In a recent post, we explored the post-recession tsunami of online retail and discovered that e-shopping’s future is anything if not bright. According to a report by Forrest Research, by 2016, not only are 192 million U.S. consumers projected to be be clicking “checkout” (up 15% since 2012), but those 192 million will also be spending an average of 44% more.
But does this mean we should expect traditional retail to flatline? Well, no. As we showed here, the flourishing of specific retail subsectors (e.g., warehouses/supercenters) certainly cheers up total gloom-and-doom predictions.
Nevertheless, traditional retail and e-shopping scream for comparison. Whatever their destiny, they could hardly differ more in size, stability, and growth patterns so far, and so let’s take a look.
A Comparison
Here’s how the two industries break down:
Traditional retail: NAICS 44-45, except for electronic shopping and electronic auctions
E-shopping: electronic shopping (454111) and electronic auctions (454112)
A quick comparison between retail and e-shopping shows two very different stories. Traditional retail, of course, has been around forever with its ups and downs, while e-shopping is still technically a teenager — and like a teen, it’s growing wicked fast.
Retail jobs declined 1% from 2002 to 2013. The industry grew 3% from 2002-2007, then tanked 7% from 2007-2010 and has yet to recover even its 2002 status.
The industry had 15.7 million jobs in 2002 and now has 15.5 million (loss of 200,000 jobs).
The average annual earnings per job is $32,433.
Jobs multiplier: 1.32. This means that every job in retail creates a third of another job elsewhere — or, put another way, every three jobs in retail create one job in another industry. (Note: We excluded induced effects in our calculations to avoid the double-counting that comes when looking at spending at the national level.)
Department stores have taken a colossal hit, dropping almost without respite from 811,000 jobs to 489,000 (40% loss).
In an age when manager positions are stepping on the gas, it’s troubling to see that within the retail industry, general & operations managers have declined 15% the past 10 years (a loss of 35,000 jobs).
E-shopping grew 161% from 2002 to 2013 (averaging 15% a year). The industry has spiked 42% just since 2009, coming out of the recession when it still managed to inch up 4%. In fact, e-shopping isn’t far behind the fastest-growing industry sector of the past 10 years — mining, quarrying, and oil & gas extraction (NAICS 21), which has grown 60% since 2002 and 26% since 2009.
With 173,737 jobs, e-shopping’s labor force can’t even compare with traditional retail’s.
On the other hand, the jobs pay significantly more: $65,000 (annual average).
Jobs multiplier: 1.46, slightly higher than traditional retail’s, which is a little surprising. (Again, we left out induced effects.)
One thing we notice is the huge discrepancy in jobs between these two industries. Traditional retail, for all its loss, is still 90 times the size of e-shopping, whose growth is not quite as jaw-dropping, perhaps, as it might seem at first. Sure, it’s booming, but then, it’s always easier to top 160% growth when you start out so tiny.
No, the most interesting fact here is not how many jobs e-shopping is adding to the economy, but how many jobs it isn’t. It creates good consumer prices, serves more customers, makes more dough, and has completely changed the way we view products (literally and figuratively). And it does all these things with a smaller workforce.
This trend of online-based business and a smaller, more tech-based workforce is well illustrated by the Kodak vs. Instagram conversation (read more here and here). At its peak, Kodak employed 140,000 while Instagram, at the time that it was purchased by Facebook in April 2012, employed a mere baker’s dozen. In short, the American economy has always been obsessed with efficiency. If we can do more with less, we will, and the internet is apparently accelerating that process.
The Story in the States
Let’s take a closer look at the top states for job growth and decline for both these industries.
Retail jobs have flourished the most in North Dakota (21%), Nevada (15%), Utah (11%), and Arizona (10%). Each of those states, it should be noted, have fast-growing populations and/or economies. The worst decline has taken place in Michigan (15%), Ohio (14%), Rhode Island (13%), and Wisconsin (10%).
