General Merchandise Stores
Overview of Demand and Supply Conditions
General merchandise stores are defined as retail stores that sell a number of lines, such as dry goods, apparel and accessories, furniture and home furnishings, small wares, hardware, and food. General merchandise stores are subdivided into three major groupings: department stores, variety stores, and miscellaneous general merchandise stores. Each of these three groupings has different characteristics.
Department stores, by far the largest of the three, accounts for over 89 percent of total employment and almost 80 percent of total sales within the general merchandise industry. A department store carries men’s, women’s and children’s apparel, household appliances or other home furnishings, and various other lines. These stores are generally arranged in departments with individualized accounting. Department stores usually provide their own charge accounts, deliver merchandise, and maintain open stocks. After a disappointing performance in the second half of the eighties, department stores have increased their market share during the nineties. In 1990, department stores accounted for 9.0 percent of total retail sales and 14.1 percent of nondurable goods sales. Since then, restructuring within the department store industry has led to continued gains in market share. In 1998, department stores accounted for 10.1 percent of total sales and 17.2 percent of nondurable sales. The rise of discount department stores (or "superstores") such as Wal-Mart, Target and K-Mart, have contributed to the overall growth of the industry by posting better than industry sales increases every year in the 1990s. Consumer spending at department stores is likely to remain healthy in the near future. Technology advances and continuing change will keep costs, and therefore prices, down, which should lead to strong sales in the future.
One of the major reasons for stronger department store performance has been the consolidation in the industry. Many of the big names in department stores not only downsized their operations in an effort to become more efficient and profitable, but also merged with other giants in the industry. Even so, department stores face stiff competition from various other forms of retail businesses. Entities such as the Home Shopping Network, mail order catalogs, and Internet retailing have the ability to capture sales due to their convenience and ease. Nonstore retailers have greatly increased their sales revenues in recent years due in large to the explosion in "e-retailing." Department stores continue to face competition from specialty stores—those that offer goods in a certain category line; and from the latest trend in retailing—the "category killer" or "superstores." These superstores, like Home Depot, and Borders seriously threaten department store sales because they offer practically every product within a particular retail category usually at much lower prices.
Variety stores, the smallest component of general merchandise, are defined as retailers who do not carry a complete line of merchandise, are not departmentalized, do not carry their own charge service, and do not deliver merchandise. As such, variety stores have been performing quite poorly in recent years. Since the mid-1980s, annual variety store sales have grown at a meager rate of 1.0 percent. Variety stores’ share of all general merchandise sales has fallen from 7.2 percent in 1980 to 3.3 percent in 1998. The growth of specialty stores and superstores is the major reason behind the demise of variety stores. Although the major attraction of variety stores is lower prices, not carrying complete product lines have made these stores especially vulnerable to superstores, which carry every product in a category at relatively low prices.
Miscellaneous general merchandise stores, the final category, are similar in structure to department stores, except they generally have fewer employees. Miscellaneous general merchandise stores normally have fewer than 50 employees. Sales at these stores have struggled in the mid-1990s. Sales growth (in real terms—i.e., without inflation) averaged 6.8 percent from 1986 to 1993, but have slowed significantly to a mere 1.3 percent average since then. The market share within general merchandise stores held by miscellaneous stores has remained somewhat strong, due largely to the strength of past sales and the demise of variety stores. Miscellaneous merchandise stores market share grew from 11.5 percent in 1980 to 20.7 percent in 1993, but has since fallen back to 18.0 percent in 1998.
Annual Retail Sales of General Merchandise Stores, 1986-1998
(Billions of 1998 dollars)
Source: U.S. Bureau of Census
For more detail of above graphic
Current Conditions in Washington
Of the eight retail trade major categories (SIC 2-digit), general merchandise stores employed approximately 10 percent of the 1998 total of 460,670 retail trade workers in Washington State. In 1998, 575 general merchandise establishments employed 47,270 workers statewide. From the latest economic census (1997), general merchandise stores account for about 14 percent of total Washington State retail sales.
The largest sub-category is department stores, representing about one-half of all establishments and over 90 percent of all employment. In general, the number of establishments in general merchandise is somewhat stable.
Composition of Retail Sales in Washington State, 1997
Source: U.S. Bureau of Census, 1997 Economic Census, Retail Trade, Washington State
For more detail of above graphic
Notes: Based on the new North American Industry Classification System (NAICS); among the changes, eating and drinking places were re-classified to the accommodation & foodservices sector.
Total 1997 retail sales in Washington was $52.473 billion.
Number of Establishments in Washington General Merchandise
Stores,
1981-1998
Source: Washington Employment Security Department
For more detail of above graphic
Employment in general merchandise stores has steadily grown in recent years. Over the 1981-1998 period, general merchandise store employment increased by 45 percent. Nine of every ten net new workers in general merchandise were found in department stores. As elsewhere, variety stores lost employment during the 1981-1998 period. Much of the growth in general merchandise stores can be attributed to the entry into Washington of mass discount merchandise stores, particularly Wal-Mart.
