| The retail sector plays a key role in the U.S economy, | | | | altered the purchasing habits of consumers. Large |
| not only because consumer demand is an indication of | | | | retailers compete on special promotions and discount |
| a healthy financial system, but also because retailers | | | | offers struggling to offer superior customer service |
| serve as large employers. Nearly 10 percent of the | | | | and top brand quality. However, consumers can find |
| national workforce in the U.S. is employed in the retail | | | | instantly and at considerably lower prices the same |
| sector, which provides both long-term career | | | | brands and products from the convenience of their |
| opportunities for young people and seniors. Retailing | | | | home, without the added costs of excessive |
| serves also as a side job when people look to switch | | | | marketing campaigns and advertising. |
| between career objectives. | | | | The current financial turmoil is another factor that has |
| No surprises then why the retail sector is greatly | | | | caused a sharp decline in consumer spending. |
| affected by consumer spending. Retail sales are highly | | | | Consumers spend their money on discount stores |
| sensitive to liquidity and preservation of capital. | | | | instead of top-end retailers and in quick service |
| However, the recent real estate slowdown, the | | | | restaurants instead of casual dining and |
| increase in energy prices, the tight credit lines and the | | | | white-tablecloth dining restaurants. Moreover, luxury |
| general market uncertainty, all have led to a general | | | | retailers are experiencing a seven percent decline in |
| slowdown of consumer-driven economic growth. | | | | global retail sales in 2009 after six years of growth |
| Generally, consumer spending is the driving force of | | | | and prosperity. |
| U.S. economic growth and consequently of the retail | | | | Overall, the retail sector is highly affected by the |
| sector. How much consumers afford to spend | | | | discretionary income of consumers, which is the |
| determines the profitability of firms and the viability of | | | | amount of income they spend to cover their basic |
| economy. The factors that affect consumer spending | | | | needs such as food, clothing and housing. In other |
| in the context of retail sector are numerous. Some are | | | | words, if people cannot take care of their fundamental |
| related to long-term changes in consumer habits and | | | | needs to survive, they are not willing to spend a single |
| some are a confluence of an economy in recession | | | | dime on luxury goods or on furniture, jewelry or |
| and depressed consumer confidence. | | | | electronics. The current market uncertainty has forced |
| One of the key factors that influence retail sales is the | | | | many retailers to get out of business and has led |
| Internet. Online shopping has evolved into a major | | | | many households on the verge of poverty. Inevitably, |
| competitor of brick and mortar businesses as more | | | | the retail sector could not have been unaffected by a |
| and more shoppers do their research and shop online. | | | | declining consumer spending and a sharp change in |
| Particularly, in the electronics industry the Internet has | | | | consumer preferences. |