Retail Channel Monthly $ Update – October Final & November Advance

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The Retail market hit bottom in April 2020 then began its recovery. The journey has been long and complex and Consumer spending behavior continues to evolve. We have not beaten the virus yet so we will continue to track the ongoing recovery of the retail marketplace with data from two reports provided by the U.S. Census Bureau.

The Reports are the Monthly Retail Sales Report and the Advance Retail Sales Report. Both are derived from sales data gathered from retailers across the U.S. and are published monthly at the same time. The Advance Report has a smaller sample size so it can be published quickly – about 2 weeks after month end. The Monthly Final Report includes data from all respondents, so it takes longer to compile the data – about 6 weeks. Although the sample size for the Advance report is smaller, the results over the years have proven it to be statistically accurate with the final monthly reports. The biggest difference is that the full sample in the Final report allows us to “drill” a little deeper into the retail channels.

We will begin with the Final Retail Report for October and then move to the Advance Report for November. Remember, the retail impact of the pandemic began in March 2020, peaked in April, then recovery started in May. We will compare 2021 to both 2020 and 2019 to document the progress that the retail market has made towards a full recovery.

Both reports include the following:

  • Total Retail, Restaurants, Auto, Gas Stations and Relevant Retail (removing Restaurants, Auto and Gas)
  • Individual Channel Data – This will be more detailed in the “Final” reports and we fill focus on Pet Relevant Channels

The information will be presented in detailed charts to facilitate visual comparison between groups/channels of:

  • Current Month change – % & $ vs previous month
  • Current Month change – % & $ vs same month in 2020 and 2019
  • Current YTD change – % & $ vs 2020 and 2019
  • Monthly and Year To Date $ will also be shown for each group/channel

First, the October Final. Retail hit bottom in April 2020 but began recovery, hitting record $ in December. $ fell in January/February but set a new $ records in March and then again in May. Sales declined through September but turned up in October. Here are the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The final total is $0.7B less than the Advance report projected a month ago. All groups but Restaurants were down slightly. The specifics were: Relevant Retail: -$0.8B; Gas Stations: -$0.1B; Auto: -$0.3B; Restaurants: +$0.5B. Sales vs September were up in all groups. Total Retail $ales broke $600B for the 1st time in December. October sales beat that number and in fact were the 4th highest of all time. Auto continues to have the strongest recovery with an annual YTD growth rate since 2019 of +11.6%. While a spending dip in September is the “norm” in U.S. Retail, so is an October rebound. Importantly, for the 5th consecutive month, all groups were positive in all measurements vs 2020 or 2019.

Now, let’s see how some Key Pet Relevant channels were doing in October.

  • Overall – No channels were down vs last month, a big change from 10 in September. In fact, the only negative was Office/Gift/Souvenir YTD $ vs 2019. October was the 2nd biggest month in history for Relevant Retail.
  • Building Material Stores – Their amazing lift has slowed a little. The surge came as a result of pandemic spending patterns developed in 2020. Consumers began focusing on their homes. Their Spring lift has slowed in 2021 but Building and Farm stores are still going strong. Sporting Goods stores have a similar pattern. Sales took off in May 2020, hit a record peak in December and continued strong into 2021, peaking in March. $ slowed but have now stabilized after a big drop in September. YTD they are +47.4% vs 2019, a Growth Rate of 21.4%!
  • Food & Drug – Supermarkets were +$77.7B in 2020. $ are up vs September and +8.3% vs October 2020. YTD $ are on par with the 2020 binge and +15.4% vs 2019. Drug Stores were +$17B (+5.7%) for 2020. They had a record March. Sales have been relatively stable since then. Their YTD $ are +7.2%.
  • General Merchandise Stores – $ in all channels fell in Jan & Feb then spiked in March. Monthly sales by channel have been up or down since then but all were strong in October, +10.1% vs September. Clubs/SuprCtrs & $ Stores are leading the way with a combined annual growth rate of +8.9%. These channels promote value. Their success reinforces its importance to consumers. Disc. Dept. Strs are now rebounding with all positive numbers.
  • Office, Gift & Souvenir Stores– $ are up from September and were +15.1% vs October 2020. The pandemic hit them hard. They are still down YTD vs 2019. Recovery will take more time, but their situation is improving.
  • Internet/Mail Order – Their sales rebounded after dipping in September. The pandemic continues to fuel this channel’s growth. In October 2019, their avg annual growth rate was +14.1%. Now, it is +19.4% – up 37.6%
  • A/O Miscellaneous – This is a group of small to midsized specialty retailers – chains and independents. It includes Florists, Art Stores and Pet Stores (22>24% of total $). Pet Stores were usually essential, but most stores were not. In May 2020 they began their recovery. Their 2020 sales were up +12.1%. October 2021 was their 6th consecutive month over $10B and their 2nd biggest month ever. YTD $ are +27.4% vs 2020 and +40.9% vs 2019.

Relevant Retail began recovery in May and set a $ record in December. $ fell in Jan & Feb, turned up again in March and began a monthly up/down rollercoaster. October $ were up for all and all but 1 channel are ahead of all 2020 & 2019 $. The key drivers are the Internet, SuperCtrs/Clubs/$ Stores and Hdwe/Farm. Now, the Advance numbers for November.

2020 was a memorable year for both its traumas and triumphs. In April & May we experienced the 2 biggest retail spending drops in history, but the problems actually began in March. Retail sales began to recover in June and in October, YTD Total Retail turned positive for the 1st time since February. In December, Total Retail broke the $600B barrier – a historic first. Sales fell in both January and February but still set monthly sales records. Then they took off again in March, setting a new monthly sales record of $633B. April sales were down slightly but they took off again in May to set yet another spending record, $643.1B. June>Sept $ fell but then came back in October & November with November setting a new record of $649.3B. Only Relevant Retail was up vs October, but all were positive in all other measurements for the 6th straight month. Some other areas of the economy are still suffering, some spending behavior has changed, and inflation has become a bigger factor in increases. However, consumers continue to spend “big bucks”, especially in Relevant Retail, and the overall Retail marketplace continues its strong recovery.

Total Retail – In March and then in May Total Retail set new sales records. From June>Sept sales dipped slightly but stayed above $600B. October brought a resurgence and in November sales continued to grow, setting another all time record with monthly sales of $649.3B. Relevant Retail deserves most of the credit for the record as sales for the other groups were down vs October. The current YTD average annual sales growth rate since 2019 for Total Retail is 9.4%, the highest ever in records going back to 1992. Inflation Note: Retail $ were +19.5% vs November 2020. Inflation was +6.8% so up to 35% of the lift came just from higher prices. The “Real” increase was +12.7%. In November 2019 (pre-pandemic) Retail $ were +2.6% over 2018. Inflation was 2.0%, 78% of the lift. The “Real” increase was +0.6%. Long term, strong inflation can slow spending but right now, Retail is far outperforming pre-COVID 2019.

Restaurants – This group has no negative measurements vs 2020 or 2019 for 6 straight months. February 2020 YTD sales were up 8.1% vs 2019. The Pandemic changed that. Restaurants started to close or cease in person dining in March and sales fell -$33.3B (-52.5%) compared to March 2019. Sales bottomed out in April at $30.1B, the lowest April sales since 2003. Sales started to slowly increase in May but never reached a level higher than 88% compared to the previous year. 2021 started off slowly. Through February, YTD sales were down -16.7% from pre-pandemic 2020 and -10.0% from 2019. In March sales took off and grew steadily from April through July. Sales dipped in August/September came back strong in October then fell in November. YTD their $ are +31.7% vs 2020 and +5.2% vs 2019. Their recovery is getting stronger.

Auto (Motor Vehicle & Parts Dealers) – Staying home causes your car to be less of a focus in your life. Sales began to fall in March and hit bottom in April. Auto Dealers began combating this “stay at home” attitude with fantastic deals and a lot of advertising. It worked. They finished 2020 up 1% vs 2019 and have returned to a strong positive pattern in 2021. The “attitude” grew amazingly positive in March and has slowed only slightly from April>November as sales exceeded $119.8B in all 9 months – the 9 biggest months in history. To show the effectiveness of their campaign, just look at the data. This group has exceeded $110B in monthly sales only 18 times in history. 15 of those occurred after the onset of the pandemic.  YTD Avg Annual Growth Since 2019 = +11.3% – the best performance of any big group.

Gas Stations – Gas Station $ales have been a mixed bag. If you drive less, you visit the gas station less often. Sales turned down in March 2020 and reached their low point in April. They moved up but generally stayed about 15% below 2019 levels for the rest of 2020. In February they were still behind 2020 in monthly and YTD $ but ahead of 2019 in both measurements. In March, sales skyrocketed and continued to grow to a record level in July. They fell in Aug/Sept but hit a record $55.3B in October. Sales fell in November, but they have been positive in all measurements vs 2019 & 2020 since March. Their comeback continues but inflation comes to the forefront in this channel. Gas prices can be pretty volatile. They dipped in the first 2 months of the pandemic but returned to more normal levels for the balance of 2020. Strong inflation began in 2021. In fact, November prices were 58.1% above 2020. That means that the 53.0% year over year $ lift in November was actually a decrease in the amount of gas sold. YTD Annual Growth Rate Since 2019 = +6.6%

Relevant Retail – Less Auto, Gas and Restaurants – This is what we consider the “core” of U.S. retail and has traditionally accounted for about 60% of Total Retail Spending. In looking at the individual channels in this group, we have seen a variety of results due to many factors, like non-essential closures, binge buying, online shopping and a consumer focus on “home”. However, overall, April 2020 was the only month in which spending in this group was down vs 2019. Monthly $ales exceeded $400B for the first time ever in December. They finished 2020 up $260B, +7.1%. Their performance was the only reason that Total Retail was able to finish 2020 with positive numbers, +0.5%. Sales fell in January and February 2021 but set monthly records. In March they turned sharply up and then began an up/down $ roller coaster ride. In October they reached the 2nd highest amount on record but November took over the top spot with $407.1B. March>November are 9 of the 11 highest $ months of all time. Relevant Retail has exceeded $361B in monthly sales 11 times in history. 10 of those have occurred since the onset of the pandemic. It is also very important that the Relevant Retail group has posted positive numbers versus last year and YTD for every month since April 2020 and their average YTD growth rate since 2019 is +10.5%. The recovery has become widespread as all channels have been positive in all measurements vs both 2020 and 2019 for 4 consecutive months. However, the primary drivers throughout the pandemic were and continue to be Nonstore, Grocery, SuperCenters/Clubs/$ Stores plus a seemingly never ending  2020 “spring lift” from Hardware/Farm and Sporting Goods.

Now let’s look at what is happening in the individual retail channels to see where the $ are coming from. November $ were up 7.4% from October and an increase occurred in 9 of 13 channels. Remember, the groups in the chart are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets.

