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Retail trade employment: before, during, and after the pandemic

By Daniel Dorfman

Retail trade is one of the largest and most closely followed industries in the U.S. economy. Retailers enable producers to sell their merchandise to consumers, and their activities are closely tied to broader trends in consumer confidence and spending measures. During the COVID-19 pandemic, retail trade experienced sharp declines in employment and output as many retailers and consumers began to engage in contactless shopping and curbside pickup. And although retail trade is projected to decline by nearly 587,000 jobs from 2020 to 2030 (the largest projected employment decline of any sector), some retail industries are projected to add employment over the next 10 years. Ultimately, the retail trade sector is expected to make up 8.6 percent of total employment in 2030, down from 9.7 percent in 2020 and 10.2 percent in 2010.¹

This Beyond the Numbers article uses data from the U.S. Bureau of Labor Statistics Employment Projections program to examine trends in retail trade employment.² The article first discusses how e-commerce and other technology contributed to the overall decline in retail trade employment over the 2010–20 decade. Then, the article examines how the pandemic-induced recession accelerated the decline in industry output and employment, and disproportionately affected several retailers both insulated from and at-risk to e-commerce. Finally, the article looks at changes to projected employment. Some industries are projected to add employment, but most are projected to lose jobs.

The rise of e-commerce

Employment in the retail trade sector experienced strong growth from 2010 to 2017 while recovering from the 2007–09 Great Recession. Employment grew from its Great Recession low of 14.4 million workers in 2010 to a peak of 15.8 million in 2017, growing by an average annual rate of 1.3 percent. During this period, retail employment was similar to overall employment growth in the broader nonagricultural wage and salary and service-providing sectors (1.7-percent annual growth for both). However, beginning in 2017, employment in retail trade began to decline and significantly diverge from the rest of the economy. (See chart 1.) From 2017–19, employment in retail trade contracted by approximately 200,000 jobs (0.7-percent annual average decline). Total nonagricultural wage and salary employment grew 1.5 percent, and service-providing employment increased 1.4 percent during the 2017–19 period.

Although employment grew from 2010 to 2017, it was during this time that e-commerce growth began to take business away from brick-and-mortar retail stores and slowed the retail sector’s employment growth. In the years leading up to the decline in sector employment, strong price competition from e-commerce firms and persistently low sales margins rendered an increasing number of brick-and-mortar retailers unprofitable. Retailers operated on ultra-thin sales margins and many began to struggle with the increased costs of customer acquisition, labor, and greater third-party vendor transactions costs. Technological growth enabled companies to tailor the shopping experience to the customer, allowing them to buy in store, online, or by mobile phone, and retailers began to make significant investments in logistics platforms to stay competitive and many large-scale retailers also took on excessive debt burdens.³ It was during this time that many large retailers began to either file for bankruptcy or consolidate operations and adopt newer forms of automation, thereby reducing retail staffing levels.⁴

In comparison, many of the industries supporting retail e-commerce—such as the transportation and warehousing industry—grew significantly over this time, reflecting a shift in employment away from the brick-and-mortar retail industry. For instance, employment in the couriers and messengers industry and the warehousing and storage industry grew 54.4 percent and 86.1 percent, respectively, between 2010 and 2019, compared with retail, which grew 8.1 percent over the same time.

Employment declines, 2017–19

Seven retail industries were responsible for the retail sector’s employment contraction during the 2017–19 period (chart 2). Of these, general merchandise stores and clothing and clothing accessories stores accounted for the largest shares of employment decline within the sector, at approximately 29.0 percent each. From 2017 to 2019, both industries saw significant store closures partly because retailers struggled to compete with online competitors, consumers changed their preferences in favor of food services and travel, and demand increased for used and discount merchandise.⁵ Sporting goods, hobby, musical instrument and bookstores accounted for the third-largest share of the sector’s employment decline (19.3 percent) as these retailers struggled to compete with online and discount retailers. Together, these three retail industries accounted for 77.6 percent of the retail trade sector’s decline in employment from 2017 to 2019. (See chart 2.)

How did COVID-19 affect retail trade employment?

