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The Importance of Retail Trade

by Tim O'Neill
April 2014

With 2,444 establishments supplying 28,418 jobs, Retail Trade makes up just over 13 percent of Northwest Minnesota's 217,700 total jobs. As such, Retail Trade is the region's third largest industry sector, behind Healthcare and Social Assistance, which employs 36,788 people, and just behind Manufacturing, which employs 28,451 people.

The Retail Trade sector is best known for General Merchandise Stores, which include those industries that are capable of retailing a large variety of goods from fixed point-of-sale locations. Including Department Stores, General Merchandise Stores within Northwest Minnesota employ 6,298 people or one in five workers in the Retail Trade sector. Other large subsectors within Retail Trade are Food and Beverage Stores, which employ 5,669 people, Gasoline Stations, which employ 3,930 people, and Motor Vehicles and Parts dealers, which employ 3,464 people. Altogether these four subsectors account for over two-thirds of the region's total Retail employment.

Zooming out, approximately 10 percent of the state's total Retail Trade employment is within the 26 counties of Northwest Minnesota. With the lion's share of Retail employment in the Seven-County Metro Area, the Northwest Planning Region is behind only the Central Minnesota Planning Region when it comes to total Retail Trade employment (see Table 1).


Table 1

Minnesota Retail Trade Employment

Area

Employment

Percent of MN's
Retail
Employment

Establishments

Average
Weekly
Wage

Location
Quotient

Minnesota

289,293

100.0%

19,434

$500

0.92

Seven County Mpls-St Paul, MN

158,555

54.8%

9,084

$547

0.83

Central MN

34,713

12.0%

2,378

$453

1.18

Northwest MN

28,418

9.8%

2,444

$437

1.21

Southeast MN

27,334

9.4%

1,862

$440

0.99

Southwest MN

20,473

7.1%

1,641

$399

1.06

Northeast MN

17,925

6.2%

1,429

$441

1.16

Source: DEED Quarterly Census of Employment and Wages


Calculating location quotients (LQ) also shows Retail Trade to be of significance in Northwest Minnesota. An LQ is simply a measure of how concentrated a particular industry is within a local economy compared to the national economy. An LQ of 1.0 indicates that a local economy has the same concentration of employment for a particular industry as the nation. An LQ of 2.0 indicates that a local economy has twice the concentration of employment for a particular industry as the nation. Typically, an LQ of 1.2 or higher is considered significant, with the local demand for that industry being more than met.

In Northwest Minnesota the LQ of 1.21 for Retail Trade indicates a high concentration of employment in that sector, which also happens to be the highest in the state. Specific retail subsectors exhibiting high concentrations in Northwest Minnesota are Gasoline Stations (LQ of 2.90), Building Material and Garden Supply dealers (LQ of 1.67), and General Merchandise Stores (LQ of 1.33).

A Restructuring Sector

Overall, while Northwest Minnesota's economy gained nearly 7,000 jobs between the third quarters of 2009 and 2013, its Retail Trade sector remained largely stagnant, adding an insignificant eight jobs. The largest gains were witnessed in Building Material and Garden Equipment Supplies dealers, Motor Vehicles and Parts dealers, and Gasoline Stations. The largest losses were in General Merchandise Stores and Food and Beverage Stores (see Table 2).


