Retail sales include the purchase of goods and services by consumers and businesses. These goods and services have reached the end of the supply chain, which starts with the product manufacturer or supplier and ends with the retail merchant.
Retailing and Its Primary Function
The retail industry distributes all of these goods and services to customers. Retail points of sale include physical stores like Target and Macy’s. They also include online retailers such as Amazon. Retail distribution also encompasses home sales like Avon products and television retailers like QVC. The retail industry also sells services, including restaurants, hotels, and beauty salons.
Measuring Sales and Trends
The U.S. Census Bureau measures retail sales through the Monthly Retail Trade Report in the United States. The report reveals total sales, percentage change, and year-over-year sales change.
Retail Categories
The U.S. Census Bureau divides retail sales into 13 categories. The largest category is motor vehicle and parts dealers. Because it is such a large component, the Census Bureau’s report also highlights retail sales excluding motor vehicles.
Impact on the Economic Environment
Retail sales tell you how much demand there is for consumer goods. This is crucial because consumer spending accounts for nearly 70% of the total U.S. Gross Domestic Product (GDP). The Bureau of Economic Analysis releases GDP data each quarter throughout the year. If retail sales are strong each month, the GDP report is likely to be strong as well. The only time this may not be true is if prices are rising due to inflation. The Retail Sales Report does not adjust for inflation. The Bureau of Economic Analysis uses what is called real GDP, which is adjusted for inflation.
Frequently Asked Questions (FAQs)
What is the function of retail sales?
Retail trade functions include cashiers, customer service representatives, salespeople, and managers. These jobs exist across many industries, including dealers selling motor vehicles or parts, household appliances, groceries, clothing, electronics, garden supplies, sports and hobbies, health and beauty stores, furniture and fixtures, hospitality and entertainment, gas stations, and miscellaneous items.
What is the general sales tax on retail sales?
The general sales tax provides revenue for governments by taxing all retail sales. The U.S. federal government does not impose sales tax on retail sales, but local and state governments do. Alaska, Delaware, Montana, New Hampshire, and Oregon do not have sales taxes.
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Sources:
– U.S. Census Bureau. “Monthly Retail Trade”, download “Advance Monthly Retail Trade Report”.
– Bureau of Economic Analysis. “National Income and Product Accounts Tables: Table 1.1.5. Nominal GDP.”
– Bureau of Labor Statistics. “Retail Trade: NAICS 44-45.”
– Tax Foundation. “State and Local Sales Tax Rates, 2022.”
Source: https://www.thebalancemoney.com/what-is-retail-sales-3305722
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