In contrast to employment changes up to 2019, changes in employment from 2019 to 2020 differed drastically because of lockdowns and shifts in consumer behavior. In total, the retail sector lost almost 800,000 jobs during 2020, compared with about 200,000 jobs from 2017 to 2019. Meanwhile, e-commerce became an even more attractive option and the couriers and messengers, and warehousing and storage industries accounted for a combined gain of approximately 300,000 jobs between 2019 and 2020, equaling the growth in employment over the prior 2-year period of 2017–19.

Many of the retail industries most adversely affected by the pandemic were those engaged in the selling of merchandise or services deemed nonessential by state and local guidelines.⁶ These retailers sold products that weren’t necessary to everyday living and that could be deferred until a later time. COVID-19 led to stay-at-home orders and government-mandated shutdowns of businesses. Fear of the virus caused consumers to avoid interpersonal contact with others; many chose to stay away from stores. All of this led to a decrease in employment in retail trade. Motor vehicle and parts dealers, miscellaneous store retailers, and gasoline stations, all of which experienced employment growth from 2017–19, combined for just over one quarter of retail sector employment loss between 2019 and 2020. Stay-at-home orders and travel limitations caused many consumers to reduce expenditures on gasoline and automobile maintenance and repair. Furthermore, stay-at-home orders and the pandemic-related recession led to significant deferrals of new automobile purchases, which contributed to the large cyclical decline in employment. Miscellaneous store retailers, which include a wide range of retailers including office supply stores, used merchandise stores, florists, and pet and pet supplies stores were among retailers that saw significant shifts to online sales.⁷

Clothing and clothing accessories stores, health and personal care stores, and furniture and home furnishings stores made up a large share of employment loss in 2020. All three industries also declined during the 2017–19 period too. The clothing stores industry accounted for 38.6 percent of total retail sector employment loss from 2019–20. The decline reflected, in part, a shift in consumer preference to defer new clothing purchases, especially as more people began to work from home. Health and personal care stores made up 9.6 percent of total retail sector employment loss and cosmetic and beauty supply stores and optical goods stores were largely responsible for this. Altogether, six retail industries—motor vehicle and parts dealers, gasoline stations, miscellaneous store retailers, clothing and clothing accessories stores, furniture and home furnishings stores, and health and personal care stores—accounted for more than three out of four retail sector jobs lost from 2019 to 2020 because of changes in demand during the pandemic.

Although the shift to essential goods and services hurt quite a few industries within the retail sector, not all were hurt. In fact, employment improved in the general merchandise industry. General merchandise stores followed a unique pattern: employment declined in both the 2017–19 and 2019–20 periods, but the industry’s share of the retail sector’s decline was much smaller during the latter period, during which it only declined 1.5 percent versus the 29.2 percent decline from 2017 to 2019. The general merchandise industry is comprised of two major subindustries: department stores, which account for approximately one-third of general merchandise industry employment, and general merchandise stores, including warehouse clubs and supercenters, which account for the other two-thirds.⁸ Department stores continued to experience significant declines in employment in 2020 stemming from major chains declaring bankruptcies.⁹ However, other large general merchandise stores, including warehouse clubs and supercenters, experienced an increase in employment. Establishments in this subindustry primarily sell essential goods and services, such as food and groceries, personal healthcare and toiletries, and discount brands. The increase in employment in warehouse clubs and supercenters reduced the overall general merchandise store employment decline in 2020. Many firms also had platforms enabling consumers to buy online and pickup in-store, which allowed customers to continue to make purchases while social distancing and adhering to limited occupancy guidelines.

Projected employment trends by retail industry

E-commerce growth, automation, and industry consolidation have long been factors that drove long-term trends in retail trade. The pandemic accelerated the effect of these factors. The pandemic both reinforced and accelerated technological changes in the retail sector that were hurting retail employment and are expected to persist going forward. As a result, retailers are expected to make further investments in automation, resulting in faster productivity growth over the 2020–30 decade.¹⁰ As a result, fewer workers will be required to meet the projected growth in output.