For e-shopping, it’s mostly just a question about where it has grown a lot and where it has grown a ton. Only two states have seen an actual decline in jobs. Idaho leads the way crazy 3,370% growth (from 40 to 1,400 jobs), followed by Utah (800%, from 700 to 6,200 jobs), and Indiana (780%, from 670 to 5,900 jobs). The states that have done the least well are Alaska (20%, from 80 down to 60 jobs), South Dakota (3%, from 92 to 89 jobs), Virginia (mere 5% growth, from 2,000 to 2,140 jobs), and New Mexico (11%, from 127 to 141 jobs).
Here’s a complete look at the growth/decline of each industry in all 50 states (plus Washington D.C.), as well as how they rank:
State
% Change in Retail Jobs
Rank
% Change in E-Shopping
Rank
North Dakota
21%
1
85%
37
Nevada
15%
2
140%
31
Utah
11%
3
804%
1
Arizona
10%
4
37%
45
South Dakota
9%
5
-3%
50
Texas
8%
6
68%
42
Idaho
7%
7
3368%
1
Florida
7%
8
74%
39
District of Columbia
7%
9
652%
4
Arkansas
6%
10
134%
33
New York
6%
11
179%
26
Alaska
5%
12
-19%
51
Hawaii
5%
13
125%
35
North Carolina
4%
14
198%
24
Washington
4%
15
271%
17
South Carolina
1%
16
135%
32
Tennessee
1%
17
114%
36
Colorado
1%
18
307%
12
Oklahoma
0%
19
277%
15
Montana
0%
20
72%
40
New Mexico
0%
21
11%
48
Delaware
-1%
22
126%
34
Oregon
-1%
23
456%
8
Virginia
-1%
24
5%
49
West Virginia
-1%
25
189%
25
Vermont
-1%
26
298%
14
Wyoming
-2%
27
68%
41
New Hampshire
-2%
28
334%
11
Louisiana
-2%
29
275%
16
Georgia
-2%
30
146%
29
California
-3%
31
156%
28
Alabama
-3%
32
53%
44
New Jersey
-4%
33
218%
23
Massachusetts
-4%
34
220%
22
Missouri
-4%
35
220%
21
Iowa
-4%
36
246%
19
Kentucky
-5%
37
455%
9
Maryland
-5%
38
435%
10
Nebraska
-5%
39
242%
20
Pennsylvania
-6%
40
76%
38
Maine
-6%
41
146%
30
Minnesota
-6%
42
554%
7
Illinois
-6%
43
65%
43
Mississippi
-7%
44
171%
27
Connecticut
-7%
45
13%
47
Indiana
-7%
46
781%
3
Kansas
-8%
47
21%
46
Wisconsin
-10%
48
304%
13
Rhode Island
-13%
49
634%
5
Ohio
-14%
50
572%
6
Michigan
-15%
51
255%
18
E-Shopping Hot Spots
E-shopping has also developed quite a few hot spots across the nation, and a handful of MSAs have very high job concentrations. Here are the MSAs where e-shopping’s concentration (measured in terms of location quotient, LQ) is highest:
MSA
2013 Jobs
2013 Avg. Earnings Per Job
2013 National LQ
Fernley, NV
710
$55,306
48.05
Hannibal, MO
590
$13,789
26.83
Galesburg, IL
426
$27,766
12.17
Grand Forks, ND-MN
748
$43,981
10.27
Mexico, MO
114
$22,497
9.27
Ottawa-Streator, IL
538
$21,666
7.31
Hood River, OR
111
$26,422
6.46
Seattle-Tacoma-Bellevue, WA
14,515
$120,560
6.39
Thomasville-Lexington, NC
328
$36,346
6.02
Huntington-Ashland, WV-KY-OH
759
$30,910
5.53
Americus, GA
84
$22,717
5.5
Salt Lake City, UT
4,277
$64,051
5.17
Moultrie, GA
98
$31,360
4.9
Chico, CA
463
$68,168
4.88
Provo-Orem, UT
1,046
$48,062
4.05
Indianapolis-Carmel, IN
4,430
$41,354
3.96
San Jose-Sunnyvale-Santa Clara, CA
4,608
$240,899
3.87
Bend, OR
312
$32,260
3.72
Port St. Lucie, FL
604
$22,611
3.72
Meadville, PA
137
$39,731
3.34
Mankato-North Mankato, MN
208
$18,374
3.09
Seattle, home to Amazon.com, stands out for its sheer number of jobs (14,500). So too does San Jose, eBay’s headquarters, with 4,600. These two MSAs are also where most of the earnings are pooled.
