A Satellite Account to Measure the Retail Transformation Organizational, Conceptual, and Data Foundations (2021) / Chapter Skim
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2 Transformation of the Retail Sector
2 Transformation of the Retail Sector
Pages 13-28
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From page 13... ...
Finally, it turns to look at trends related to the retail sector from current statistical series to see what picture they provide of this sectoral transformation. During the panel's workshop, four of the seven sessions provided an overview of important recent changes in the retail sector.1 The first session considered the transformation from the perspective of researchers who study the sector.
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From page 14... ...
, which represent one-fifth of total employment in the retail sector, 3.0 million out of 15.7 million employees.3 Over the first two decades of this century, while employment in retail overall and in general merchandise stores stayed roughly constant,4 there was a large shift in employment within general merchandise: department store employment decreased by 0.7 million while employment in general merchandise stores, including warehouse clubs and supercenters, increased by 0.9 million.5 This shift moved department stores from 62 to 36 percent of employment in the 2 Industry statistics in the United States are classified according to the North America Industry Classification System (NAICS)
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From page 15... ...
For example, nonstore retailers (NAICS 454) represented only 2.9 percent of total retail employment and only 7.9 percent of total retail sales in January 2010.7 Total sales in nonstore retailers surpassed sales in general merchandise stores, including warehouse clubs and superstores, only in 2015.8 According to the Census Bureau, e-commerce as a percentage of total sales grew from 0.6 percent in 1999 to 16.1 percent in the second quarter of 2020.9 As e-commerce has grown in recent years, it has become increasingly difficult to separate out the e-commerce portion of the industry.
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From page 16... ...
Providing these extended retail services has required the creation of substantial computing and demand analysis functions that are associated with the headquarters of large retailers and that produce substantial intangible assets that are essential to the success of these firms. While e-commerce extends retail services, the digital technology that makes e-commerce possible also takes away a number of key retail services from the physical store itself, including providing information to customers about the products that are available, accepting the customer's payment to execute the purchase, and providing the product to the customer upon purchase.
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From page 17... ...
Calculated from the underlying detail tables for Personal Consumption Expenditures, see https://apps.bea.gov/iTable/index_nipa.cfm. 12 BEA, nominal Personal Consumption Expenditures, comparing nominal expenditures on motor vehicle leasing, motor vehicle rental, and new motor vehicles.
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From page 18... ...
Bean carries out much of its back-office work in Costa Rica.17 Role of Large Firms in the Retail Transformation The four changes previously mentioned have been driven by national and regional multi-unit retail firms, which lead productivity growth in the industry and represent most of the sector's growth in sales and employment (Foster et al., 2016)
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From page 19... ...
This can be seen in the sheer number of products offered at warehouse clubs and supercenters, which has increased again with the rise of e-commerce, where nonstore retailers can offer a huge range of products beyond the limits of a physical store. At the same time, inventory management software and online search and recommendations systems allow consumers to identify and obtain specific products from the vast array offered for sale, powerfully extending the service that retailers have always provided in presenting and organizing products for consumers to consider purchasing.
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From page 20... ...
This question is raised with particular urgency by e-commerce, where a growing number of firms now provide some aspects of retail services without identifying themselves as retail firms. Does a freight company that subcontracts with a retailer to provide customer service and order fulfillment services effectively become a retail establishment in some sense?
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From page 21... ...
The warehousing sector stored goods in the transition from manufacturer to final consumer, and the transportation sector moved goods between manufacturer, wholesaler, retailer, and final consumer. As noted above, large retailers today often directly provide wholesale services (includ ing direct importing)
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From page 22... ...
However, this shifting in the types of services provided by the retail sector can make it difficult to interpret changes that are occurring in measured employment and productivity. Specifically, the extra services can produce an increase in employment and therefore possibly suggest a decrease in productivity unless the output measure recognizes that a greater level of service is being provided, as reflected in the significant reduction in unpaid shopping hours reported by the American Time Use Survey.23 These two changes, which involve shifts from activities inside the traditional retail definition to activities outside that definition or vice 23 See https://www.bls.gov/tus.
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From page 23... ...
This situation necessarily requires some approximation in allocating inputs to different industries, though that is a challenge throughout the economic statistical system and is not specific to the retail transformation. THE RETAIL TRANSFORMATION AS SEEN IN EXISTING STATISTICAL SERIES As a starting point in considering the statistical challenge of portraying and understanding the retail transformation, Figure 2-1 illustrates the sector's labor productivity as measured by three different statistical series.
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From page 24... ...
Labor productivity calculated by dividing change in output by change in hours worked, using hours data from BLS (BLS data from https://www.bls.gov/lpc/lpc_by_industry_and_measure.xlsx using the "Output" and "Hours" fields for the sale revenue and hours indices, respectively)
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From page 25... ...
The one retail subindustry that clearly stands out for its labor pro ductivity performance is the nonstore sector, where labor productivity was more than twice as large as for the retail sector as a whole. However, for general merchandise stores, which saw substantial restructuring in the decline of department stores and the rise of warehouse clubs and super centers, productivity changes look no different than for the rest of the retail sector in the three statistical series.
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From page 26... ...
The TABLE 2-1 Several Indicators of the Retail Transformation, 1997-2019 (percentage) 1997 2002 2007 2012 2017 2019 Warehouse and supercenter share 4.6 7.3 9.3 10.9 10.8 10.6 of total retail sales Nonstore retailer share of total 5.1 6.1 7.7 9.5 12.5 14.6 retail sales Employment share in firms with 42.9 39.0 35.9 35.2 <500 employees Employment share in firms with 44.6 49.7 52.3 53.5 10,000+ employees Share of total retail sales for 11.7 15.3 17.5 19.5 8 largest retail firms E-commerce share of sales: Music and video 12.3 41.2 76.5 Books and magazines 9.1 22.1 41.1 Computers and software 18.7 30.3 32.9 Food and beverages 0.2 0.7 0.9 SOURCES: Sales data from BLS, https://www.bls.gov/lpc/lpc_by_industry_and_measure.xlsx, using the Value of Production field for NAICS 45231 (General merchandise, including warehouses and supercenters)
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From page 27... ...
firms, with a shift of 8 percentage points in overall retail employment from small to large firms over a 15-year period. It also shows the shift in revenue of the largest eight retail firms over an earlier (but overlapping)
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