Overall, the retail trade sector is projected to lose almost 4.0 percent of its 2020 employment total over the course of the 2020–30 decade, which is roughly 587,000 jobs. The largest projected declines are expected to occur in food and beverage stores and general merchandise stores, which are expected to account for a projected decline of 257,500 and 233,500 jobs, respectively, or roughly 83.7 percent of all retail jobs lost. Meanwhile, motor vehicle and parts dealers, nonstore retailers, and clothing and clothing accessories stores are all projected to gain employment. Although motor vehicle and parts dealers and clothing stores are projected to grow, their 2030 projected employment levels are not expected to reach their 2019 prepandemic levels of 2.0 and 1.3 million jobs, respectively. Nonstore retailers remain the only growth industry expected to see gains beyond historical levels, driven largely by accelerated e-commerce growth.

Table 1. Employment in retail trade, 2020 and 2030 projected

Industry title	Employment (thousands of jobs)		Employment change, 2020–30
	2020	2030	Number	Percent
Total employment	153,533.8	165,413.7	11,879.9	7.7%
Service-providing, excluding special industries	122,773.6	134,114.6	11,341.0	9.2
Retail trade	14,853.1	14,266.4	-586.7	-4.0
Motor vehicle and parts dealers	1,907.7	1,983.8	76.1	4.0
Food and beverage stores	3,101.6	2,844.1	-257.5	-8.3
General merchandise stores	3,029.8	2,796.3	-233.5	-7.7
Furniture and home furnishings stores	405.2	425.1	19.9	4.9
Electronics and appliance stores	425.0	361.3	-63.7	-15.0
Building material and garden equipment and supplies dealers	1,351.0	1,296.6	-54.4	-4.0
Health and personal care stores	958.5	919.9	-38.6	-4.0
Gasoline stations	930.7	887.4	-43.3	-4.7
Clothing and clothing accessories stores	949.2	992.0	42.8	4.5
Sporting goods, hobby, musical instrument, and book stores	460.0	426.4	-33.6	-7.3
Miscellaneous store retailers	749.5	662.9	-86.6	-11.6
Nonstore retailers	584.9	670.5	85.6	14.6
Source: U.S. Bureau of Labor Statistics.

Where is retail sector employment projected to end up in 2030?

For many retail industries, the projected rate of employment growth largely reflects a strong expected decline in brick-and-mortar retail over the 2020–30 decade. By examining retail trade over time, we can get a better idea which retail industries are likely to return to prepandemic employment trends and which retail industries will not. This helps inform us which industries will make up more of a share or less of a share of retail sector employment than they did prior to the pandemic.

Most notably, the general merchandise stores and food and beverage stores industries, which both had increases in employment during 2020, are both projected to return to prepandemic employment trends. The pandemic’s shift to essential goods and services, such as groceries, toiletries, and household items, caused an increase in demand for employment in both general merchandise stores and food and beverage stores. However, this increase is projected to be temporary because of e-commerce and automation. Online competition and automation have caused these retailers to explore new strategies. For instance, some large general merchandise stores have explored opening smaller branches or downsizing existing ones to cater to different consumers who may be less likely to shop online.¹¹ Meanwhile, the closure of many restaurants during 2020 shifted consumer expenditures toward food at home, which created a large temporary increase in employment in food and beverage stores to handle the sudden rise in demand. The long-term shift to consumers preferring food away from home, growth in online sales of prepackaged meals and home deliveries, along with enhanced automation of occupations heavily concentrated within this industry (for example, cashiers), will constrain the food and beverage store industry’s projected share of employment in 2030.¹²

Table 2. Industry share of retail sector employment, 2017–19; 2020; and 2030, projected.

Industry	2017–19	2020	2030, projected
Furniture and home furnishings stores	3.0%	2.7%	3.0%
Electronics and appliance stores	3.1	2.9	2.5
Nonstore retailers	3.6	3.9	4.7
Sporting goods, hobby, musical instrument, and book stores	3.7	3.1	3.0
Miscellaneous store retailers	5.3	5.1	4.7
Gasoline stations	5.9	6.3	6.2
Health and personal care stores	6.7	6.5	6.5
Building material and garden equipment and supplies dealers	8.2	9.1	9.1
Clothing and clothing accessories stores	8.5	6.4	7.0
Motor vehicle and parts dealers	12.8	12.9	13.9
Food and beverage stores	19.5	20.9	19.9
General merchandise stores	19.6	20.4	19.6
Source: Author's calculations based on U.S. Bureau of Labor Statistics Employment Projections data.