We should also note Indianapolis, where job growth since 2009 approaches 4,000 and tops 500%. In fact, e-shopping is Indianapolis’s fastest-growing industry of the past 10 years, climbing 4,500% since 2002. (Indiana, remember, is third in the nation for e-shopping growth: nearly 800%.)
The city with the highest concentration of online retail jobs is Fernley, Nev., home to an Amazon distribution center. Currently the town of 53,000 is 48 times the national average for e-shopping. Moreover, about 6% of the town’s workforce (710 out of 12,800 jobs) are in the e-shopping industry.
However, this isn’t as golden as Fernley was back in 2007, when e-shopping’s concentration was 107 times greater than the national average. During the recession, Fernley lost 30% of its e-shopping jobs, and has yet to recover them.
Galesburg, Ill., has a similar recession story but bounced back quickly. The town of 32,000, with a concentration 12 times that of the national average, has rapidly regained its jobs — and then some — over the past year.
For towns like Fernley and Galesburg, perhaps the lesson is that e-shopping is much less place-bound than traditional retail. All these small towns with high concentrations run a certain risk with e-shopping if the big companies were to move operations elsewhere.
The map and table below show the 2009-2013 job performance of online retail in the towns with the highest job concentrations (containing at least 100 e-shopping jobs). We see both huge gains and huge declines (in terms of % growth):
MSA
2009 Jobs
2013 Jobs
Change
% Change
2013 Average Earnings
2009 LQ
2013 LQ
Thomasville-Lexington, NC
10
241
231
2310%
$40,154
0.30
4.97
Mexico, MO
12
114
102
850%
$22,497
1.54
10.40
Elkhart-Goshen, IN
18
124
106
589%
$34,131
0.24
0.99
Indianapolis-Carmel, IN
698
4,367
3,669
526%
$41,569
1.03
4.38
Port St. Lucie, FL
93
561
468
503%
$22,448
0.92
3.87
Lincoln, NE
68
339
271
399%
$48,179
0.52
1.80
Huntington-Ashland, WV-KY-OH
181
759
578
319%
$30,904
2.04
6.21
Fort Wayne, IN
54
207
153
283%
$48,876
0.34
0.91
Toledo, OH
88
335
247
281%
$29,519
0.38
1.01
Coeur d'Alene, ID
31
118
87
281%
$22,609
0.71
1.94
Canton-Massillon, OH
36
128
92
256%
$41,449
0.28
0.69
Mankato-North Mankato, MN
60
206
146
243%
$18,459
1.45
3.44
Vallejo-Fairfield, CA
42
127
85
202%
$18,672
0.40
0.85
Wilmington, NC
65
188
123
189%
$42,190
0.57
1.17
Grand Forks, ND-MN
268
746
478
178%
$44,038
5.99
11.51
Peoria, IL
58
149
91
157%
$36,634
0.42
0.75
Ann Arbor, MI
50
128
78
156%
$32,806
0.32
0.55
Boise City-Nampa, ID
377
895
518
137%
$56,366
1.77
2.89
Worcester, MA
278
653
375
135%
