SEED Plan for Retail Trade
In this article, we look into the processes and people who drive the Retail Trade Industry and explore the performance of this sector over the past couple of years.
The Retail Trade Industry is all about the final consumer. A modern-day household and workspace require many things daily. It is not practical for a consumer to reach out to individual brands and procure products in bulk for an entire year. This is where the retail industry plays an important role. It is responsible for the last mile delivery of finished products. For smooth operations of this industry, several verticals have to coordinate across various channels in a relay of sorts. Together the sole aim of the retail industry is customer satisfaction.
Retail Trade Companies
The Retail Trade Industry operates through companies that tirelessly work towards linking the manufacturer and wholesaler to the final customer. This link needs to be as stable as possible as it is two-way communication. Products reach consumers and consumer feedback reaches the manufacturers. This cycle of exchange contributes to a thriving market.
What Retail Trade companies do? Why are they important?
Companies of the Retail Trade Industry purchase goods in bulk from distributors, wholesalers, and sometimes directly from the manufacturers. They break these massive stocks down to small units and sell directly to the consumer. Consumers of retail products purchased in small quantities and for personal use. Products from the retail chain are seldom used for resale purposes.
The Retail Trade Industry is an important service provider for consumers across various geographies. A product manufactured thousands of miles away is easily made available at a local store consistently throughout the year. This is the power of the retail sector. Some of the important services provided to consumers by this industry are:
- Consistent availability and variety: The Retail Trade Industry ensures that products of multiple brands in demand are made available in a reliable way throughout the year
- Credit support: In some cases, the retail store can have a cycle of monthly credits with long-term customers
- After-sales support: Apart from selling products, the retail outlets provide a good backup for after-sale services.
Meanwhile, for the suppliers i.e. Wholesalers and manufacturers, the Retail Trade Industry is an important support system for the following reasons:
- Retailers are in many ways the face of a brand to the final consumer. For certain products such as clothing and shoes, a salesman employed by the retailer plays an important role as a shopping assistant.
- Retailers are a source of consumer feedback and market information. Since they interact with the consumer directly, they can report discrepancies and product feedback immediately allowing the manufacturer to rectify the same.
- Retailers have an important responsibility to drive sales. In-store sales promotions, offers, sampling, etc. are some of the services offered by retailers.
- The Retail Trade Industry permits economies of scale.
Forecast for the Retail Trade Industry
The retail trade industry is expected to make a recovery in 2021, with a forecast of 6.5% to 8.2%, as reported by the National Retail Federation (NRF). This would come hand in hand with the increased vaccination rates of americans, and more potential for movement of people and business for retail trade. Of course online sales, which also incorporate retail trade, have higher during the COVID-19 times, and are expected to increase in the future.
Types of Retail Trade
The Retail Trade Industry operates broadly in two models:
- Retail: This is the most popular one. According to the National Retail Federation, almost 95% of the retail industry comprises independent and privately held retail businesses. Data shows that one in five Americans is employed in a retail store. The retail format has now expanded into online selling platforms opening up new job portals for skilled people.
- Franchise: This model has been an established and reliable one in America for more than 150 years. The franchise model has a time-tested business plan in place. All that needs to be done by the proprietor is to replicate it. Though the initial investment is high, once the business picks up, profits are assured.
Retail Trade Industry Statistics
By number of firms:
|# of employees||Average||2017||2016||2015||2014||2013|
As per the data observed between 2013 and 2017, the Retail trade industry seems to be dominated by companies employing less than 10 employees. Close to 80% of the companies in this sector are small ones operating with 0 – 9 personnel. The next two categories are companies with 10 – 19 and 20 – 49 employees forming 10.72% and 5.53% of the Retail Trade industry respectively.
On the whole, the Retail trade sector mostly operates with small companies with a handful of employees. In order to grow these firms, founders can embrace ESOPs in the retail trade industry to motivate staff to work harder and grow their company.
By number of employees:
|# of employees||Average||2017||2016||2015||2014||2013|
On the other hand, if employee preferences are considered in the same five-year period, it is observed that almost 65% prefer to work for large companies employing more than 500 personnel. The Retail Trade industry has been consistent in this trend between 2013 and 2015. Though the next best options appear to be small companies either in the range of 0 – 9 employees or those with 20 – 49 employees, their percentage is quite less at 10.27% and 6.74% respectively.
On the whole, these trends have pretty much remained the same in the Retail trade industry over the five years between 2013 and 2015.