Sales in 9 of 13 channels were up vs October but all were up vs November 2020, vs November 2019 and YTD vs 2020 and 2019. (Relevant Retail YTD Avg Annual Growth Rate since 2019 = +10.5%)

After hitting bottom in April 2020, Relevant Retail has now beaten the previous year’s $ for 19 consecutive months. The group set an all-time record of $406.8B in December and finished 2020 +$260B vs 2019. 2021 started strong, with record sales in every month, including a new all-time record of $407.1B in November. Essential channels are still the big drivers:

  • Nonstore Retailers – The biggest driver. Online shopping continues to grow in # of households and in $.
  • Food & Beverage – Grocery– Restaurant $ are improving but consumers continue to eat & drink more at home.
  • Bldg Materials/Garden/Farm– Their “Spring” lift may be ending but consumers are still focused on their homes.
  • SuperCtrs/Club/Value/$ Strs – They kept the GM channel strongly positive. Value is still a big consumer priority.

Regarding the Individual Large Channels (Includes YTD Avg Annual Growth Rate since 2019)

General Merchandise Stores – Sales increased for all channels vs October and all other numbers were also positive. Even Department Stores $ are growing increasingly positive. After dipping to +7.5% in February, the growth rate by Club/SuperCtr/$ stores has stabilized at about 8.8% ever since. These stores are still the key to this channel.

  • YTD Avg Annual Growth: All GM = +7.6%; Dept Stores = +1.7%; Club/SuprCtr/$ = +8.9%

Food and Beverage, plus Health & Personal Care Stores – Sales in Grocery were down in March>May from 2020 – No surprise, as these were 2020 binge months. In Jun>Nov they beat 2020 $. Health/Personal Care finished 2020 at +1.8% but 2021 has been better. November was down 2.7% from October but YTD $ are +9.4%% vs 2020 and +10.8% vs 2019.

  • YTD Avg Annual Growth: Grocery = +7.5%; Health/Drug Stores = +5.3%

Clothing and Accessories; Electronic & Appliances; Home Furnishings – March > Nov have been spectacular for all these channels. The increase in Clothing vs November 2020 was less than usual but was still +35.3%. All were up vs October and also remained positive in all measurements vs 2020 or 2019 for the 9th consecutive month.

  • YTD Avg Annual Growth: Clothing = +5.6%; Electronic/Appliance = +3.6%; Furniture = +10.1%

Building Material, Farm & Garden & Hardware – Their “Spring” lift which began in 2020 has slowed but they have greatly benefited from consumers focusing on their home needs. They finished 2020 +53B (+13.8%). Sales took off in March, set a record in April, but have since slowed and stabilized. They are still +13.4% YTD. Avg Annual Growth = +13.6%

Sporting Goods, Hobby and Book Stores – Book & Hobby stores are open but Sporting Goods stores have driven the lift in this group. Consumers turned their attention to personal recreation and sales in Sporting Goods outlets took off. The group ended 2020 +5.5% vs 2019. The growth accelerated in 2021 with a strong spike in November, up 15.8% from October to $10.2B, the 2nd biggest month ever. November YTD they are +29.9% vs 2020. Avg Annual Growth = +17.1%

All Miscellaneous Stores – Pet Stores were deemed essential but most other stores were not, so closures hit this group particularly hard. Sales hit bottom at -$3.8B in April then began to rebound. They finished with a strong December and ended 2020 -$1.0B, -0.7%. In March 2021 sales took off and reached the $14+B level in May. They have stayed there and set a record of $15.3B in October. Sales fell to $15.0B in November, but it is still #2 of all time. YTD sales are now +27.5% vs 2020 +26.9% vs 2019. Their recovery is very real. YTD Avg Annual Growth = +12.7% (4th Best)

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV. The pandemic accelerated the movement to online retail. In February 2020 NonStore $ were +8.6% YTD. In December monthly sales exceeded $100B for the 1st time. They ended 2020 at +21.4%, +$162.9B. This was 63% of the total $ increase for Relevant Retail Channels. Their 2020 performance beat the 12.9% increase in 2019 and every month in 2021 has produced record $. November was +19.9% vs October and set a new record of $105.4B. YTD $ are +14.4%. YTD Avg Annual Growth= +18.1%

Note: Almost without exception, online sales by brick ‘n mortar retailers are recorded with their regular store sales.

Recap – 2020 was quite a year. April & May had the 2 biggest year over year sales decreases in history while December sales broke $600B for the first time. 2021 may become even more memorable. November set a new $ record. Mar>Nov are 9 of the 10 biggest $ months in history with the 9 largest year over year sales increases ever. The total increase was +$1.05T, which is over 6 times the -$174B decrease from March>May 2020 which caused so much concern. At yearend 2020, Restaurants and Gas Stations were still struggling but Auto had largely recovered. Relevant retail had segments that also struggled but they still led the way for Total Spending to finish the year +0.5% vs 2019. 2021 has been even better. In Jun>Nov all major groups were positive vs both 2020 and 2019. The recovery has also become real for virtually all channels and monthly sales continue to set records. In fact, the current annual growth rates of +9.4% for Total retail and +10.5% for Relevant Retail are the best ever. Retail has recovered and continues to grow but we’ll keep checking.

2020 U.S. TOTAL PET SPENDING $83.74B…Up ↑$5.31B

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In 2020 Total Pet Spending in the U.S. was $83.74B, a $5.31B (6.8%) increase from 2019. The biggest driver was the pandemic. Pet Parents focused on necessities and binge bought Pet Food in the 1st half of the year. In the 2nd half they turned their attention to the other necessary segment – Veterinary. The two more discretionary segments, Supplies and Services, suffered. Services was impacted the most with restrictions and closures but Supplies $ continued their decline due to a reduction in both $ per transaction and purchase frequency. However, there was still a net gain in Total Pet $.

  • A $5.65B (+18.1%) increase in Food
  • A $1.65B (-9.8%) decrease in Supplies
  • A $3.05B (+14.0%) increase in Veterinary
  • A $1.73B (-20.1%) decrease in Services

Let’s see how these numbers blend together at the household (CU) level. In any given week, 22.5 million U.S. CU’s (1/6) spent money on their Pets – food, supplies, services, veterinary or any combination – down from 27.1M in 2019.

In 2020, the average U.S. CU (pet & non-pet) spent a total of $637.78 on their Pets. This was a +7.5% increase from the $593.51 spent in 2019. However, this doesn’t “add up” to a 6.8% increase in Total Pet Spending. With additional data provided from the US BLS, here is what happened.

  • 0.8% fewer CU’s
  • Spent 29.0% more $
  • 16.6% less often

If 67% of U.S. CU’s are pet parents, then their annual CU Total Pet Spending was $951.91. Now, let’s look at the recent history of Total Pet Spending. The rolling chart below provides a good overview. (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys – The 2016>2020 Totals include Veterinary Numbers from the Interview survey, rather than the Diary survey due to high variation)

  • We should note a 3-year pattern since 2010. 2 years of increases (yr 1 the largest) followed by a small decrease.
  • In 2014-15, the Food upgrade began, but early in 2015 consumers were trading $ in other segments to pay for it.
  • In 2016, they were intensely value shopping for super premium foods. They started spending some of this saved money on Supplies and Veterinary Services, but not quite enough as spending fell slightly for the year.
  • In 2017, spending took off in all but Services, especially in the 2nd half. Consumers found more $ for their Pets.
  • In 2018 a spectacular lift in Services overcame the FDA issue in Food, tariffs on Supplies and inflation in Veterinary.
  • In 2019 a bounce back in Food and small lift in Veterinary couldn’t overcome the drop in Supplies from “tarifflation”.
  • In 2020 consumers focused on necessities, Food & Veterinary (+$8.7B) while Services & Supplies suffered (-$3.4B).

Now we’ll look at some Demographics. First, 2020 Total Pet Spending by Income Group

<$70K spending was up. Middle income was down. $100>150K had a huge lift but $150K> spent less. Definitely mixed.

Nationally: · Total Pet: ↑$5.31B   · Food: ↑$5.65B  · Supplies: ↓$1.65B  · Services: ↓$1.73B  · Veterinary: ↑$3.05B

  • < $70K – (56.5% of U.S. CUs); CU Pet Spending: $404.76, +11.1%; Total $: $29.91B, ↑$1.93B (+6.9%) ..
    • Food ↑$0.59B
    • Supplies ↓$0.39B
    • Services ↓$0.03B
    • Veterinary ↑$1.76B

Money matters a lot to this group, but the pandemic caused them to focus on Pet needs, especially Veterinary. After a 2 years of declines, they spent more in 2020 and are once again ahead of 2015 $.

  • >$70K – (43.5% of U.S. CUs); CU Pet Spending: $937.46, +2.7%; Total $: $53.84B, ↑$3.38B (+6.7%) from…
    • Food ↑$5.05B
    • Supplies ↓$1.26B
    • Services ↓$1.70B
    • Veterinary ↑$1.29B

This group continues to grow, up 4.0% in 2020. On the surface, this accounted for most of their spending increase. However, it is more complicated. There were 2 big swings. The middle income $70>99K group spent significantly less in all segments while the $100>149K group spent $9.6B more in Food & Veterinary, driving much of the lift.

  • < $30K – (25.4% of U.S. CUs); CU Pet Spending: $314.01, +19.5%; Total $: $10.19B, ↑$1.06B (+11.6%) from…
    • Food ↑$0.57B
    • Supplies ↓$0.09B
    • Services ↓$0.05B
    • Veterinary ↑$0.62B

Although still behind 2015 $, this lowest income group demonstrated their committment to their pets with strong increases in Food and Veterinary spending and only minimal $ drops in the more discretionary segments.

  • $30>$70K – (31.1% of CUs); CU Pet Spending: $477.03, +6.4%; Total $: $19.72B, ↑$0.87B (+4.6%) from…
    • Food ↑$0.02B
    • Supplies ↓$0.30B
    • Services ↑$0.01B
    • Veterinary ↑$1.14B

This lower income group essentially maintained their spending level in Food and Services. They did spend 7% less on Supplies but they had a 23% increase in Veterinary, which drove their overall spending lift.

  • $70>$99K – (15.0% of CUs); CU Pet Spending: $552.88, -25.1%; Tot $: $10.64B, ↓$3.52B (-24.9%) from…
    • Food ↓$2.15B
    • Supplies ↓$0.54B
    • Services ↓$0.42B
    • Veterinary ↓$0.41B

This middle income group had the biggest negative pandemic reaction with double digit % drops in every segment

  • $100K>$149K– (14.4% of CUs); CU Pet Spend: $1239.36, +54.2%; Tot $: $23.37B, ↑$8.45B (+56.6%) from
    • Food ↑$8.46B
    • Supplies ↓$0.36B
    • Services ↓$0.79B
    • Veterinary ↑$1.14B

They were the Star of the income groups in 2015 and 2017. In 2016, they were the worst performers. In 2018 & 2019 their Total $ were stable. The 2020 pandemic obviously motivated them. They drove most of the binge buying on Food and much of the lift in Veterinary. They are very reactive and have the money to take action.

