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Productivity
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Wholesale and Retail Trade Industries Labor Productivity
On July 28, 2022, the Bureau of Labor Statistics (BLS) updated measures for 46 detailed industries Productivity and Costs by Industry: Wholesale Trade and Retail Trade Industries - 2021. Chart 1 from the news release illustrates the NAICS four–digit trade industries with the largest increases and decreases in labor productivity in 2021. All six industries with the highest productivity growth reported increases in output, while all six industries with the largest declines reported growth in hours worked.
In 2021, the wholesale trade sector comprised 3.9 percent of nonfarm business sector employment (5.68 million workers) and 6.2 percent of U.S. GDP.[1] The retail trade sector employed approximately 15.4 million workers, or 10.5 percent of all total nonfarm employees in 2021, while contributing 6.0 percent to value-added GDP.[2]
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Pandemic Shifts in Ecommerce Shopping
A pair of fuzzy slippers, toilet paper, computer monitors, an air fryer, cat food, and the latest New York Times best seller. What do these items have in common? If you purchased them in 2020, there is a good chance you ordered them online. The Covid-19 pandemic changed many things about our day-to-day lives, and the way we purchase goods was no exception. In 2020, electronic shopping and mail order houses saw explosive growth in output, rising an unprecedented 36.2 percent.[3] Hours worked also accelerated 12.1 percent, resulting in a 21.5 percent vault in productivity, the second highest increase on record for this industry. (See chart 2.)
Even after vaccines became widely available and most pandemic restrictions were rolled back, the shift toward ecommerce shopping continued, albeit at a slower pace. In 2021, output grew 15.8 percent while hours grew 8.3 percent, resulting in a 6.9 percent increase in productivity. Overall, during the two-year period from 2019 to 2021, output increased 25.6 percent, hours worked rose 10.2 percent, and productivity jumped 14 percent.
The ecommerce industry was no stranger to growth even before the pandemic, with annual output growth greater than 10 percent every year since 2015 and an average growth rate of 10.9 percent in productivity during this period. What distinguishes the 2019-21 period of growth in electronic and mail order houses from the previous years of growth is the expansion of spending categories. Primarily dominated by electronic sales in previous years, growth during the 2019-2021 period was driven by three categories: electronics, groceries, and apparel. Of these three, groceries was the big winner, surging 103 percent year-over-year in 2020 before jumping another 7.2% in 2021. Groceries now make up 8.9% of the ecommerce market. Additionally, average monthly spending on groceries in this industry has more than doubled, rising from $3.1 billion in 2019 to an average of $6.7 billion in 2021.[4]
Fashion Frenzy
The pandemic caused a lot of upheaval within the economy. Fashion industries were no exception as people stayed home from work and cancelled social engagements during the majority of 2020. In 2021, as stores reopened and people ventured back into offices and to in-person social gatherings, fashion industries began to thrive again. Chart 4 looks at the trends in output, hours worked, and productivity in three fashion industries within wholesale and retail trade. The following industries had declines in both output and hours worked in 2020: shoe stores; jewelry, luggage, and leather goods stores; and apparel, piece goods, and notions merchant wholesalers. Then in 2021, output rebounded in all three industries. However, hours worked grew in two out of the three industries but at a much slower pace than output. Shoe stores was the exception where hours worked continued to decline. Two of the industries, shoe stores and jewelry, luggage, and leather goods stores, had productivity growth in both 2020 and 2021 but due to different forces. For these two industries, in 2020, hours worked declined more rapidly than output, while in 2021, output increased at a faster pace than hours worked.
A Closer Look: Clothing Stores
Now that we’ve looked at a few fashion industries, let’s take a closer look at the largest fashion industry: clothing stores. Clothing stores has more employees than the three fashion industries highlighted above combined. Trends in clothing stores were like the other fashion industries during the pandemic. As presented in chart 5, output, hours worked, and productivity had small fluctuations leading up to 2020 when output and hours worked plummeted. As the pandemic set in and social events were cancelled, people no longer had a reason to shop for new cocktail dresses or business slacks and every reason to embrace sweatpant chic. Then in 2021, stores opened, people returned to offices, and social events popped up on calendars. Demand for apparel was strong and, with vaccines available, people felt more comfortable shopping at brick-and-mortar stores again.
No Hangover in 2021
Much of the year 2020 was spent exploring ways to cope with the pressures brought on by the Covid-19 pandemic. To help pass the time and relieve stress, Americans returned to the basics—baking, reading, gardening and, of course, enjoying the occasional glass of wine. Output in the beer, wine, and liquor stores industry in 2020 increased by 14.8 percent, twice the rate of any other year on record.[5] Previously, the largest annual increase in this industry’s output occurred in 2006 at 5.6 percent. As Americans returned to the workplace and dining out, one might assume that at-home alcohol consumption would decline. However, as hours worked declined by 4.8 percent in the beer, wine, and liquor stores industry in 2021, output increased by 3.1 percent. This industry had its fifth highest productivity gain in 2021, growing by 8.3 percent.
First quarter expectations for the alcohol beverage industry normally tend to be mild as people make resolutions to swear off alcohol consumption for the new year. Defying expectations, beverage alcohol retailers touted their ability to procure new wines, beers, and spirits monthly, as sales grew in January of 2021 over 2020 sales by as much as 10 to 20 percent.[6] While the entire alcohol beverage industry saw growth in 2021, that growth was not equal across each of the products. U.S. shipments of spirits grew twice as much as wine shipments , and total beer sales decreased by 3.6 percent over the year ending November 2021.[7] Both the wine and beer industries are adjusting to what they see as a sobering change in market preferences. The new generation of alcohol consumers are demanding a more diverse array of alcoholic beverages. On the other hand, liquor and spirit sales are being pushed by increased TV advertisement spending, mentions in popular media, and the rise in at-home cocktail making.[8]
Related resources
Industries at a Glance: Wholesale Trade
Industries at a Glance: Retail Trade
Notes
[1] The wholesale trade sector refers to the 2-digit North American Industry Classification System (NAICS) code 42 Wholesale Trade.
[2] The retail trade sector refers to the 2-digit North American Industry Classification System (NAICS) code 44-45 Retail Trade.
[3] NAICS 454110, electronic and mail order houses, comprises establishments primarily engaged in retailing all types of merchandise using nonstore means, such as catalogs, toll free telephone numbers, or electronic media, such as interactive television or the Internet. Included in this industry are establishments primarily engaged in retailing from catalog showrooms of mail-order houses.
[4] Source: Brian Straight, “E-commerce consumers keep shopping, even as inflation drives up prices,” Freight Waves—Modern Shipper, Mar 21, 2022
[5] The beer, wine, and liquor stores industry refers to the 6-digit North American Industry Classification System (NAICS) code 445320 Beer, wine, and liquor retailers.
Last Modified Date: October 25, 2022