Unlike the industries with temporary employment growth in 2020, several retail industries are projected to account for a share of employment similar to their 2020 pandemic level. This includes building material and garden equipment and supplies dealers, health and personal care stores, and gasoline stations. Building material and garden equipment and supplies dealers are projected to account for 9.1 percent of retail sector employment. While much of the pandemic shift towards home renovation is expected to be temporary, building materials stores are projected to see very small declines compared with other retail industries. Many consumers still prefer in-person consultation and customer support services for home decor and hardware supplies.¹³ Furthermore, many products sold at building material stores generally do not lend themselves to e-commerce, and often require in-store purchasing or pickup.¹⁴ In the long run, both health and personal care stores (for example, pharmacies and drug stores, cosmetic and beauty supply stores), and gasoline stations are projected to continue their pandemic trend and account for approximately 6.5 and 6.2 percent of retail sector employment, respectively. Employment in these industries is projected to decline on par with the overall retail industry, as e-commerce continues to grow and automation of retail salespersons and cashier positions becomes more common in pharmacies and gasoline stations.

Motor vehicle and parts dealers, nonstore retailers, furniture and home furnishing stores, and clothing and clothing accessories are expected to make up a larger share of retail sector employment by 2030 because of projected employment growth. Motor vehicle and parts dealers, which made up roughly 12.8 percent of industry employment during both the 2017–19 and 2020 periods, is projected to account for 13.9 percent by 2030. (See chart 3.) It is one of four retail industries projected to add employment through 2030. Consumers will continue to prefer using car dealerships for vehicle purchases as they can see and test drive cars, despite the growth in online sales.¹⁵ In addition, growing interest in both electric vehicles and recreational vehicles (for example, RVs and motorcycles), combined with sustained demand for routine maintenance services will support a larger share of industry employment.¹⁶

Nonstore retailers, which include electronic shopping and mail-order houses, is projected to gain a larger share of industry employment, largely a result of the pandemic’s acceleration of e-commerce. In 2020, e-commerce grew over three times its pre–COVID-19 rate. In total, e-commerce sales increased 32.0 percent from the fourth quarter 2019 to the fourth quarter 2020, growing from 11.0 percent of total retail sales to almost 14.0 percent.¹⁷ While e-commerce was growing sharply before the pandemic, and was a key factor contributing to many retail industries’ decline in employment during the 2017–19 period, the pandemic signaled a fundamental change in the shopping behavior of many consumers. One of the casualties of e-commerce was the clothing and clothing accessories stores industry. This industry was on the decline prior to the pandemic, largely a result of increased e-commerce. The pandemic’s effect on the clothing and clothing accessories stores industry employment was significant because stay-at-home orders closed most clothing stores and consumers working from home delayed new clothing purchases.¹⁸ Due to the significance of the 2020 employment decline, clothing stores share of retail sector employment is projected to grow in share to 7.0 percent, a level between that of the prepandemic (8.5 percent) and 2020 pandemic (6.4 percent), reflecting a modest cyclical recovery.

Conclusions

The retail trade sector is undergoing significant changes that are projected to alter its employment outlook. Many of these changes began prior to the pandemic because e-commerce changed consumer behavior and led to vast gains in industry productivity favoring fewer retail workers. As a result, retail trade is projected to contract by almost 600,000 jobs over the course of the 2020–30 decade. Most retail industries are expected to continue their long-term trajectory, and future trends will largely favor retailers most insulated from e-commerce such as building material and garden equipment and supplies dealers and motor vehicle and parts dealers, as well as those most accelerated by the shift to e-commerce, namely nonstore retailers.

This Beyond the Numbers article was prepared by Daniel Dorfman, formerly an economist in the Office of Employment and Unemployment Statistics, U.S. Bureau of Labor Statistics. For more information, contact by email: ep-info@bls.gov, or by telephone: (202) 691-5700.

If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications relay services or the information voice phone at: (202) 691-5200. This article is in the public domain and may be reproduced without permission.