  • $150K> – (14.1% of CUs); CU Pet Spending: $1038.91, -14.8%; Total $: $19.84B, ↓$1.55B (-7.2%) from…
    • Food ↓$1.26B
    • Supplies ↓$0.36B
    • Services ↓$0.49B
    • Veterinary ↑$0.56

The results in this big group were also mixed. The $200K> group was up +0.6% due to drops in the discretionary Supplies & Services segments which were overcome by slightly greater increases in Food & Veterinary. The $150>199K group drove the overall spending in the high income group down for the 1st time in my records going back to 2013. They spent 1% (0.06B) more on Supplies, Services & Veterinary but $1.7B less on Food. Income is becoming increasingly important in Pet spending but the behavior can vary between the higher income groups.

  • < $100K – (71.5% of CUs); CU Pet Spending: $435.56, -0.7%; Total $: $40.54B, ↓$1.59B (-3.8%) ..
    • Food ↓$1.56B
    • Supplies ↓$0.93B
    • Services ↓$0.45
    • Veterinary ↑$1.35

The spending dividing line was clearly $50K. All Groups Under $50K: +$2.98B; All groups from $50>99K: -$4.57B

  • >$100K – (28.5% of CUs); CU Pet Spending: $1127.64, +12.0%; Total $: $43.20B, ↑$6.90B (+19.0%) from…
    • Food ↑$7.20B
    • Supplies ↓$0.72B
    • Services ↓$1.28B
    • Veterinary ↑$1.69B

We have detailed the variations but the net result is that their focus was on Pet Needs. We added the over/under $100K measurement because of the growing importance of income. For the 1st Time >$100K $ exceeded 50%.

Income Recap –  The top 2 drivers in consumer spending behavior are value (quality + price) and convenience. That makes income , especially disposable income very important in Pet Spending. We also often see motivation in the opportunity brought by new product development. In 2020 we saw the results from perhaps the biggest human motivator – fear. This was the driver in the pandemic binge buying of pet food. Although the spending was mixed, the key results were the big drop from $70>99K and the huge lift from $100>149K. This combination was instrumental in driving the 50/50 $ divide up to $103K. That’s up considerably from $94K in 2019. Even with spending increases from the lower income groups, CU income continues to grow in importance in Total Pet Spending.

Next let’s look at 2020 Total Pet Spending by Age Group

Basically, a Generational Divide. Boomers & Millennials spent more. Everyone else spent less.

Nationally: · Total Pet: ↑$5.31B   · Food: ↑$5.65B  · Supplies: ↓$1.65B  · Services: ↓$1.73B  · Veterinary: ↑$3.05B

  • <25 – (3.8% of U.S. CUs); CU Pet Spending: $283.19, -15.8%; Total $: $1.44B, ↓$1.06B (-42.3%) from…
    • Food ↓$0.37B
    • Supplies ↓$0.31B
    • Services ↓$0.03B
    • Veterinary ↓$0.35B

The biggest factor was a loss of 2M CUs (-31%) as they moved back home with their parents or grouped together.

  • 25-34 – (16.0% of U.S. CUs); CU Pet Spending: $586.67, +28.7%; Total $: $12.42B, ↑$2.56B (+26.0%) from…
    • Food ↑$0.87B
    • Supplies ↑$0.62B
    • Services ↓$0.03B
    • Veterinary ↑$1.11B

These Millennials have often led the way in new food trends. Now they have stepped up in trying times. Services spending was essentially the same as 2019 but they spent over 20% more in all other segments, even Supplies.

  • 35-44 – (17.0% of CUs); CU Pet Spending: $594.82, -11.0%; Total $: $13.29B, ↓$1.56B (-10.5%) from…
    • Food ↓$0.61B
    • Supplies ↓$0.07B
    • Services ↓$0.30B
    • Veterinary ↓$0.59B

This group has the largest families and is in the middle of building their careers. This makes them very sensitive to and cautionary in times of change. They are big in Supplies and that essentially didn’t change. However, they had double digit % decreases in all the other segments.

  • 45-54 – (17.2% of U.S. CUs); CU Pet Spending: $690.80, -9.3%; Total $: $15.47B, ↓$1.54B (-9.0%) from…
    • Food ↓$1.63B
    • Supplies ↓$0.45B
    • Services ↓$0.31B
    • Veterinary ↑$0.85B

This group has the highest income and occupied the top spot in CU Pet Spending in 2019. In 2020 they fell to a distant second. They had double digit % decreases in 3 segments. The $0.85B increase in Veterinary Services was likely them making up for a $1B decrease in Veterinary procedures in 2019.

  • 55-64 – (19.1% of U.S. CUs); CU Pet Spending: $962.48, +33.0%; Total $: $24.15B, ↑$6.36B (+35.8%) from…
    • Food ↑$7.09B
    • Supplies ↓$1.26B
    • Services ↓$0.37B
    • Veterinary ↑$0.90B

These younger Baby Boomers are especially reactive. They were the primary drivers behind the binge spending on Pet Food. They cut back spending on Supplies and reduced the frequency in Services but spending in the other “necessary” segment, Veterinary, grew 20%. The result was a 35.8% increase in Total Pet $.

  • 65-74 – (15.6% of U.S. CUs); CU Pet Spending: $592.19, +3.5%; Total $: $12.44B, ↑$1.02B (+9.1%) from…
    • Food ↑$0.32B
    • Supplies ↑$0.11B
    • Services ↓$0.28B
    • Veterinary ↑$0.87B

This group is growing, +3.7% and now are all Baby Boomers. They are careful with their money, but their commitment to their pets is very apparent. They had a reduced frequency in Services but spending in all other segments grew, especially in Veterinary and Food, the “needed” segments.

  • 75> – (11.2% of U.S. CUs); CU Pet Spending: $326.03, -10.5%; Total $: $4.73B, ↓$0.48B (-9.3%) from…
    • Food ↓$0.02B
    • Supplies ↓$0.29B
    • Services ↓$0.42B
    • Veterinary ↑$0.25B

Pet Parenting is more difficult, and money is tight for these oldest Pet Parents, but their commitment is still there. No binge spending, but they held their ground in Food. They cut back on Supplies and Services but had a 17% increase in Veterinary Services $ which kept their overall decrease in Total Pet under 10%.

Age Group Recap: There was an age spending pattern in Total Pet, but it was basically divided by generation. Boomers and Millennials spent $8.35B more. Everyone else spent $3.04B less. Pet Food spending had the same pattern. Other segments had different patterns. In Supplies only the 25>34 and 65>74-year-olds spent more. In Veterinary, only the <25 and 35>44-year-olds spent less. Unfortunately, Services was more consistent as all age groups spent less.

Next, we’ll look at the biggest winner and loser in each demographic category. In some cases, a clear spending pattern is evident. In those situations, segments are bundled together to reflect their shared spending behavior.

Key Demographic “Movers” for 2020.

In 2019, 50 of 96 Demographic Segments (52%) spent more on their Pets but spending fell -$0.16B (-0.2%). In 2020 only 46 of these 96 segments (48%) spent more but Total Pet Spending increased by $5.31B (+6.8%). This is very unusual to say the least. 6 segments flipped from 1st to last or vice versa and 3 segments held their spot. These are not unusual numbers. What you do see in the chart is the huge difference between the most positive and most negative segments. This suggests that the lift was very targeted. From our earlier segment analysis, we know that the driving force behind the lift was Pet Food spending, especially the binge buying that occurred in the 1st half of 2020. Let’s look at some specifics.

There are a few usual winners like:

  • Homeowners
  • White, Not Hispanic
  • 2 Earners
  • Self Employed

We should note that all racial/ethnic segments spent more which is always a good sign for the industry. There were also some winning segments that are periodically on top, whenever they are strongly motivated by events/trends:

  • $100>149K
  • < 2500 Population
  • 55>64-year-olds
  • Baby Boomers

That means that there were still some unexpected winners, like:

  • Married, Oldest child 18>
  • 4 people
  • Less than College Grads

Now let’s look at the downside. The “usual” losers were:

  • Singles
  • Renters
  • No Earner, Singles

This low number means that there must have been quite a few surprises, like:

  • Large Suburbs
  • 2 People
  • 35>44
  • Gen X
  • College Grads

Recap: After a slight downturn in 2019, Pet Spending turned up in 2020. There is no doubt that the onset of the COVID-19 pandemic was the major factor in the turnaround. It produced mixed results among the industry segments. Services took a big negative hit due to restrictions and closures in nonessential outlets. Consumers, including Pet Parents, focused their attention and spending on the most needed Products and Services. In the Pet Industry this resulted in a 10% drop in Supplies $ but strong lifts in spending for Veterinary Services and especially Pet Food. The Pet Food $ were even stronger because Pet Parents feared possible shortages like what happened to many other essential products. This caused some very select demographics to binge buy an extra $6.77B in the 1st half of 2020. Although the 25>34-year-olds participated in this lift, the key drivers were the 55>64-year-old Baby Boomers. Boomers have a history of strong reactions to trends and outside factors. The 55>64-year-olds also have the highest income of any Boomer group so they had both the “will” and the “way” (money) to binge spend for the welfare of their pet children… and in 2020, they did!

 

2020 U.S. VETERINARY SERVICES SPENDING $24.85B…UP ↑$3.05B

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Veterinary Services is the 2nd largest segment in the Pet Industry. High inflation, 3.5+%, caused a reduction in Veterinary visits from 2014>2016. In 2017 inflation slowed (+2.2%) and consumers responded. In 2018 prices turned up (+2.6%) and spending plateaued. In 2019 inflation was +4.1% and Veterinary Spending grew +2.7% so “real” spending was actually down -1.4%. In 2020, COVID drove spending up significantly in “needed” categories, like Veterinary. Spending reached  $24.85B, up $3.05B (+14.0%). Inflation was 3.7% so 74% of the growth was real. In this report, we’ll take a closer look at the demographics behind the 2020 numbers. (Note: All 2020 numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Interview Survey, rather than their Diary report. The low frequency of Veterinary Visits is still generating an exceptionally high variation on the data collected by the Diary method. Interview seems to be a more logical and accurate way to track Veterinary Service Expenditures.)

Let’s get started. Veterinary Spending per CU in 2020 was $189.35, up 14.8% from $164.88 in 2019. (Note: A 2020 Pet CU (67%) Spent $282.61) More specifically, the increase in Veterinary spending came as a result of:

  • 0.8% less CU’s
  • Spending 12.8% more $
  • …1.8% more often

We’ll take a closer look. But first, the chart below gives an overview of recent Veterinary Spending.

The big spending drop in the first half of 2015 coincided with the upgrade to Super Premium Foods – Trading $. Then consumers began value shopping for Premium Foods and the savings freed up $ for Veterinary Services. Spending began to climb until it flattened out at the beginning of 2017. In 2017, Veterinary inflation slowed markedly in the second half and spending took off. In 2018 prices turned up again and consumers essentially held their ground through 2019. The initial reaction to COVID in 2020 was a drop in spending but the “need focused” consumers then drove a huge increase.

Now, let’s look at Veterinary spending by some specific demographics. First, here is a chart by Income Group

Although not as much as Services and now Food, Veterinary Spending is driven by income. The only group to spend less than 2015 was <$30K. 2020 spending was mixed. The only drop came from the $70>100K income group and the increase was almost equally divided between <$70K & $100K>. The 50/50 break point in $ was $96K, down from $97K in 2019.