$38,345
1.09
1.77
Austin-Round Rock-San Marcos, TX
737
1,666
929
126%
$48,277
1.19
1.75
Bremerton-Silverdale, WA
53
116
63
119%
$46,891
0.69
1.12
Charlotte-Gastonia-Rock Hill, NC-SC
277
571
294
106%
$50,665
0.42
0.58
St. Louis, MO-IL
1,102
2,260
1,158
105%
$50,619
1.07
1.56
Allentown-Bethlehem-Easton, PA-NJ
177
357
180
102%
$32,915
0.67
0.95
Madison, WI
258
516
258
100%
$58,625
0.97
1.36
Honolulu, HI
116
228
112
97%
$30,149
0.29
0.40
Knoxville, TN
115
226
111
97%
$38,606
0.44
0.61
Ogden-Clearfield, UT
291
557
266
91%
$39,442
1.84
2.39
Chico, CA
243
458
215
88%
$68,695
3.98
5.42
New York-Northern New Jersey-Long Island, NY-NJ-PA
7,402
13,923
6,521
88%
$76,745
1.13
1.47
Eugene-Springfield, OR
94
177
83
88%
$25,883
0.81
1.08
Seattle-Tacoma-Bellevue, WA
7,570
14,226
6,656
88%
$120,821
5.45
7.03
Minneapolis-St. Paul-Bloomington, MN-WI
611
1,130
519
85%
$41,066
0.45
0.57
Fayetteville-Springdale-Rogers, AR-MO
88
162
74
84%
$42,470
0.56
0.69
Orlando-Kissimmee-Sanford, FL
544
1,001
457
84%
$53,066
0.70
0.88
Ocala, FL
57
104
47
82%
$39,066
0.75
0.97
San Jose-Sunnyvale-Santa Clara, CA (41940)
810
1,459
649
80%
$102,195
1.14
1.37
Ottawa-Streator, IL
297
535
238
80%
$21,722
6.43
8.16
Boston-Cambridge-Quincy, MA-NH
1,709
3,054
1,345
79%
$67,988
0.89
1.09
Las Vegas-Paradise, NV
1,128
2,013
885
78%
$56,095
1.71
2.15
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
1,335
2,372
1,037
78%
$50,131
0.63
0.80
Chicago-Joliet-Naperville, IL-IN-WI
2,580
4,557
1,977
77%
$59,758
0.77
0.96
Columbia, SC
59
104
45
76%
$35,458
0.21
0.26
Davenport-Moline-Rock Island, IA-IL
107
186
79
74%
$50,847
0.75
0.91
Chattanooga, TN-GA
94
164
70
74%
$31,012
0.52
0.63
Provo-Orem, UT
556
961
405
73%
$49,202
3.72
4.18
Hartford-West Hartford-East Hartford, CT
283
486
203
72%
$30,435
0.59
0.72
Hood River, OR
65
110
45
69%
$26,564
6.20
7.16
Oklahoma City, OK
97
163
66
68%
$48,017
0.21
0.24
New Haven-Milford, CT
110
183
73
66%
$68,783
0.38
0.44
Columbia, MO
93
153
60
65%
$36,494
1.33
1.48
Medford, OR
107
176
69
64%
$39,243
1.63
1.90
Scranton--Wilkes-Barre, PA
247
403
156
63%
$31,560
1.25
1.46
Portland-Vancouver-Hillsboro, OR-WA
1,202
1,944
742
62%
$37,203
1.47
1.63
Cincinnati-Middletown, OH-KY-IN
1,009
1,625
616
61%
$39,261
1.30
1.49
Louisville/Jefferson County, KY-IN
126
201
75
60%
$38,956
0.27
0.29
Charleston-North Charleston-Summerville, SC (16700)
86
137
51
59%
$35,397
0.37
0.40
Logan, UT-ID
85
135
50
59%
$22,246
2.10
2.30
Santa Rosa-Petaluma, CA (42220)
111
175
64
58%
$41,602
0.72
0.80
Nashville-Davidson--Murfreesboro--Franklin, TN
498
785
287
58%
$36,789
0.82
0.85
Lexington-Fayette, KY
177