Table 2

Northwest Minnesota Retail Trade Employment

NAICS Industry Title

3Q 2013 Data

3Q 2009 - 3Q 2013 Employment

Establishments

Employment

Average
Annual
Wage

Numeric
Change

Percent
Change

Total, All Industries

17,197

217,700

$34,424

6,931

3.3%

Retail Trade

2,444

28,418

$22,724

8

0.0%

General Merchandise Stores

156

6,298

$21,684

-430

-6.4%

Food and Beverage Stores

287

5,669

$17,212

-167

-2.9%

Gasoline Stations

346

3,930

$15,652

194

5.2%

Motor Vehicle and Parts Dealers

346

3,464

$35,568

207

6.4%

Building Material and Garden Equipment and Supplies Dealers

287

3,148

$27,872

211

7.2%

Health and Personal Care Stores

168

1,336

$31,616

-34

-2.5%

Miscellaneous Store Retailers

260

1,168

$17,680

6

0.5%

Sporting Goods, Hobby, Book, and Music Stores

114

860

$16,692

5

0.6%

Clothing and Clothing Accessories Stores

158

835

$14,196

10

1.2%

Electronics and Appliance Stores

102

649

$30,992

43

7.1%

Non-store Retailers

126

618

$30,940

-9

-1.4%

Furniture and Home Furnishings Stores

94

439

$24,180

-29

-6.2%

Source: DEED Quarterly Census of Employment and Wages


When analyzing these specific subsectors, however, a more definitive picture of how the Retail Sector is restructuring begins to emerge. The biggest example of this restructuring is occurring within Retail's largest subsector, General Merchandise Stores. Between the third quarters of 2009 and 2013, this subsector shed 430 jobs for a 6.4 percent decline. General Merchandise Stores, however, is further broken down into two categories: Department Stores and Other General Merchandise Stores, which includes Warehouse Clubs and Supercenters. On the one hand, Department Stores have slipped drastically, cutting more than 2,700 jobs between the third quarters of 2009 and 2013, a 63 percent drop. On the other hand, Superstores and Warehouse Clubs have added 2,300 jobs in the same period, growing by nearly 250 percent and raising Other General Stores 100% as a whole (see Figure 1). All other growing Retail subsectors have added 1,015 jobs combined, showing the magnitude of the growth in Superstores and Warehouse Clubs.


Figure 1: line graph-General Merchandise Stores, NW Minnesota


Follow the Money

Another method of tracking Retail's growth is through gross retail sales, as reported by the Minnesota Department of Revenue. Annual gross retail sales for the 26 counties of Northwest Minnesota equaled $6.5 billion in 2008. This dropped by 8.1 percent to $6.0 billion in 2009. At the same time, annual gross retail sales statewide dropped from $73.6 billion to $68.7 billion or 6.8 percent,. During this same period the average annual income for those in the Retail Sector remained largely unchanged, increasing from $20,228 to $20,280 regionally.

Since the end of the recession in 2009, gross retail sales have rebounded. In Northwest Minnesota sales increased, from $6.0 billion in 2009 to $7.5 billion in 2012, 24.3 percent. Statewide, sales increased by 9.7 percent, from $68.7 billion to $82.2 billion. During this period, the average annual income for those in the retail sector increased from $20,280 to $22,048 regionally.

Conclusion

Retail Trade, Northwest Minnesota's third largest-employing industry sector, has undergone major restructuring in recent years, adapting to changes brought on by both the Great Recession and technology. In terms of restructuring, major job swings were seen in General Merchandise Stores, with Department Stores shedding 2,700 jobs and Warehouse Clubs and Supercenters adding 2,300 jobs. While consumer shopping behavior holds significance in this change, the evolution of department stores in recent years has also impacted the reporting of Retail employment. More specifically, as department stores expand to include grocery items, restaurant services, and pharmacies, they are recoded in our statistics as supercenters.

At the same time, retailers have adapted to new technologies and strategies to meet consumer demand. Such developments include self-service checkouts, reaching out to consumers via mobile devices and tablets, and the fragmentation of discount and premium shopping. These developments may all account for the healthy increase in retail gross sales in recent years, even as retail employment remains largely unchanged.

Despite recent trends and restructuring, however, Retail Trade remains a highly concentrated and significant sector for Northwest Minnesota. Sales and related occupations make up over nine percent of the region's total occupations, with cashiers, retail salespersons, and managers of retail salespersons rounding out the top-employing occupations (see Table 3). Recent fourth quarter Job Vacancy Survey results point to a high current need to fill vacant sales occupations, and projections all but guarantee the need for new and replacement sales-workers in the future.


Table 3

Retail Occupational Statistics Sorted by Employment

SOC

SOC Title

Northwest Minnesota

MN Median
Hourly Wag
e

Employment

25th
Percentile
Wage

Median
Hourly Wage

00-0000

Total, All Occupations

206,850

$10.51

$15.08

$18.08

412011

Cashiers

6,530

$8.32

$9.03

$9.20

412031

Retail Salespersons

5,760

$8.70

$9.93

$9.92

411011

First-Line Supervisors/Managers of Retail Sales Workers

2,080

$12.84

$15.35

$17.17

419099

Sales and Related Workers, All Other

750

$9.67

$13.48

$21.61

413099

Sales Representatives, Services, All Other

440

$15.80

$24.74

$25.44

412021

Counter and Rental Clerks

310

$8.68

$10.03

$9.81

412022

Parts Salespersons

300

$11.94

$14.12

$14.95

413011

Advertising Sales Agents

190

$14.49

$20.53

$23.28

413031

Securities, Commodities, and Financial Services Sales Agents

180

$16.74

$19.98

$28.41

412012

Gaming Change Persons and Booth Cashiers

160

$8.58

$9.60

$11.51

413021

Insurance Sales Agents

150

$15.85

$20.74

$23.81

419022

Real Estate Sales Agents

50

$9.50

$22.04

$17.70

419041

Telemarketers

50

$11.52

$14.81

$11.98

419011

Demonstrators and Product Promoters

40

$8.56

$9.53

$10.90

413041

Travel Agents

20

$12.84

$13.70

$17.73

Source: DEED Occupational Employment Statistics

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