National: $189.35 per CU (+14.8%) – $24.85B – Up $3.05B (+14.0%)

  • Over $150K (14.1% of CUs) – $375.65/CU (+2.9%) $6.96B, Up $0.56B (+8.7%) This highest income group is the biggest Veterinary Spender as 14.1% of CUs generated 28% of 2020 $. Their $ grew but slower than the overall rate.
  • $100>150K (14.4% of CUs) – $267.61/CU (+24.8%) $5.04B, Up $1.14B (+29.1%) Spending by this middle/upper income group slowed in 2019 as prices turned up, but it took off in 2020 as they reacted strongly to their pet needs.
  • $70K>100K (15.0% of CUs) – $190.23/CU (-12.4%) $3.74B, Down $0.41B (-9.8%) Their spending has steadily grown since 2016. That changed in 2020 as monetary pressures from the pandemic caused them to spend less.
  • $30K>70K (31.1% of CUs) – $149.72/CU (+25.4%) $6.11B, Up $1.14B (+22.9%) This is the 2nd largest group in Veterinary $ and their spending pattern is remarkably similar to the big spending $150K+ group. Vet $ were flat in 2019 but grew strongly in 2020 as they found the money to fulfill their Veterinary needs.
  • Under $30K (25.4% of CUs) $89.67/CU (+35.0%) $2.99B, Up $0.62B (+26.2%) This group is very price sensitive. After an increase in all segments in 2017, they dialed back their pet spending on Food and Veterinary Services in 2018. They began to recover in 2019 and spending growth continued in 2020. They are now just 6% below their 2015 $.

Now, here is Veterinary Spending by Age Group

Every group but 35>44 and <25 spent more. The lift came more from increased $ spent rather than visit frequency.

National: $189.35 per CU (+14.8%) – $24.85B – Up $3.05B (+14.0%)

  • <25 (3.8% of CUs) – $65.35/CU (-29.7%) – $0.33B – Down $0.35B (-51.7%) The biggest factor in the big spending drop by this youngest group was a 2.2M, -31.2% decrease in CUs. 31.2% fewer CUs spent 32.0% less $ …3.3% more often.
  • 25>34 (16.0% of CUs) – $178.05/CU (+43.9%) – $3.74B – Up $1.11B (+42.2%) The commitment of these Millennials to their pets is growing. Their Veterinary $ ticked up in 2019 after being stable for 2 years. In 2020 the $ took off with a 43.9% increase in CU spending. 1.2% fewer CUs spent 37.5% more $ …4.6% more often.
  • 35>44 (17.0% of CUs) – $200.58/CU (-11.5%) – $4.47B – Down $0.59B (-11.6%) In 2019, these mostly Gen Xers radically increased their Veterinary spending and they moved to the top in Veterinary $. In 2020 they increased visit frequency but cut back -20% on $. They fell to 3rd 0.1% less CUs spent 20.5% less $ …11.4% more often
  • 45>54 (17.2% of CUs) – $221.60/CU (+18.7%) – $5.01B – Up $0.85B (+20.4%) This group has the highest income, but value is important. In 2017, the slowed inflation caused them to spend significantly more money and more often. In 2018, prices turned up and continued to inflate in 2019. Spending dropped precipitously. They fell from the top spot in Veterinary $ and even below their 2015 numbers. 2020 brought a strong recovery with a 20% increase in $. They spent more $ more often and moved up the ladder to #2. 1.5% more CUs spent 11.7% more $…6.2% more often
  • 55>64 (19.1% of CUs) – $217.17/CU (+17.2%) – $5.45B – Up $0.90B (+19.8%) This group is all Baby Boomers and was the leader in Veterinary Spending prior to 2015. In 2015 they upgraded to Super Premium Food and Vet Spending fell. In 2016 they began to spend more again on Veterinary Services. In 2017, as inflation significantly slowed, they regained the top spot. In 2018 Veterinary prices began to strongly inflate again. Their spending fell and continued down into 2019. In 2020 their frequency fell but they spent a lot more. They’re back on top in Veterinary Spending because 2.2% more CUs spent 25.2% more $ …6.4% less often
  • 65>74 (15.6% of CUs) – $200.22/CU (+22.6%) – $4.09B – Up $0.87B (+27.1%) This group is growing in numbers and very price sensitive. They are Boomers so they are committed to their pets. In 2020 their visit frequency was down due to the pandemic, but they spent 37% more $. 3.7% more CUs spent 37.0% more $ …10.5% less often
  • 75> (11.2% of CUs) – $118.92/CU (+17.0%) – $1.75B – Up $0.25B (+16.7%) This group of oldest Pet Parents has a strong commitment to their pets – in 2015 a $1B increase in Veterinary Spending. In 2016, they upgraded their food. In 2017 they increased spending in Food, Supplies and Services. In 2018, they turned their attention back to Veterinary and in 2019 they had increases in all but Supplies. The pandemic hit them hard, but they still took care of their pets with increased Veterinary spending. 0.2% less CUs spent 14.9% more $…1.8% more often

Now, let’s take a look at some other key demographic “movers” behind the 2020 Veterinary Spending numbers.

Veterinary spending increased by $3.05B (+14.0%) in 2020. Even with a high 3.7% inflation rate, 74% of the growth was real. 2020 had widespread positivity. 82 of 96 demographic segments (85.4%) spent more on Veterinary Services while only 14 segments spent less. In 4 categories all segments spent more. However, there was some turmoil as 8 flipped from first to last or vice versa while 4 segments maintained their position from 2019.

Half of the segments were the “usual” winners and losers. On the winning side were:

  • Mgrs/Professionals
  • Homeowners w/Mtge
  • White, Not Hispanic
  • 2 People
  • Married Couple Only
  • Adv College Degrees.

The “usual” losers were equal in number and included:

  • Singles
  • African Americans
  • Renters
  • No earner Singles
  • <HS Grads
  • Gen Z

That means that there were relatively few surprises:

  • Winners: Center City, 25>34 yrs old
  • Losers: Suburbs, 35>44 yrs old

In our earlier analysis we saw that the increase was widespread across Income and Age groups. Only 1 income group, $70>99K and 2 age groups, <25 and 35>44 spent less. There were 4 categories in which all segments spent more. The nature of these categories illustrates how truly widespread the lift in Veterinary $ was.

  • Race/Ethnic
  • Housing
  • CU sizes
  • Area Type

There had been a strong youth movement in Veterinary Spending from the <45 crowd. That changed in 2020 as the 45> groups were up $2.87B which accounted for 94% of the segment’s increase. We should also note that the 65> group is now the only group with  a spending increase for 3 consecutive years.

Generations still seems to be the most popular demographic measurement and it was almost all good news as Gen Z was the only generation with a decline in Veterinary Spending in 2020. Baby Boomers bounced back to the top spot in Veterinary $ after 2 years of big decreases. Boomers fueled the growth of the Pet Industry and remain the overall biggest pet spenders. In Veterinary $, their spending in 2017 was greater than all of the younger generations combined. In 2020, the younger groups spent 50% more than the Boomers. Because of their sheer numbers, Boomers will remain a force in the industry for years to come. but the “torch” is slowly but surely being passed.

Retail Channel Monthly $ Update – September Final & October Advance

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In May 2020, the Retail market began its recovery after hitting bottom in April. The road back has been long and complex and Consumer spending behavior continues to evolve. We have not beaten the virus yet so we will continue to track the ongoing recovery of the retail marketplace with data from two reports provided by the U.S. Census Bureau.

The Reports are the Monthly Retail Sales Report and the Advance Retail Sales Report. Both are derived from sales data gathered from retailers across the U.S. and are published monthly at the same time. The Advance Report has a smaller sample size so it can be published quickly – about 2 weeks after month end. The Monthly Final Report includes data from all respondents, so it takes longer to compile the data – about 6 weeks. Although the sample size for the Advance report is smaller, the results over the years have proven it to be statistically accurate with the final monthly reports. The biggest difference is that the full sample in the Final report allows us to “drill” a little deeper into the retail channels.

We will begin with the Final Retail Report for September and then move to the Advance Report for October. Remember, the retail impact of the pandemic began in March 2020, peaked in April, then recovery started in May. We will compare 2021 to both 2020 and 2019 to document the progress that the retail market has made towards a full recovery.

Both reports include the following:

  • Total Retail, Restaurants, Auto, Gas Stations and Relevant Retail (removing Restaurants, Auto and Gas)
  • Individual Channel Data – This will be more detailed in the “Final” reports and we fill focus on Pet Relevant Channels

The information will be presented in detailed charts to facilitate visual comparison between groups/channels of:

  • Current Month change – % & $ vs previous month
  • Current Month change – % & $ vs same month in 2020 and 2019
  • Current YTD change – % & $ vs 2020 and 2019
  • Monthly and Year To Date $ will also be shown for each group/channel

First, the September Final. Retail hit bottom in April 2020 but began recovery, hitting record $ in December. $ fell in January & February but set a new $ record in March. In April $ fell but rebounded in May to another record high. Sales have slowly declined through September. Here are the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The final total is $1.7B more than the Advance report projected a month ago. All groups but Relevant Retail were up slightly. The specifics were: Relevant Retail: -$0.3B; Gas Stations: +$1.0B; Auto: +$0.8B: Restaurants: +$0.3B. Sales vs August were down in all groups. As you recall, Total Retail $ales broke $600B for the 1st time in December. Although September $ were slightly below December, they were still the 8th highest of all time. Auto continues to have the strongest recovery with an annual YTD growth rate since 2019 of +11.8%. A spending dip in September is the “norm” in U.S. Retail. It is more important that for the 4th consecutive month, all groups were positive in all other measurements.

Now, let’s see how some Key Pet Relevant channels were doing in September.

  • Overall – 10 of 11 channels were down vs August but all were up vs September 2020 and September 2019. In YTD $, all were up vs 2020 and 10 vs 2019. September was the 9th biggest month in history for Relevant Retail.
  • Building Material Stores – Their amazing lift may finally be slowing. The surge came as a result of pandemic spending patterns developed in 2020. Consumers began focusing on their homes. Their Spring lift has slowed in 2021 but Building and Farm stores are still going strong. Sporting Goods stores have a similar spending pattern. Sales took off in May 2020, hit a record peak in December and continued strong into 2021, peaking in March. $ have slowed with a big drop in September, but YTD they are +47.7% vs 2019, an Annual Growth Rate of 21.5%!
  • Food & Drug – Supermarkets were +$77.7B in 2020. $ are down vs Aug. but YTD are on par with the 2020 binge. They are up 19.5% vs Sept. 2019 and 14.9% vs YTD 2019. Drug Stores were +$17B (+5.7%) for 2020. They had a record March. Sales have been stable since then, but all other measurements are positive and YTD $ are +7.6%.
  • General Merchandise Stores – $ in all channels fell in Jan & Feb then spiked in March. Monthly sales by channel have been slightly up or down since then but GM has been strong, +15% YTD. $ Stores & Clubs/SuperCtrs are leading the way with a combined annual growth rate of +8.8%. These channels promote value. Their success reinforces its importance to consumers. Disc. Dept. Strs $ fell 11.5%, but that’s much better than -19% in 2019.
  • Office, Gift & Souvenir Stores– $ fell from August but were +22.3% vs September 2020. The pandemic hit them hard. They are still down YTD vs 2019. Recovery is still a long way off, but their situation is improving.
  • Internet/Mail Order – Even their $ were down vs August but the pandemic continues to foster this channel’s growth. In September of 2019, their YTD growth was +14.1%. Now, their avg growth rate is +19.6% – up 39.0%
  • A/O Miscellaneous – This is a group of small to midsized specialty retailers – chains and independents. It includes Florists, Art Stores and Pet Stores (22>24% of total $). Pet Stores were usually essential, but most stores were not. In May 2020 they began their recovery. Their 2020 total sales were up +11.6%. September was their 3rd biggest month, and they had the only increase from August. YTD $ are +27.4% vs 2020 and +40.5% vs 2019.