280
103
58%
$38,517
0.90
0.96
Dayton, OH
111
175
64
58%
$26,891
0.38
0.43
Bend, OR
191
300
109
57%
$33,132
3.60
4.02
Colorado Springs, CO (17820)
233
366
133
57%
$27,687
1.01
1.10
Tallahassee, FL
95
149
54
57%
$40,553
0.72
0.82
Riverside-San Bernardino-Ontario, CA
649
1,003
354
55%
$38,227
0.63
0.69
El Paso, TX
514
791
277
54%
$17,522
2.17
2.28
Galesburg, IL
277
424
147
53%
$27,835
12.45
13.61
Harrisburg-Carlisle, PA
136
209
73
54%
$31,602
0.55
0.59
Palm Bay-Melbourne-Titusville, FL (37340)
143
217
74
52%
$42,583
0.92
1.00
Boulder, CO (14500)
376
561
185
49%
$48,869
2.88
2.89
Atlanta-Sandy Springs-Marietta, GA (12060)
1,655
2,454
799
48%
$56,564
0.92
0.94
Eau Claire, WI
131
194
63
48%
$29,794
2.14
2.16
San Luis Obispo-Paso Robles, CA
139
205
66
47%
$39,356
1.59
1.53
Jacksonville, FL
328
484
156
48%
$39,193
0.70
0.72
Little Rock-North Little Rock-Conway, AR
85
123
38
45%
$30,742
0.32
0.33
Milwaukee-Waukesha-West Allis, WI (33340)
804
1,162
358
45%
$34,887
1.28
1.30
Hannibal, MO (25300)
413
590
177
43%
$13,789
31.34
30.11
Raleigh-Cary, NC
378
537
159
42%
$49,990
0.94
0.90
San Diego-Carlsbad-San Marcos, CA
1,504
2,132
628
42%
$62,877
1.34
1.32
Buffalo-Niagara Falls, NY (15380)
185
258
73
39%
$26,681
0.45
0.45
San Francisco-Oakland-Fremont, CA
2,919
4,010
1,091
37%
$87,280
1.79
1.67
Bellingham, WA
118
158
40
34%
$33,482
1.73
1.64
New Orleans-Metairie-Kenner, LA (35380)
160
212
52
33%
$35,863
0.38
0.35
Salt Lake City, UT
2,006
2,654
648
32%
$63,187
4.10
3.60
Denver-Aurora-Broomfield, CO
1,465
1,936
471
32%
$54,863
1.49
1.33
Sacramento--Arden-Arcade--Roseville, CA
770
1,016
246
32%
$40,959
1.06
1.01
Washington-Arlington-Alexandria, DC-VA-MD-WV
1,250
1,639
389
31%
$64,473
0.53
0.48
Birmingham-Hoover, AL
167
218
51
31%
$35,155
0.43
0.40
Oxnard-Thousand Oaks-Ventura, CA
209
272
63
30%
$42,119
0.81
0.74
Kansas City, MO-KS
671
865
194
29%
$38,886
0.86
0.78
Albany-Schenectady-Troy, NY
79
102
23
29%
$29,447
0.23
0.22
Fort Collins-Loveland, CO
147
186
39
27%
$39,192
1.35
1.16
Manchester-Nashua, NH
280
353
73
26%
$60,692
1.83
1.64
Omaha-Council Bluffs, NE-IA
654
824
170
26%
$53,708
1.80
1.60
Houston-Sugar Land-Baytown, TX
1,442
1,809
367
25%
$40,959
0.70
0.58
Brownsville-Harlingen, TX
103
128
25
24%
$21,781
0.98
0.83
Salem, OR (41420)
182
225
43
24%
$29,941
1.42
1.28
Spokane, WA
408
502
94
23%
$60,997
2.38
2.09
Phoenix-Mesa-Glendale, AZ
3,332
4,062
730
22%
$62,002
2.42
2.03
Miami-Fort Lauderdale-Pompano Beach, FL
2,647
3,210
563
21%
$54,616
1.47
1.23
Racine, W
91
110
19
21%
$28,197
1.57
1.32
Akron, OH
150
174
24
16%
$34,974
0.60
0.49
Springfield, MA
88
102
14
16%
