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Retail Sales in Trading Definition & Meaning

Retail Sales in Trading Definition & Meaning

The retail sales index is an important economic indicator that measures the current consumer spending in an economy. A central component of the gross domestic product (GDP), as a measure of the economic performance of an economy, is consumer consumption.

This indicator is closely watched by many players from the business and financial world as it provides an assessment of a country’s economic development.

Retail sales definition

Retail sales include aggregate demand for finished goods (goods that have completed the manufacturing process but have not yet been sold to the end consumer) by measuring purchases of goods over a specified period (e.g., a month or a year). Typically, retail sales are measured based on a data sample that includes the reported retail sales of food service and retail outlets.

The United States Census, officially known as the Bureau of the Census, a division of the United States Department of Commerce, has regularly conducted surveys, surveys, statistical analysis, and publications on US retail sales since 1951.

The federal agency collects retail sales data through Monthly Retail Trade Survey (MRTS) and Annual Retail Trade Survey (ARTS) surveys of retailers. The mandatory survey is based on reports from approximately 13,000 retailers with salaried employees, with a new sample drawn approximately every five years.

Composition of retail sales

Retail sales (also known as retail trade) include all trading companies that sell goods to the end consumer (consumer). The trading companies receive the goods, for example, from wholesalers or directly from the manufacturer. The following figure shows a simplified supply chain for a product.

Simplified model of a typical supply chain

Retailers are, for example, supermarkets, discounters, specialist shops, or department stores. United States Census publishes different retail sales that take into account different industries, such as:

  • Vehicle sales
  • Clothing sales
  • Grocery sales
  • Sales of electronics and appliances

Retail sales are often examined in the total amount and without vehicle sales. This is because auto sales can skew total retail sales. After all, they are relatively high and subject to seasonal fluctuations.


The United States Census publishes data that includes retail sales in total and only for online trade (electronic commerce, or e-commerce for short). In online trading, goods are sold when the buyer places his order over the Internet. Stockholders of Amazon, a leader in e-commerce, can use this e-commerce retail sales data to get a sense of the overall importance of online retailers in retail.

Use of retail sales data

Numerous companies, individuals, institutions, and governments use retail sales data for different purposes. The following points list some essential uses:

  • Calculation of the gross domestic product
  • Estimation of current economic trends
  • Calculation of consumer price and producer price indices (average price development of raw materials and industrial goods)
  • Monitoring of lending to private customers
  • Estimation of business activity indices

Importance of watching retail sales

Retail sales are a good indicator for assessing a country’s economic development. They signal trends in (various) consumer spending. In the US, in particular, consumer spending is central to economic performance as it accounts for nearly 70% of the US GDP.

Rising retail sales mean higher returns for retail businesses and retail business shareholders. They can also signal an economic upswing.

Both demand and prices are central components of retail sales. For example, the price of a product line increases significantly and demand decreases at the same time, so that retail sales are little changed compared to the previous month.

Importance for the investor

Financial and investment firms use retail sales statistics to measure recent economic trends. One advantage of retail sales as an economic indicator is the timeliness of surveys and reports every month (as opposed to the quarterly measurement of GDP, for example).

Some financial market players also use Retails Sales as a macroeconomic leading indicator:

  • Declining retail sales tend to contribute to investor restraint.
  • On the other hand, increasing retail sales can positively influence investment decisions.
  • A comparative analysis of retail sales across retail sectors (e.g., vehicle sales vs. clothing sales) can provide investors with initial guidance for weighting their portfolio.

Some financial market players closely monitor the release of retail sales data, particularly those in the US, and may base their investment decisions accordingly, so the release dates are associated with more volatile securities (e.g., stocks and options) prices.


Retail Sales is a general (macroeconomic) economic indicator that measures retail sales. They reflect the demand for consumer goods and help assess an economy’s economic performance (often measured in terms of GDP). Some financial market players use retail sales to value securities (e.g., stocks and corporate bonds).

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