Relevant Retail began recovery in May and set a $ record in December. $ fell in Jan & Feb, turned up again in March and began a monthly up/down rollercoaster. September $ are down but all but 1 channel are ahead of all 2020 & 2019 $. The key drivers are the Internet, SuperCtrs/Clubs/$ Stores and Hdwe/Farm. Now, the Advance numbers for October.

2020 was a memorable year for both its traumas and triumphs. In April & May we experienced the 2 biggest retail spending drops in history, but the problems actually began in March. Retail sales began to recover in June and in October, YTD Total Retail turned positive for the 1st time since February. In December, Total Retail broke the $600B barrier – a historic first. Sales fell from their December peak in both January and February but still set monthly sales records. Then they took off again in March, setting a new monthly sales record of $633B. April sales were down slightly but they took off again in May to set yet another spending record, $643.1B. June>Sept $ fell but then came back in October with the 3rd biggest $ month in history. All major groups were up from September and were positive in all other measurements for the 5th straight month. Some other areas of the economy are still suffering, some spending behavior has changed, and inflation has become a bigger factor in increases. However, consumers continue to spend “big bucks”, especially in Relevant Retail, and the overall Retail marketplace continues its strong recovery.

Total Retail – In March, Total Retail was $633.1B, a new record. In April, $ales dipped to $625.5B but were still $218.3B more than April 2020 – a record increase, more than double the size of last year’s record drop. In May, sales set another new record, $643.1B. June>Sept sales dipped slightly but stayed above $600B. October brought a resurgence with monthly sales of $634.6B, the 3rd biggest month in history. Moreover, the current YTD average annual sales growth rate since 2019 is 9.3%, the highest ever in records going back to 1992. INFLATION NOTE: Retail $ were +14.7% vs October 2020. Inflation was +6.2% so up to 42% of the lift came just from higher prices. The “Real” increase was +8.5%. In October 2019 (pre-pandemic) Retail $ were +3.7% over 2018. Inflation was 1.8%, 48% of the lift. This produced a “Real” increase of +1.9%. Long term, strong inflation can slow spending but right now, Retail is outperforming pre-COVID 2019.

Restaurants – This group has no negative measurements vs 2020 or 2019 for 5 straight months. February 2020 YTD sales were up 8.1% vs 2019. The Pandemic changed that. Restaurants started to close or cease in person dining in March and sales fell -$33.3B (-52.5%) compared to March 2019. Sales bottomed out in April at $30.1B, the lowest April sales since 2003. Sales started to slowly increase in May but never reached a level higher than 88% compared to the previous year. 2021 started off slowly. Through February, YTD sales were down -16.7% from pre-pandemic 2020 and -10.0% from 2019. In March sales took off and grew steadily from April through July. Sales dipped slightly in August/September but came back strong in October. YTD their $ are +30.4% vs 2020 and +5.0% vs 2019. Their recovery is getting stronger.

Auto (Motor Vehicle & Parts Dealers) – Staying home causes your car to be less of a focus in your life. Sales began to fall in March and hit bottom in April. Auto Dealers began combating this “stay at home” attitude with fantastic deals and a lot of advertising. It worked. They finished 2020 up 1% vs 2019 and have returned to a strong positive pattern in 2021. The “attitude” grew amazingly positive in March and has slowed only slightly from April>October as sales exceeded $123B in all 8 months – the 8 biggest months in history. To show the effectiveness of their campaign, just look at the data. This group has exceeded $110B in monthly sales only 17 times in history. 14 of those occurred after the onset of the pandemic.  YTD Avg Annual Growth Since 2019 = +11.6% – the best performance of any big group.

Gas Stations – Gas Station $ales have been a mixed bag. If you drive less, you visit the gas station less often. Sales turned down in March 2020 and reached their low point in April. They moved up but generally stayed about 15% below 2019 levels for the rest of 2020. In February they were still behind 2020 in monthly and YTD $ but ahead of 2019 in both measurements. In March, sales skyrocketed and continued to grow to to a record $53.5B in July. They fell in Aug/Sept but turned up in October. They have been positive in all measurements vs 2019 & 2020 since March. Their comeback continues but inflation comes to the forefront in this channel. Gas prices can be pretty volatile. They dipped in the first 2 months of the pandemic but then returned to more normal levels for the balance of 2020. They began strongly inflating in 2021. In fact, October 2021 prices were 49.6% above 2020. That means that the 45.3% year over year $ lift in October was actually a decrease in the amount of gas sold. YTD Annual Growth Rate Since 2019 = +6.0%

Relevant Retail – Less Auto, Gas and Restaurants – This is what we consider the “core” of U.S. retail and has traditionally accounted for about 60% of Total Retail Spending. In looking at the individual channels in this group, we have seen a variety of results due to many factors, like non-essential closures, binge buying, online shopping and a consumer focus on “home”. However, overall, April 2020 was the only month in which spending in this group was down vs 2019. Monthly $ales exceeded $400B for the first time ever in December. They finished 2020 up $260B, +7.1%. Their performance was the only reason that Total Retail was able to finish 2020 with positive numbers, +0.5%. Sales fell in January and February 2021 but set monthly records. In March they turned sharply up and then began an up/down $ roller coaster ride. In October they reached the 2nd highest amount on record. We should also note that while December 2020 is still #1, March>October are 8 of the 10 highest $ months of all time. Relevant Retail has exceeded $361B in monthly sales 10 times in history. 9 of those have occurred since the onset of the pandemic. It is also very important that the Relevant Retail group has posted positive numbers versus last year and YTD for every month since April 2020 and their average YTD growth rate since 2019 is +10.4%. The recovery has become widespread as all channels have been positive in all measurements vs both 2020 and 2019 for 3 consecutive months. However, the primary drivers throughout the pandemic were and continue to be Nonstore, Grocery, SuperCenters/Clubs/$ Stores plus an exceptionally long 2020 “spring lift” from Hardware/Farm and Sporting Goods.

Now let’s look at what is happening in the individual retail channels to see where the $ are coming from. October $ were up 5.0% from September and an increase occurred in all but one channel. Remember, the groups in the chart are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets.

Sales in 12 of 13 channels were up vs September but all were up vs October 2020, vs October 2019 and YTD vs 2020 and 2019. (Relevant Retail YTD Avg Annual Growth Rate since 2019 = +10.4%)

After hitting bottom in April 2020, Relevant Retail has now beaten the previous year’s $ for 18 consecutive months. The group set an all-time record of $407B in December and finished 2020 +$260B vs 2019. 2021 started strong, with record sales in every month. March > Oct. were 8 of the 10 biggest of all time. Essential channels are still the primary drivers:

  • Nonstore Retailers – The biggest driver. Online shopping continues to grow in # of households and in $.
  • Food & Beverage – Grocery– Restaurant $ are improving but consumers continue to eat & drink more at home.
  • Bldg Materials/Garden/Farm– Their “Spring” lift may be ending but consumers are still focused on their homes.
  • SuperCtrs/Club/Value/$ Strs – They kept the GM channel strongly positive. Value is still a big consumer priority.

Regarding the Individual Large Channels (Includes YTD Avg Annual Growth Rate since 2019)

General Merchandise Stores – Sales increased for all channels in October and all other numbers were also positive. Even Department Stores $ are growing increasingly positive. After dipping to +7.5% in February, the growth rate by Club/SuperCtr/$ stores held at about 8.8% and then moved up in October. These stores are still the key to this channel.

  • YTD Avg Annual Growth: All GM = +7.9%; Dept Stores = +1.9%; Club/SuprCtr/$ = +9.1%

Food and Beverage, plus Health & Personal Care Stores – Sales in Grocery were down in March>May from 2020 – No surprise, as these were 2020 binge months. In June>Oct they beat 2020 $. The Health, Personal Care group finished 2020 at +1.8% but 2021 has been better. October was up 1.6% from September but YTD they are +10% vs both 2020 & 2019.

  • YTD Avg Annual Growth: Grocery = +7.3%; Health/Drug Stores = +5.2%

Clothing and Accessories; Electronic & Appliances; Home Furnishings – March > Oct have been spectacular for all these channels. The increase in Clothing vs October 2020 was less than usual but was still +22.7%. Only Furniture was down vs September, but all groups remained positive in all measurements vs 2020 or 2019 for the 8th consecutive month.

  • YTD Avg Annual Growth: Clothing = +5.4%; Electronic/Appliance = +3.7%; Furniture = +10.0%

Building Material, Farm & Garden & Hardware – Their “Spring” lift which began in 2020 has slowed but they have greatly benefited from consumers focusing on their home needs. They finished 2020 +53B (+13.8%). Sales took off in March, set a record in April, but has since slowed and stabilized. They are still +13.6% YTD. Avg Annual Growth = +13.5%

Sporting Goods, Hobby and Book Stores – Book & Hobby stores are open but Sporting Goods stores have driven the lift in this group. Consumers turned their attention to personal recreation and sales in Sporting Goods outlets took off. The group ended 2020 +5.5% vs 2019. The growth accelerated in 2021. Sales grew 1% vs September, but it was still good enough for the 10th consecutive monthly record. October YTD they are +31.0% vs 2020. Avg Annual Growth = +17.1%

All Miscellaneous Stores – Pet Stores were deemed essential but most other stores were not, so closures hit this group particularly hard. Sales hit bottom at -$3.8B in April then began to rebound. They finished with a strong December and ended 2020 -$1.0B, -0.7%. In March 2021 sales took off and reached the $14+B level in May and they have stayed there. Sales grew 8.0% to $15.7B in October, which set a new all time $ record and broke the $15B barrier. YTD sales are now +28.1% vs 2020 +27.1% vs 2019. Their recovery has become very real. YTD Avg Annual Growth = +12.7% (4th Best)

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV. The pandemic accelerated the movement to online retail. In February 2020 NonStore $ were +8.6% YTD. In December monthly sales exceeded $100B for the 1st time. They ended 2020 at +21.4%, +$162.9B. This was 63% of the total $ increase for Relevant Retail Channels. Their 2020 performance far exceeded their 12.9% increase in 2019 and every month in 2021 has produced record $. October was +6.1% vs September and +7.4% vs 2020. YTD $ are +14.2%. YTD Avg Annual Growth = +17.6%

Note: Almost without exception, online sales by brick ‘n mortar retailers are recorded with their regular store sales.