Washington General Merchandise Store Workers, 1981-1998
Source: Employment Security Department
For more detail of above graphic
General merchandise stores in Washington are largely composed of large nationwide companies that sell various general merchandise goods. Over four-fifths of all general merchandise store workers are found in establishments with 100 or more employees, compared with 51 percent of all retail trade workers and 60 percent of all state nonfarm workers.
Size of Establishments of Washington General Merchandise Store
Workers, 1998
Source: Washington Employment Security Department
For more detail of above graphic
In 1998, average covered wages for general merchandise store workers was $20,388, compared with $17,908 for all retail trade workers and $33,922 for all nonfarm workers in Washington. General merchandise store workers rank fourth in wages and salaries among all retail trade workers (behind auto dealers and gasoline service stations; building materials and supply stores; and home furniture and furnishings). Like most statewide nonfarm workers, general merchandise store workers gained ground in real wage growth (i.e., without inflation) over the 1981-1998 period. Real wages in general merchandise grew faster than overall retail trade, but slower than state nonfarm workers.
Table 1
Real Average Wages for Washington Covered General Merchandise
Store Workers, 1981-1998 (1998 dollars)
Sources: Washington Employment Security Department,
U.S. Bureau of Economic Analysis
Sector |
1981 |
1983 |
1985 |
1987 |
1989 |
1991 |
1993 |
1995 |
1997 |
1998 |
|
Department stores | ||||||||||
|
$18,970 |
$19,198 |
$19,308 |
$18,635 |
$17,629 |
$17,894 |
$17,339 |
$18,639 |
$19,246 |
$20,846 |
|
Variety stores | ||||||||||
|
$13,985 |
$13,573 |
$18,670 |
$19,688 |
$22,320 |
$23,430 |
$23,674 |
$13,633 |
$11,440 |
$11,398 |
Misc. general merchandise | ||||||||||
|
$14,549 |
$14,406 |
$14,441 |
$13,130 |
$14,526 |
$14,319 |
$15,546 |
$15,551 |
$15,507 |
$16,262 |
Total general merchandise | ||||||||||
|
$18,641 |
$18,852 |
$19,121 |
$18,524 |
$17,753 |
$18,245 |
$18,135 |
$18,311 |
$18,833 |
$20,388 |
Total retail trade | ||||||||||
|
$16,764 |
$16,274 |
$15,600 |
$15,233 |
$15,264 |
$15,672 |
$15,886 |
$16,163 |
$16,915 |
$17,908 |
Total nonfarm state | ||||||||||
|
$28,783 |
$27,789 |
$27,313 |
$27,304 |
$27,167 |
$27,928 |
$28,575 |
$29,046 |
$31,504 |
$33,922 |
The distribution of hourly wages for general merchandise store workers is dissimilar to the state, with a pronounced disposition toward lower hourly wages. Two-thirds of all workers in general merchandise stores earn $12 or less per hour, compared with 41 percent of all nonfarm workers in the state.
Hourly Wages for Washington Building Material & Supply Store
Workers, 1997
Source: Washington Employment Security Department
For more detail of above graphic
The labor force in general merchandise stores are dominated by sales workers, clerical workers, and laborers. Sales clerks and cashiers are the most common occupations within general merchandise stores.
Table 2
Occupational Profile of General Merchandise Store Workers in
Washington, 1998 and 2008
Source: Washington Employment Security Department
|
Estimated 1998 |
Projected 2008 |
||
General merchandise, SIC 53 |
Estimated Employment |
Percent of Total Employment |
Projected Employment |
Percent of Total Employment |
Managerial & Administrative |
1,590 |
3.4% |
1,719 |
3.3% |
Professional, Paraprofessional & Technical |
2,083 |
4.5% |
2,259 |
4.3% |
Sales & Related Occupations |
27,980 |
60.2% |
33,181 |
63.0% |
Clerical & Administrative Support |
7,077 |
15.2% |
7,116 |
13.5% |
Service Occupations |
2,909 |
6.3% |
3,122 |
5.9% |
Production, Operating & Maintenance |
1,107 |
2.4% |
1,208 |
2.3% |
Operators, Helpers & Laborers |
452 |
1.0% |
475 |
0.9% |
Undefined Occupations |
3,290 |
7.1% |
3,582 |
6.8% |
TOTAL |
46,488 |
100.0% |
52,662 |
100.0% |
Outlook
The massive restructuring of general merchandising stores undertaken largely by department stores during the 1990s will continue over the next five-ten years. Since acquiring new stores is a way to gain market share within a mature industry, mergers and acquisitions will dominate department stores. Variety stores, by and large, are in trouble, but their small market share will generally limit their overall impact on general merchandise stores. Miscellaneous merchandise stores are expected to rebound from their recent decline in sales over the past few years.
The health of general merchandise falls directly upon department stores. In Washington, forecasters expect continued health within general merchandise stores as measured by employment. Department stores will continue to dominate the employment picture. General merchandise stores are expected to experience modest growth during the 2000-2020 forecast period.
Washington General Merchandise Store Wage & Salary
Employment Forecast, 2000-2020
Sources: Washington Office of Financial Management,
Washington Employment Security
Department