Top 20 Jobs/ Average wages per job:
|Sample Size||Employment %||Average Salary||Average Salary||Average Salary|
|Sales and Related Occupations||8,604,510||54.38%||$30,520||$29,440||$28,440|
|Retail Sales Workers||7,217,850||45.62%||$27,430||$26,330||$25,410|
|Transportation and Material Moving Occupations||2,431,820||15.37%||$28,630||$28,940||$27,810|
|Material Moving Workers||1,963,370||12.41%||$27,650||$26,920||$25,990|
|Laborers and Material Movers||1,930,250||12.20%||$27,470||$26,670||$25,590|
|Stockers and Order Fillers||1,402,230||8.86%||$27,350||$26,240||$25,290|
|Office and Administrative Support Occupations||1,371,170||8.67%||$35,230||$30,390||$29,650|
|First-Line Supervisors of Sales Workers||1,093,740||6.91%||$46,110||$45,420||$43,820|
|First-Line Supervisors of Retail Sales Workers||1,061,850||6.71%||$45,550||$44,850||$43,340|
|Installation, Maintenance, and Repair Occupations||760,720||4.81%||$43,240||$42,040||$41,080|
|Food Preparation and Serving Related Occupations||558,740||3.53%||$27,160||$25,860||$24,900|
|Information and Record Clerks||533,110||3.37%||$31,010||$30,050||$29,310|
|Vehicle and Mobile Equipment Mechanics, Installers, and Repairers||528,320||3.34%||$42,070||$40,940||$39,870|
|Customer Service Representatives||422,860||2.67%||$30,610||$29,490||$28,600|
|Automotive Technicians and Repairers||358,280||2.26%||$45,780||$44,550||$43,570|
|Motor Vehicle Operators||330,120||2.09%||$31,740||$30,730||$29,690|
|Automotive Service Technicians and Mechanics||328,480||2.08%||$45,760||$44,410||$43,400|
|General and Operations Managers||306,270||1.94%||$90,390||$90,380||$93,170|
|Driver/Sales Workers and Truck Drivers||302,080||1.91%||$32,170||$31,150||$30,110|
|Health Practitioner Support Technologists and Technicians||295,390||1.87%||$33,390||$32,140||$31,260|
|Laborers and Freight, Stock, and Material Movers, Hand||273,650||1.73%||$29,170||$28,170||$26,920|
|Cooks and Food Preparation Workers||262,970||1.66%||$26,550||$25,280||$24,280|
|Counter and Rental Clerks and Parts Salespersons||254,130||1.61%||$34,600||$33,250||$31,990|
|Food and Beverage Serving Workers||239,950||1.52%||$25,660||$24,410||$23,540|
|Food Processing Workers||225,980||1.43%||$31,700||$30,720||$29,870|
|Fast Food and Counter Workers||224,700||1.42%||$25,770||$24,490||$23,620|
The classifications for these occupations often overlap one another, so total employment size % may result in a larger number than 100% for all jobs.
The Retail trade industry has been a consistent source of employment. As per the data observed of a sample size of 15,822,440 for three years between 2017 and 2019, it is evident that there has been an upward trend in the average salaries of all the job profiles. In these three years, this sector posted a 2.5 – 3.5% growth in the average salaries across all profiles. The five most preferred roles were:
- Sales and Related Occupations
- Retail Sales Workers
- Retail Salespersons
- Transportation and Material Moving Occupations
Sales and related operations contributed almost 55% of the employment. The average salary of this job was $28,440 in 2017. This became $30,520 by 2019. Over three years, the job profile of sales and related operations posted a growth of 7.3%.
The second most preferred category of employment in the retail trade sector was Retail sales workers. This job engaged 45.62%of the workforce. In 2017, this profile extended an average salary of $25,410. By 2019, this figure reached $27,430, a growth of almost 8%.
Retail salespersons formed the next category posting 25.25% employment in 2019. Since 2017, the average salary of this job shows a 7% increase. The average salaries of retail salespersons were in the range from $27,340 to $29,250 between 2016 – 19.
The salaries of Cashiers in the Retail trade also displayed a substantial increase. This job profile formed 18.76% of the employment in 2019 and average salaries ranged from $22,070 to $24,380 displaying a growth of almost 10.5% over three years.
Meanwhile, Transportation and Material Moving Occupations provided 15.37% of employment in 2019. In 2017 average salary for this profile was $27,810 which rose by 3% and reached $28,630 in 2019.
ESOP in Retail Trade
Job hours in the Retail Trade Industry may not be long and laborious like manufacturing, but it demands a high level of customer friendliness and a proactive willingness to cater to customer needs. Sometimes the customer may not know which product to buy. In such cases, educating the consumer and guiding with the right product is also the role of the retailer. In such a scenario, to be motivated and forthcoming every working hour, employees must see value in what they are doing. Retirement benefits such as ESOP are a good way to approach this.
Why is offering ESOP a better option for Retail Trade companies?
The Employee Stock Option Plan is a company’s way to grant stocks to employees. A company cannot do this directly and has to operate through a trust specifically created for this purpose. Owning stocks not only keeps employees engaged and motivated but also aligns their financial goals with that of the company. Studies indicate that firms who have opted for ESOP have seen much more profits than those who have not. Besides, ESOP as a retirement benefit helps reduce corporate taxes and increases cash flow that in turn can be invested in strategic areas.
The fact that ESOP in retail companies is a good option is starkly reflected in the success of these three employee-owned American retailers:
- Publix supermarket with 1,242 stores and more than 20,000 employees
- Penmac staffing with 32 branches and close to 28,000 employees
Brookshire brothers with multiple operations such as grocery stores, gas stations, convenience stores in Texas & Louisiana and close to 7,000 employees
SEED by Eqvista – Plan for Retail Trade
SEED or the Simple Employee Equity Development plan is a unique structure developed by Eqvista that helps create a suitable ESOP in Retail companies. This is an extensive guideline that is created considering the various levels of employment in the retail sector. Here is a brief of the various employment types in this industry:
- Small scale fixed retail stores: general stores, street stall, singly line stores, seconds stores
- Large scale fixed retail stores: retail chains, departmental stores, auto vending machines, malls, supermarkets
Considering the varying sizes of companies and the different types of employees in this sector, SEED suggests an employee pool of a minimum of 10% that can be expanded to 20% for large establishments. Equity rewards are suggested to be granted as 100% time based. However, in the case of seniority, it could be a combination of time based and milestone based of varying percentages. Vesting schedules are set at 3 – 4 years with a one-year mandatory cliff. There are provisions for milestone vesting as well. Thus SEED by Eqvista can be a comprehensive equity rewards guide for the Retail Trade Industry.
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