$41,527
0.37
0.30
Detroit-Warren-Livonia, MI
712
826
114
16%
$47,384
0.53
0.42
Redding, CA
117
134
17
15%
$57,004
2.22
1.88
Rochester, NY
238
271
33
14%
$33,405
0.62
0.50
Portland-South Portland-Biddeford, ME
188
214
26
14%
$44,201
0.88
0.72
Dallas-Fort Worth-Arlington, TX
2,950
3,334
384
13%
$51,152
1.27
0.96
St. George, UT
143
162
19
13%
$30,715
3.74
2.85
Baton Rouge, LA
111
125
14
13%
$46,293
0.37
0.30
Memphis, TN-MS-AR
284
319
35
12%
$34,885
0.59
0.47
Baltimore-Towson, MD
432
478
46
11%
$73,551
0.42
0.32
Cape Coral-Fort Myers, FL
176
194
18
10%
$37,279
1.09
0.83
Grand Rapids-Wyoming, MI
693
765
72
10%
$85,872
2.47
1.79
Providence-New Bedford-Fall River, RI-MA
279
306
27
10%
$23,727
0.52
0.41
Los Angeles-Long Beach-Santa Ana, CA
7,839
8,519
680
9%
$60,101
1.74
1.32
Santa Barbara-Santa Maria-Goleta, CA
122
132
10
8%
$48,521
0.79
0.60
Lakeland-Winter Haven, FL
97
105
8
8%
$39,221
0.62
0.48
Columbus, OH
3,094
3,324
230
7%
$34,355
4.33
3.22
Des Moines-West Des Moines, IA
143
148
5
3%
$35,543
0.56
0.40
Cleveland-Elyria-Mentor, OH
770
785
15
2%
$54,287
0.98
0.71
Fernley, NV (22280)
704
710
6
1%
$55,306
72.77
53.93
North Port-Bradenton-Sarasota, FL
177
174
-3.00
-2%
$37,516
0.88
0.62
Pittsburgh, PA
1,077
1,002
-75.00
-7%
$50,314
1.23
0.80
Bridgeport-Stamford-Norwalk, CT
1,017
898
-119.00
-12%
$111,274
3.02
1.88
Deltona-Daytona Beach-Ormond Beach, FL
179
157
-22.00
-12%
$36,650
1.42
0.88
Springfield, MO
165
136
-29.00
-18%
$30,943
1.09
0.62
Poughkeepsie-Newburgh-Middletown, NY
169
136
-33.00
-20%
$35,261
0.84
0.49
Virginia Beach-Norfolk-Newport News, VA-NC
301
241
-60.00
-20%
$43,710
0.47
0.27
Tucson, AZ
468
373
-95.00
-20%
$31,186
1.56
0.89
Richmond, VA
294
221
-73.00
-25%
$36,861
0.61
0.32
Greensboro-High Point, NC
255
177
-78.00
-31%
$36,448
0.95
0.47
Reno-Sparks, NV (39900)
661
386
-275.00
-42%
$40,630
4.29
1.81
San Antonio-New Braunfels, TX
1,594
926
-668.00
-42%
$62,759
2.26
0.89
Charlottesville, VA
191
102
-89.00
-47%
$29,774
2.41
0.93
Tampa-St. Petersburg-Clearwater, FL
2,990
1,252
-1738.00
-58%
$44,406
3.34
0.98
Wichita, KS
287
114
-173.00
-60%
$28,774
1.22
0.35
Conclusion
There’s no doubt we should keep an eye on the exciting growth in e-shopping. Yet we should also be aware that individual online companies do tend, by their very nature, to be smaller and less sturdy than traditional brick-and-mortar stores. They fluctuate rapidly and often drastically, which could be a little unsettling for towns where e-shopping is heavily concentrated.
If you have any questions or comments, email Rob Sentz (rob@economicmodeling.com) or call us at 208-883-3500.