Recap – 2020 was quite a year. April & May had the 2 biggest year over year sales decreases in history while December sales broke $600B for the first time. 2021 may become even more memorable. March>October are 8 of the 9 biggest $ales months in history with the 8 largest year over year monthly sales increases ever. The total increase was +$945B, which is over 5 times the -$174B decrease from March>May 2020 which caused so much concern. At yearend 2020, Restaurants and Gas Stations were still struggling but Auto had largely recovered. Relevant retail had segments that also struggled but they still led the way for Total Spending to finish the year +0.5% vs 2019. 2021 has been even better. In June > October all major groups are positive vs both 2020 and 2019. The recovery has also become real for virtually all channels and monthly sales continue to set records. In fact, the current annual growth rates of +9.3% for Total retail and +10.4% for Relevant Retail are the best in history. Retail has recovered and continues to grow but we’ll keep checking.

2020 U.S. PET SERVICES SPENDING $6.89B…Down ↓$1.73B

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Except for a small decline in 2017, Non-Vet Pet Services has shown consistent growth in recent years. In 2018, that changed as spending grew a spectacular $1.95B to $8.72B. The number of outlets offering Pet Services has grown rapidly and consumers have opted for the convenience. However, prices were also strongly increasing. In the 2nd half of 2019 spending turned down and then plummeted in 2020 due to COVID. The final $ were $6.89B, down $1.73B (-20.1%). In this report we will drill down into the data to see what groups were most impacted. (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys)

Services’ Spending per CU in 2020 was $52.53, down from $65.22 in 2019. (Note: A 2020 Pet CU (67%) Spent $97.34)

More specifically, the 20.1% decrease in Total Pet Services spending came as a result of:

  • 0.8% less households
  • Spending 3.40% less $
  • 16.62% less often

The chart below gives a visual overview of recent spending on Pet Services

You can see that after the big lift in 2018, spending essentially flattened out in 2019, similar to the pattern in 2016-17. Increased availability and convenience of Services has radically driven up the spending on Services. This happened despite a return to a more normal inflation rate, +2.4%. However, inflation grew even stronger, +2.5%. By the 2nd half of 2019, it made an impact as spending declined for the 1st time in 18 months. The 2020 pandemic brought restrictions and closures which drove spending radically down. Now, let’s look at some specific demographics of 2020 Services spending.

First, by Income Group.

In 2018, all groups spent more. In 2019, only the middle income group, $70>150K, spent more. In 2020 they had the biggest decrease, and their spending is now below the level in 2015. The only increase came from the $30>70K group, which is the only group earning under $150K which spent more than they did in 2015. The 50/50 dividing line in $ for Services was $123K. That is down from $125K in 2019 but still by far the highest of any segment.

  • <30K (25.4% of CU’s) – $19.66 per CU (-0.1%) – $0.66B, Down $0.05B (-6.7%) – This segment is getting smaller and money is tight, so Services spending is less of an option. Their Services $ fell even farther below 2015.
  • $30>70K (31.1% of CU’s) – $35.95 per CU (+3.0%) – $1.47B, Up $0.01B (+0.9%) – In 2019 they had the biggest decrease. In 2020, they had the only increase and finished second in $ to the $150K> group.
  • $70>100K (15.0% of CU’s) – $41.87 per CU (-35.6%) – $0.82B, Down $0.42B (-33.7%) – The spending of this middle income group had slowly but consistently grown since 2016. Then came the pandemic and the $ plummeted in 2020, falling even below the previous low point in 2016.
  • $100>150K (14.4% of CU’s) – $62.88per CU (-42.0%) – $1.19B, Down $0.79B (-40.0%) – They had shown the strongest, most consistent growth since 2016. Then came 2020, when they had the biggest decrease, down 40.%.
  • $150K> (14.1% of CU’s) – $149.07 per CU (-19.6%) – $2.76B, Down $0.49B (-15.0%) – They have moved steadily down since peaking in 2018. The pandemic drop in 2020 was -$0.49B, but they are still slightly above 2015 $.

Now, let’s look at spending by Age Group.

All age groups spent more on Services in 2018. In 2019, the groups under 45 spent less on Services while those 45 or older spent more. In the 2020 pandemic, everyone spent less but all stayed above 2015 $. Here are the specifics:

  • 75> (11.2% of CU’s) – $23.09 per CU (-55.0%) – $0.34B – Down $0.42B (-55.1%) This group has the greatest need for pet services, but money is always an issue. In 2019 they had the biggest increase. In 2020 they basically gave it all back, with the biggest drops in spending and frequency. 0.2% fewer CU’s spent 28.5% less $, 37.1% less often.
  • 65>74 (15.6% of CU’s) – $47.60 per CU (-25.0%) – $0.97B – Down $0.28B (-22.2%). This group is also very value conscious and growing in numbers. From 2016 to 2019 their spending was very stable. In 2020 it plunged by over 20% primarily due to a big decrease in frequency. 3.7% more CU’s spent 5.7% less $, 18.9% less often.
  • 55>64 (19.1% of CU’s) $53.15 per CU (-23.4%) – $1.33B – Down $0.37B (-21.7%) After a big drop in 2017, they began to slowly increase Services spending. In 2019, they moved up to the #2 spot in Services spending. A big drop in frequency drove spending down in 2020 but they are still #2. 2.2% more CU’s spent 1.9% less $, 21.9% less often.
  • 45>54 (17.2% of CU’s)- $75.38 per CU (-16.5%) – $1.70B – Down $0.31B (-15.2%) This highest income group was the leader in Services $ until 2016. They regained the top spot in 2019 and held on in 2020 despite a 20% drop in frequency which drove spending down -$0.31B. 1.5% more CU’s spent 5.2% more $, 20.6% less often.
  • 35>44 (17.0% of CU’s) – $56.91 per CU (-18.8%) – $1.27B – Down $0.30B (-18.9%) Spending exploded in 2018 with a $1B increase pushing them to #1. In 2019 they spent $1.6B more on Veterinary and Food and cut back on Services and Supplies. In 2020 both their spending and frequency fell. 0.1% fewer CU’s spent 8.9% less $, 10.9% less often.
  • 25>34 (16.0% of CU’s) – $52.85 per CU (-1.9%) – $1.11B – Down $0.03B (-3.0%) This group of Millennials “found” the Services segment in 2018 with a 36% increase in $. Their spending has slowly fallen since then. In 2020, their 3% decrease was primarily driven by a -9.7% drop in frequency. 1.2% less CU’s spent 8.6% more $, 9.7% less often.
  • <25 (3.8% of CU’s) – $32.44 per CU (+24.6%) – $0.16B – Down $0.03B (-14.3%) After 2018 this group returned to being a very minor player. 31% fewer CUs is significant. 31.2% fewer CU’s spent 19.7% less $, 55.1% more often.

In 2019, when overall Services spending fell $0.1B, the over 45 age group spent $0.51B more. The situation was reversed in 2020 as they spent -$1.38B less, 79.8% of the total $1.73B drop in Services spending.

Finally, here are some key demographic “movers” that drove the big drop in Pet Services Spending in 2020. The segments that are outlined in black “flipped” from 1st to last or vice versa from 2018. The red outline stayed the same.

In 2018 the Services spending increase was very widespread with (88%) of all segments spending more. 6 of 12 demographic categories had no segments that spent less on Services in 2018. 2019 was very different and reflected the slight decrease in spending for the segment. All categories had segments that spent less on Services and 49 total segments (51%) had decreased Services $ from 2018. In 2020, the situation got markedly worse as 76 segments (79%) spent less and in 3 categories, no segments spent more.

You see from the graph that the biggest negatives were all substantially larger than the small increases. This speaks to the severity and widespread nature of the loss in $ in the segment. There was also considerable turmoil in Services spending. 3 groups maintained their position but 7 flipped from 1st to last or vice versa.

There was only 1 “usual” winner – Self-Employed, which have the highest income in their category. There were some winners that were definitely a surprise – Renters, Rural, $50>69K Income, Gen Z, High School Grads, Hispanic and Under 25 years old. That means that more than half of the winners were not expected.

In terms of “usual” losers, there really were none in 2020. The losing segments are where we find these usual winners:

  • 2 People
  • Married Couple Only
  • Homeowner w/Mtge
  • Managers & Professionals
  • Suburban
  • $100>149K
  • College Degree
  • 2 Earners
  • White, Not Hispanic

This actually makes some sense. The drop in spending was largely due to restrictions and closures caused by the COVID Pandemic. This would most impact the groups that usually spent the most and would produce the biggest decreases.

In our earlier analysis, we didn’t see any truly distinct spending patterns. The only lift in any age or income group, and it was miniscule, was from the $30>69K income group. However, it is significant that they are the only income group under $150K that didn’t spent less in 2020 than they did in 2015. The 50/50 spending point moved down slightly from $125 to $123 but that is somewhat deceptive. The highest income group, $150K> actually gained ground. This group has 14.1% of CUs but did 40.1% of the Services spending in 2020. That’s up from 37.7% in 2019.

After the huge lift in spending in 2018, Services spending plateaued in 2019. There were a lot of ups and downs, but overall the segment remained essentially stable at its new elevated level of spending. That changed with the pandemic in 2020. Like many retail services segments, Pet Services outlets were deemed nonessential and subject to restrictions This resulted in a radically reduced frequency of visits and was the biggest reason behind the 20% drop in spending.

There is no doubt that the Covid pandemic with widespread closures and “staying at home” had a big impact on this most discretionary Pet Industry segment. However, in recent years, with the increasing humanization of our pets, Pet Services have become more important to Pet Parents and the Pet Industry. For Pet retail outlets, offering Services provides a key point of differentiation and a reason to shop in their store. You can’t get your dog groomed on the internet or even in a Mass Market retailer. We expect this segment to come back strong in 2022.

 

2020 U.S. PET SUPPLIES SPENDING $15.16B…DOWN ↓$1.65B

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Total Pet spending grew to $83.74B in 2020, up $5.31B (+6.8%) from 2019, a big turnaround. Unfortunately, the Supplies segment was on the other side as spending dropped to $15.16B, down $1.65B (-9.8%). (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys)

After flattening in the 2nd half of 2018, spending turned sharply down in the 1st half of 2019 and continued to decline through 2020 as the pandemic also contributed to the drop. 2019 & 2020 wiped out 93% of a 24 month $5B gain. We’ll “drill down” into the data to try to determine what and who are “behind” the 2020 drop in Supplies Spending.

In 2020, the average household spent $115.52 on Supplies, down 9.1% from $127.15 in 2019. (Note: A 2020 Pet CU (67%) Spent $172.42) This doesn’t exactly match the -9.8% total $ decrease. Here are the specific details:

  • 0.8% less CU’s
  • Spent 3.6% less $
  • 5.8% less often

Let’s start with a visual overview. The chart below shows recent Supplies spending history.

Since the great recession, spending trends in the Supplies segment have been all about price – the CPI. Although many supplies are needed by Pet Parents, when they are bought and how much you spend is often discretionary. Additionally, many of the product categories in this segment are now considered commodities, so price is the main driver behind consumer purchasing behavior. When prices fall, consumers are more likely to buy more. When they go up, consumers spend less and/or buy less frequently.

