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Retail Franchise Industry Report

Retail Franchise Industry Report-1

The space was humming with activity. Music was blasting from speakers strategically set up around the area. People were standing around mingling with a drink in their hands talking about various subjects – especially the latest fashions, which happened to be on display around them.

But this event wasn't being held at a bar or a lounge, it was at a retail store. The competitive nature of the retail industry has many franchises and non-franchises alike pulling out the stops to hopefully gain an edge in getting consumers in the door and buying from them.

r-1Although clothing comes to mind quickly when people think of retail, retail franchises are in virtually every industry and make an impact on people daily.


Many potential business owners are finding franchises as a more attractive path in starting a retail business than going at it independently. With the franchisor providing an established brand, better economies of scale, marketing help and ongoing support and advice, a franchisee has an increased chance at success – so long as the franchise system is utilized properly. This report gives background on the retail franchise industry as well as some the main trends impacting it. Also contained in this report is a look at some example retail franchises.

Defining Retail

The United States Bureau of Labor Statistics (BLS) classifies retail as a “supersector” within the broader trade, transportation, and utilities category. According to the BLS:

The retailing process is the final step in the distribution of merchandise; retailers are, therefore, organized to sell merchandise in small quantities to the general public. This sector comprises two main types of retailers: store and non-store retailers.

  1. Retail Franchise Industry Report-1Store retailers operate fixed point-of-sale locations, located and designed to attract a high volume of walk-in customers. In general, retail stores have extensive displays of merchandise and use mass-media advertising to attract customers. They typically sell merchandise to the general public for personal or household consumption, but some also serve business and institutional clients. In addition to retailing merchandise, some types of store retailers are also engaged in the provision of after-sales services, such as repair and installation.
  2. Non-store retailers, like store retailers, are organized to serve the general public, but their retailing methods differ. The establishments of this subsector reach customers and market merchandise with methods, such as the broadcasting of "infomercials," the broadcasting and publishing of direct-response advertising, the publishing of paper and electronic catalogs, door-to-door solicitation, in-home demonstration, selling from portable stalls (street vendors, except food), and distribution through vending machines.


Vast only begins to describe the very broad umbrella of the retail category, under which several businesses are categorized. The unifying aspect of all these franchises is that they all are involved in the sale of a product. Some also provide services that correspond and/or complement the product(s) being sold. In fact, the North American Industry Classification System (NAICS) specifies 75 retail store types. Below is a chart demonstrating the diversity of the retail industry by way of the NAICS:

New Car Dealers
Used Car Dealers
Recreational Vehicle Dealers
Motorcycle, ATV, and Personal Watercraft Dealers
Boat Dealers
All Other Motor Vehicle Dealers
Automotive Parts and Accessories Stores
Tire Dealers
Furniture Stores
Floor Covering Stores
Window Treatment Stores
All Other Home Furnishings Stores
Household Appliance Stores
Radio, Television, and Other Electronics Stores
Computer and Software Stores
Camera and Photographic Supplies Stores
Home Centers
Paint and Wallpaper Stores
Hardware Stores
Other Building Material Dealers
Outdoor Power Equipment Stores
Nursery, Garden Center, and Farm Supply Stores
Supermarkets and Other Grocery (except Convenience) Stores
Convenience Stores
Meat Markets
Fish and Seafood Markets
Fruit and Vegetable Markets
Baked Goods Stores
Confectionery and Nut Stores
All Other Specialty Food Stores
Beer, Wine, and Liquor Stores
Pharmacies and Drug Stores
Cosmetics, Beauty Supplies, and Perfume Stores
Optical Goods Stores
Food (Health) Supplement Stores
All Other Health and Personal Care Stores
Art Dealers

Men's Clothing Stores
Women's Clothing Stores
Children's and Infants' Clothing Stores
Family Clothing Stores
Clothing Accessories Stores
Other Clothing Stores
Shoe Stores
Jewelry Stores
Luggage and Leather Goods Stores
Sporting Goods Stores
Hobby, Toy, and Game Stores
Sewing, Needlework, and Piece Goods Stores
Musical Instrument and Supplies Stores
Book Stores
News Dealers and Newsstands
Prerecorded Tape, Compact Disc, and Record Stores
Department Stores (except Discount Department Stores)
Discount Department Stores
Warehouse Clubs and Supercenters
All Other General Merchandise Stores
Office Supplies and Stationery Stores
Gift, Novelty, and Souvenir Stores
Used Merchandise Stores
Pet and Pet Supplies Stores
Manufactured (Mobile) Home Dealers
Tobacco Stores
All Other Miscellaneous Store Retailers (except Tobacco Stores)
Electronic Shopping
Electronic Auctions
Mail-Order Houses
Vending Machine Operators
Heating Oil Dealers
Liquefied Petroleum Gas (Bottled Gas) Dealers
Other Fuel Dealers
Other Direct Selling Establishments
Gasoline Stations with Convenience Stores
Other Gasoline Stations

Source: NAICS Association


The outlook of the retail franchise industry coincides with the strength of the economy. The more disposable income consumers have the better. Another factor retail franchises will have to keep an eye on for the future is the changing demographic landscape. Within 30 years, Census data indicates that today’s minorities (any race other than non-Hispanic, single-race whites) will become the majority in the United States. Current minority children are expected to reach the majority even sooner (by 2023). As the demographics of the U.S. shift, it is likely retailers will have to adapt their merchandising and promotional efforts to maintain success.


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