With the US being considered as one of the world’s biggest economies, the American apparel market is by far the largest in the world. It is 50% bigger than China’s retail segment. In fact, the top global retail companies are largely American.
Though there has been a decline in the market brought about by the economic recession, the industry and the market have bounced back. For local and foreign companies wishing to venture into the US retail industry, there are several opportunities available as the market is still growing strong and Americans are among the largest retail spenders.
The Demographics of US Retail Industry
Based on research conducted by the Euro Monitor, the US retail industry had a total of USD 1,509.9 billion in sales in 2013. The health and beauty sector had the highest share with the apparel and footwear sectors acquiring the second biggest share.
Looking at the US retail market, one can easily see that it is comprised of a few primary players which hold more than 35% of market share. These include Walmart, Kroger, Costco, Target and Home Depot at the top. The market is really competitive which makes it challenging for foreign brands to acquire a credible spot. However, foreign brands like H&M, Zara and Ikea have been able to penetrate the market.
Largest Retail States
Many of the big retail states are located on the east coast and in the Midwest regions of the nation. The top 5 states account for about 40% of the market sales which offer various business opportunities.
These top 5 states include (percentage of total sales):
- California (12.8%)
- Texas (8.5%)
- New York (6.9%)
- Florida (6.5%)
- Illinois (4.0%)
Consumers in large metropolitan areas tend to spend more compared to those in the rural areas. This induces more sales of luxury goods which are projected to increase 3 times faster than in Western Europe. In dissecting the consumer profile, shoppers with high educational attainment spend more. Degrees and the salary are directly correlated with the level of education.
The growth of E-commerce
With more shoppers now using mobile devices to purchase products, there is an increasing growth in e-commerce. A majority of retail sales are still in-store but there are evident changes in the way customers are opting to buy products. It is projected that by 2016, mobile online retailing is expected to comprise 18% of all e-commerce.
There is no doubt that the US retail market is attractive. However, there are challenges for new market player entries and the requirements are also high. A foreign brand has to face tough competition against established and well-known brands in the market. It is also important for those who plan to indulge in business in the American retail market to be prepared for the tedious legal process that lies ahead.