2014 was the third consecutive year of deflation in Supplies as prices reached a level not seen since 2007. Consumers responded with a spending increase of over $2B. Prices stabilized and then moved up in 2015.

In 2015 we saw how the discretionary aspect of the Supplies segment can impact spending in another way. Consumers spent $5.4B for a food upgrade and cut back on Supplies – swapping $. This, in conjunction with inflation, caused supplies to suffer as consumers spent 4.1% less, but they bought 10% less often. That drop in purchase frequency drove $1.6B (78%) of the $2.1B decrease in Supplies spending.

In 2016, supplies’ prices flattened out and consumers value shopped for their upgraded food. Supplies spending stabilized and began to increase in the second half. In 2017 supplies prices deflated, reaching a new post-recession low. The consumers responded with a huge $2.74B increase in Supplies spending that was widespread across demographic segments. An important factor in the lift was an increase in purchase frequency which was within 5% of the 2014 rate.

In 2018 prices started to move up in April and rapidly increased later in the year due to the impact of new tariffs. By December, Supplies prices were 3.3% higher than a year ago. This explains the initial growth and pull back in spending.

In 2019 we saw the full impact of the tariffs. Prices continued to increase. By yearend they were up 5.7% from the Spring of 2018 and spending plummeted -$2.98B. The major factor in the drop was a 13.1% decrease in purchasing frequency.

2020 brought the pandemic, with retail restrictions and the consumers focus on needed items. Both the amount spent and frequency of purchase of Supplies fell slightly. This could be the result of a strong consumer move to the internet.

That gives us an overview of the years leading up to 2020. Now let’s look at some specifics regarding the “who” behind the 2020 numbers. First, we’ll look at spending by income level, the most influential demographic in Pet Spending.

National: $115.52 per CU (-9.1%) – $15.16B – Down $1.65B (-9.8%).

All big income groups spent less but the 50/50 $ divide remained the same as 2019, $92K, the lowest of all segments.

  • <$30K (25.4% of CU’s)- $57.73 per CU (+2.1%) $1.93B– Down $0.09B (-4.6%). This group is very price sensitive, but they actually spent more per CU. 6.5% fewer CUs caused the decrease and put them even further below 2015 $.
  • $30K>70K (31.1% of CU’s)- $97.38 per CU (-5.1%) $3.97B Down $0.30 (-7.0%). This big, lower income group closely matches both the national pattern and that of the $150K+ group. The tariff prices had a big impact and COVID a lesser one. Amazingly enough, until 2019 they were the leader in Total Supplies Spending $.
  • $70>$100K (15.0% of CU’s) – $117.65 per CU (-21.3%) – $2.32B Down $0.54B (-19.0%). This middle-income group had been consistent in Supplies spending. 2020 hit them hard in all segments, including a 19% drop in Supplies $.
  • $100K>$150K (14.4% of CU’s) – $146.42 per CU (-14.4%) – $2.76B Down $0.36B (-11.4%). This higher income group is also sensitive due to family needs. They had the 2nd biggest % drop and traded Supplies $ for Food & Veterinary.
  • $150K> (14.1% of CU’s) – $225.91 per CU (-13.0%) $4.18B Down $0.36B (-8.0%). The $150>199K was up $0.01B but the $200K+ group spent $0.38B less. Money matters in Supplies, but the pandemic impact was widespread.

Every group spent less but the biggest negative impact occurred in the middle range – $70K >$150K. This group has the biggest family and career pressures, so it is not surprising that their discretionary spending on Supplies was less.

Now, we’ll look at spending by Age Group.

National: $115.52 per CU (-9.1%) – $15.16B – Down $1.65B (-9.8%).

It’s split, but simple. Young Millennials and old Boomers spent more. Everyone else spent less. Here are the details.

  • 55>64 (19.1% of CU’s) $108.93 /CU (-33.0%) – $2.73B – Down $1.26B (-31.5%). Low Supplies prices in 2017 got them on the Supplies Band Wagon. When prices turned sharply up in the 2nd half of 2018 and 2019, spending stalled then dropped. Spending fell again in 2020 as 2.2% more CU’s spent 26.2% less on Supplies, 9.2% less often. Part of the cut back on Supplies was to help pay for a huge spending increase in Food as they traded $.
  • 45>54 (17.2% of CU’s) $146.36 per CU (-13.2%) – $3.31B – Down $0.45B (-11.9%). Until 2019, this highest income age group had been the leader in Supplies spending since 2007. More CU’s (+1.5%) spent 6.8% less on supplies, 6.9% less often. They had a 12% drop but returned to the top $ spot, now battling the 35>44 group.
  • 35>44 (17.0% of CU’s) $141.94 per CU (-2.1%) – $3.17B; Down $0.07B (-2.2%). This group is second in income and overall expenditures but also has the biggest families. After 3 strong years, the strong inflation drove the $ down in 2019. However, the Pandemic had little impact. 0.1% less CUs spent 5.5% more $, 7.2% less often.
  • 25<34 (16.0% of CU’s) $133.17 per CU (+29.8%) – $2.80B; Up $0.62B (+28.3%). After trading Supplies $ for upgraded Food and Vet Care in 2016, these Millennials turned their attention back to Supplies. The rising prices hit them hard in 2019 but they reversed this in 2020 as 1.2% fewer CUs spent 30.4% more $, 0.5% less often.
  • 65>74 (15.6% of CU’s) $96.07 per CU (+2.1%) – $1.96B – Up $0.11B (+5.8%). This older group is very price sensitive. When prices turned up in 2018, they immediately cut back on spending which continued into 2019. They came back in 2020 but not as strong as the 25>34 group. 3.7% more CUs spent 4.9% more, 2.7% less often
  • 75> (11.2% of CU’s) $43.04 per CU (-31.4%) – $0.63B, Down $0.29B (-31.5%). This lowest income group is truly price sensitive. They began to cut back on spending in the 2nd half of 2018 and this behavior continued in 2019. Their spending was severely impacted by the Pandemic as 0.2% less CU’s spent 19.4% less, 14.9% less often.
  • <25 (3.8% of CUs) $110.71/CU (-6.4%) $0.56B – Down $0.31B (-35.6%). 31.2% fewer CUs spent 8.8% less $, 2.6% more often. This group was fundamentally impacted by COVID as they lost 2.2M CUs, down 31.2%.

The impact of COVID was widespread but mixed. Only 2 disparate groups – 25>34 and 65>74 spent more.

Next, let’s take a look at some other key demographic “movers” in 2020 Pet Supplies Spending. The segments that are outlined in black “flipped” from 1st to last or vice versa from 2019. The red outline stayed the same.

In 2019, in 9 of the 12 demographic categories all segments spent less on Supplies. In 2020 it was only 1. Also in 2019, 97% of 96 demographic segments spent less. In 2020 it was 81%. 2020 was bad but still an improvement over 2019.

Only 2 segments flipped from last to 1st as Managers/Professionals and Homeowners w/Mtge returned to their usual position at or near the top. 5 Segments held their position – 1 on top, 4 on the bottom. All of these are surprises as they are often in the opposite spot.

On the “winning” side there are a couple “usual suspects” – Mgrs/Prof & Adv. College Degree. The others are all somewhat surprising although Supplies has trended younger in recent years which would include Millennials & 25>34 yr olds. On the losing side, we already mentioned 4 surprises but there are a couple more – Suburban & 2 Earners.

Supplies is a discretionary segment, so it is more susceptible to market factors than the more needed segments. In fact, Supplies spending has decreased in 16 years since 1984. Since 2010, it has become very commoditized and price sensitive. 2 years of deflation drove spending up $5B. Then inflation hit and things turned around, -$2.98B. The 2020 Pandemic caused Pet Parents to focus on Pet Needs. This means that the more discretionary categories, Supplies & Services, lost ground. The overall decrease in Supplies was relatively small, under 10%, compared to the changes in other segments but it still shows the vulnerability of this more discretionary segment.

Retail Channel Monthly $ Update – August Final & September Advance

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In May 2020, the Retail market began its recovery after hitting bottom in April. The road back has been long and complex and Consumer spending behavior continues to evolve. We have not beaten the virus yet so we will continue to track the ongoing recovery of the retail marketplace with data from two reports provided by the U.S. Census Bureau.

The Reports are the Monthly Retail Sales Report and the Advance Retail Sales Report. Both are derived from sales data gathered from retailers across the U.S. and are published monthly at the same time. The Advance Report has a smaller sample size so it can be published quickly – about 2 weeks after month end. The Monthly Final Report includes data from all respondents, so it takes longer to compile the data – about 6 weeks. Although the sample size for the Advance report is smaller, the results over the years have proven it to be statistically accurate with the final monthly reports. The biggest difference is that the full sample in the Final report allows us to “drill” a little deeper into the retail channels.

We will begin with the Final Retail Report for August and then move to the Advance Report for September. Remember, the retail impact of the pandemic began in March 2020, peaked in April, then recovery started in May. We will compare 2021 to both 2020 and 2019 to document the progress that the retail market has made towards a full recovery.

Both reports include the following:

  • Total Retail, Restaurants, Auto, Gas Stations and Relevant Retail (removing Restaurants, Auto and Gas)
  • Individual Channel Data – This will be more detailed in the “Final” reports and we fill focus on Pet Relevant Channels

The information will be presented in detailed charts to facilitate visual comparison between groups/channels of:

  • Current Month change – % & $ vs previous month
  • Current Month change – % & $ vs same month in 2020 and 2019
  • Current YTD change – % & $ vs 2020 and 2019
  • Monthly and Year To Date $ will also be shown for each group/channel

First, the August Final. Retail hit bottom in April 2020 but began recovery, hitting record $ in December. $ fell in January & February but set a new all time $ record in March. In April $ fell but they rebounded in May to another record high. Sales have slowly declined through August. Here are the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The final total is $2.0B more than the Advance report projected a month ago. All groups were up slightly. The specifics were: Relevant Retail: +$0.7B; Gas Stations: +$0.6B; Auto: +$0.4B: Restaurants: +$0.3B. Sales vs July were down in all but Relevant Retail. Total Retail $ were the 8th highest month of all time. Total $ales broke $600B for the 1st time in December and has now done it 8 times. Auto still has the strongest recovery and is in fact prospering – annual YTD growth rate since 2019 is +11.9%. There were spending dips vs the previous month but for the third consecutive month, all groups were positive in all other measurements.

Now, let’s see how some Key Pet Relevant channels were doing in August.

