If you’ve been watching the news over the past months, you’ve no doubt heard numerous reports of major retailers going out of business or on the verge of bankruptcy. But those reports focus on huge, well-known retail companies, which skews the true picture of retail.

The retail sector isn’t homogenous. It’s composed of various layers and segments. Just because the big box segment is struggling doesn’t necessarily reflect the business conditions of the small retailers, as the two segments operate in different environments and with different challenges. In fact, in some cases, small retailers may be benefitting from the failure of the big box retailers. Technological innovations, like the Internet, have leveled the playing field, allowing small businesses to compete more effectively.

Another reason people wrongly think the entire retail market is collapsing is that they assume that big business represents the lion’s share of the market. But actually, small business is the backbone of American retail, as 91% of retail businesses have fewer than 20 employees. And 98% of retail businesses have 100 or fewer employees. This means that only 2% of all retailers have more than 100 employees, yet big box retailers tend to get most of the attention in media reports.

Lately the news has been carrying stories about large drops in retail jobs, but the numbers don’t reflect changes in the industry that aren’t captured by the Bureau of Labor Statistics (BLS). According to BLS methodology, a retail worker is only counted if the person works in a building in which retail sales take place. This omits those who work in call centers, distribution centers, and headquarters offices. Although major changes have taken place in retail logistics over the years, the BLS has not changed their methodology to reflect those changes. In reality, retail support positions, including those in technology and transportation have continued to contribute to retail opportunities. Meanwhile BLS statistics show that in April there were 577,000 retail job openings, which exceed the three-year average of 554,000, and there were just 162,000 layoffs in April, the lowest April layoff number since 2000.

Source: NRF.com