,190
General merchandise stores 596,358 591,682 607,989 630,557 649,754
Miscellaneous store retailers 111,589 103,384 106,540 111,256 112,966
Non-store retailers 319,283 311,891 342,041 377,871 408,475
Food services and drinking places 456,102 451,684 466,493 494,813 524,892
Total 4,402,508 4,082,092 4,307,947 4,627,809 4,869,032

Source: US Census Bureau
Notes:
1. Non-store retailing includes door-to-door solicitation, portable stalls and vending machines
2. Miscellaneous store retailers include florists, office supplies, used goods, and gifts

The United States has some of the largest retailers in the world. The top five mass merchandisers – Wal-Mart, Target, Costco Wholesale, Meijer and BJ’s Wholesale – collectively generate nearly half a trillion dollars in annual sales. Mass merchandisers operate large stores, selling a variety of items including apparel, sporting goods, garden equipment and videos.

Other groups of retailers in the United States market are:

Category Killers

These are giant retailers that only sell one type of product — from pet food to electronic goods – at prices their competitors can’t match. Examples of category killers include Home Depot and Lowe’s in the home improvement industry, Barnes & Noble and Borders in the bookselling industry, and Best Buy in consumer electronics.

Warehouse Clubs

These retailers tend to sell products off pallets in a warehouse-like environment. Shoppers buy anything in bulk at discounted prices, from groceries to electronics and furniture. Examples of warehouse club stores are BJ’s Warehouse and Sam’s Club. Exporters thinking of selling to warehouse clubs will need to develop economies of scale, delivering high quality products at low prices.

Speciality Chains

These are businesses that concentrate on one type of merchandise and offer it in a manner that makes it special. They vary from fashion outlets like Louis Vuitton to home furnishing stores like Crate & Barrel. These stores are found in shopping malls all over the United States.

Department Stores

These large retail stores sell many different kinds of products, which could include clothing and household appliances, in separate departments. Famous department stores in the United States include Barneys New York, Bloomingdale’s, J.C. Penney and Macy’s, which vary from luxury to mid-priced chains.

Purely E-commerce Stores

Many retailers sell products online but some of the best known e-commerce only retailers are American companies, including Amazon, which now dominates e-commerce retailing in the USA and in many countries around the world. Amazon first sold only books, but later started selling everything from electronics to gardening equipment. They now act as a portal for “marketplace suppliers” who are able to use UPS marketplace shipping to process order information and ship products directly to customers, bypassing Amazon’s warehouses altogether.

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