  • Overall– 5 of 11 channels were down vs July but all were up vs August 2020 and 10 vs August 2019. In YTD $, all were up vs 2020 and 10 vs 2019. August was the 4th biggest month in history for Relevant Retail.
  • Building Material Stores – Their amazing lift may finally be slowing. The surge came as a result of pandemic spending patterns developed in 2020. Consumers began focusing on their homes. Their Spring lift has slowed in 2021 but Building and Farm stores are still going strong. Sporting Goods stores have a similar spending pattern. Sales took off in May 2020, hit a record peak in December and continued strong into 2021, peaking in March. After slowing in July, the $ increased in August. YTD they are +47.4% vs 2019, an Annual Growth Rate of 21.4%!
  • Food & Drug – Supermarkets were +$77.7B in 2020. $ are down vs July but YTD are on par with the 2020 binge. They are up 14% vs August 2019 and 14.3% vs YTD 2019. Drug Stores were +$17B (+5.7%) for 2020. They had a record March. Sales have been stable since then, but all other measurements are positive and YTD $ are +7.6%.
  • General Merchandise Stores – $ in all channels fell in Jan & Feb then spiked in March. Monthly sales by channel have been slightly up or down since then but GM has been strong, +14% YTD. $ Stores & Clubs/SuperCtrs are leading the way with a combined growth rate of +8.5%. These channels promote value. Their success reinforces its importance to consumers. Also, Discount Dept Stores are again back in the game.
  • Office, Gift & Souvenir Stores– $ increased slightly from July and were +20.5% vs August 2020. The pandemic hit them hard. They are still down vs 2019 – monthly and YTD. Recovery is a long way off, but things are improving.
  • Internet/Mail Order – Their $ were up vs July as the pandemic continues to foster this channel’s growth. In August of 2019, their YTD growth was +13.9%. Now, their avg growth rate is +19.6% – a 41.0% increase.
  • A/O Miscellaneous – This is a group of small to midsized specialty retailers – chains and independents. It includes Florists, Art Stores and Pet Stores (22>24% of total $). Pet Stores were usually essential, but most stores were not. In May 2020 they began their recovery. Their 2020 total sales were up +11.6%. Their August $ were down slightly from July but still #4 of all time. YTD sales are +27.5% vs 2020 and +39.3% vs 2019. Very strong!

Relevant Retail began recovery in May and reached a record level in December. $ fell in Jan & Feb, turned up again in March and began a monthly up/down rollercoaster. August $ are up and all channels but 1 are ahead of 2019 & 2020. The key drivers are the Internet, SuperCtrs/Clubs/$ Stores and Hdwe/Farm. Now, the Advance numbers for September.

2020 was a memorable year for both its traumas and triumphs. In April & May we experienced the 2 biggest retail spending drops in history, but the problems actually began in March. Retail sales began to recover in June and in October, YTD Total Retail turned positive for the 1st time since February. In December, Total Retail broke the $600B barrier – a historic first. Sales fell from their December peak in both January and February but still set monthly sales records. Then they took off again in March, setting a new monthly sales record of $633B. April sales were down slightly but they took off again in May to set yet another spending record, $643.1B. June>Sept $ fell but September was still the 8th biggest $ month in history. All major groups were down from August, but were positive in all other measurements for the fourth straight month. Some other areas of the economy are still suffering, some spending behavior has changed, and inflation has become a bigger factor in some increases. However, consumers continue to spend “big bucks”, especially in Relevant Retail, and the overall Retail marketplace continues its strong recovery.

Total Retail – In March, Total Retail hit $633.1B, a record for the most spending in any month in any year. In April, $ales dipped to $625.5B but were still $218.3B more than April 2020 – a record increase that was more than double the size of last year’s record drop. In May, sales set another new record, $643.1B. June>Sept sales dipped slightly and September was the 3rd smallest month this year, which is normal. However, at $606.8B, it was still the 8th biggest month in history. Moreover, the current YTD average annual sales growth rate since 2019 is 9.2%, the highest ever in records going back to 1992. Total Retail has not just recovered. It is stronger than ever.

Restaurants – This group has no negative measurements vs 2020 or 2019 for 4 straight months. Last February YTD sales were up 8.1% vs 2019. The Pandemic changed that. Restaurants started to close or cease in person dining in March and sales fell -$33.3B (-52.5%) compared to March 2019. Sales bottomed out in April at $30.1B, the lowest April sales since 2003. Sales started to slowly increase in May but never reached a level higher than 88% compared to the previous year. 2021 started off slowly. Through February, YTD sales were down -16.7% from pre-pandemic 2020 and -10.0% from 2019. In March sales took off and grew steadily from April Through July. Sales dipped slightly in August/September but were still strong vs 2019 & 2020. YTD their $ are plus 30.5% vs 2020 and +4.1% vs 2019. Their recovery is getting stronger.

Auto (Motor Vehicle & Parts Dealers) – Staying home causes your car to be less of a focus in your life. Sales began to fall in March and hit bottom in April. Auto Dealers began combating this “stay at home” attitude with fantastic deals and a lot of advertising. It worked. They finished 2020 up 1% vs 2019 and have returned to a strong positive pattern in 2021. The “attitude” grew amazingly positive in March and slowed only slightly in April>September as sales exceeded $122B in all 7 months – the 7 biggest months in history. To show how well consumers responded to their campaign you just need to look at the data. This group has exceeded $110B in monthly sales only 16 times in history. 13 of those occurred after the onset of the pandemic.  YTD Avg Annual Growth Since 2019 = +11.8% – the best performance of any big group.

Gas Stations – Gas Station $ales have been a mixed bag. If you drive less, you visit the gas station less often. Sales turned down in March 2020 and reached their low point in April. They moved up but generally stayed about 15% below 2019 levels for the rest of 2020. In February they were still behind 2020 in monthly and YTD $ but ahead of 2019 in both measurements. In March, sales skyrocketed and continued to grow to to a record $53.5B in July. They fell in Aug/Sept but are still +38% from 2020. They have been positive in all measurements vs 2019 & 2020 since March. Their comeback continues but there is another factor that must be considered – inflation. Gas prices can be pretty volatile. They dipped in the first 2 months of the pandemic but then returned to more normal levels for the balance of 2020. They began strongly inflating in 2021. In fact, September 2021 prices were 42.1% above 2020. That means that the 38.3% year over year $ lift in September was actually a decrease in the amount of gas sold. YTD Annual Growth Rate Since 2019 = +5.2%

Relevant Retail – Less Auto, Gas and Restaurants – This is what we consider the “core” of U.S. retail and has traditionally accounted for about 60% of Total Retail Spending. When you look at the individual channels in this group, you see a variety of results due to many factors – non-essential closures, binge buying, online shopping and a consumer focus on “home”. However, overall, April 2020 was the only month in which spending in this group was down vs 2019. Monthly $ales exceeded $400B for the first time ever in December ($407B). They finished 2020 up $260B, +7.1%. Their performance was the only reason that Total Retail was able to finish 2020 with positive numbers, +0.5%. Sales fell in January and February but set monthly records. In March they turned sharply up and then down in April. They bounced back in May then fell in June & July. In August sales rose again but fell in September. However, we should note that while December 2020 is still #1, March > September are 7 of the 9 highest $ months of all time. The Relevant Retail Market has exceeded $361B in monthly sales 9 tImes in history. 7 of those have occurred since the onset of the pandemic. It is also very important that the Relevant Retail group has posted positive numbers versus last year and YTD for every month since April 2020 and their average YTD growth rate since 2019 now stands at +10.4%. The recovery has become widespread as all channels have been positive in all measurements vs both 2020 and 2019 for 2 consecutive months. However, the primary drivers throughout the pandemic were and continue to be Nonstore, Grocery, SuperCenters/Clubs/$ Stores plus an exceptionally long 2020 “spring lift” from Hardware/Farm and Sporting Goods.

Now let’s look at what is happening in the individual retail channels to see where the $ are coming from. September $ were down 3.6% from August and the drop was widespread. However, a dip in September $ is normal and at -3.6% it was less than half of the -8% drop in 2019. The groups in the chart are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets.

Sales in 12 of 13 channels were down vs August but all were up vs September 2020, vs September 2019 and YTD vs 2020 and 2019. (Relevant Retail YTD Avg Annual Growth Rate since 2019 = +10.4%)

After hitting bottom in April 2020, Relevant Retail has now beaten the previous year’s $ for 17 consecutive months. The group set an all-time record of $407B in December and finished 2020 +$260B vs 2019. 2021 started strong, with record sales in every month. March > Sept. were 7 of the 9 biggest of all time. Essential channels are still the primary drivers:

  • Nonstore Retailers – The biggest driver. Online shopping continues to grow in # of households and in $.
  • Food & Beverage – Grocery– Restaurant $ are improving but consumers continue to eat & drink more at home.
  • Bldg Materials/Garden/Farm– Their “Spring” lift may be ending but consumers are still focused on their homes.
  • SuperCtrs/Club/Value/$ Strs – They kept the GM channel strongly positive. Value is still a big consumer priority.

Regarding the Individual Large Channels (Includes YTD Avg Annual Growth Rate since 2019)

General Merchandise Stores – Sales fell for all channels in September, but all other numbers were positive. Even Department Stores $ are growing increasingly positive. After dipping to +7.5% in February, the growth rate by Club/SuperCtr/$ stores has remained near the current 8.8%. These stores are still the key to this channel.

  • YTD Avg Annual Growth: All GM = +7.4%; Dept Stores = +1.2%; Club/SuprCtr/$ = +8.8%

Food and Beverage, plus Health & Personal Care Stores – Sales in Grocery were down in March>May from 2020 – No surprise, as these were 2020 binge months. In June>Sept they beat 2020 $. The Health, Personal Care group finished 2020 at +1.8% but 2021 has been better. September was down from August but YTD they are +10% vs 2020 and 2019.

  • YTD Avg Annual Growth: Grocery = +7.2%; Health/Drug Stores = +5.2%

Clothing and Accessories; Electronic & Appliances; Home Furnishings – March > Sept have been spectacular for all these channels. The increase in Clothing vs September 2020 was less than usual but was still +22.5%. Only Furniture was up vs August, but all remained positive in all measurements vs 2020 or 2019 for the 7th consecutive month.

  • YTD Avg Annual Growth: Clothing = +5.1%; Electronic/Appliance = +3.4%; Furniture = +10.3%

Building Material, Farm & Garden & Hardware – Their “Spring” lift which began in 2020 may be slowing. They have greatly benefited from consumers focusing on their home needs. They finished 2020 +53B (+13.8%). Sales took off in March, set a record in April then trended down May > Sept. They are still +14.4% YTD. Avg Annual Growth = +13.8%

Sporting Goods, Hobby and Book Stores – Book & Hobby stores are open but Sporting Goods stores have driven the lift in this group. Consumers turned their attention to personal recreation and sales in Sporting Goods outlets took off. The group ended 2020 +5.5% vs 2019. The growth accelerated in 2021. Even though $ fell 10% in September, it was still good enough for the 9th consecutive monthly record. September YTD they are +32.9% vs 2020. Avg Annual Growth = +17.1%

All Miscellaneous Stores – Pet Stores were deemed essential but most other stores were not, so closures hit this group particularly hard. Sales hit bottom at -$3.8B in April then began to rebound. They finished with a strong December and ended 2020 -$1.0B, -0.7%. In March 2021 sales took off and reached the $14+B level in May and they have stayed there. Sales fell -2.9% in September, but their YTD sales are now 27.8% above 2020 and 26.0% more than 2019. Their recovery has become very real. YTD Avg Annual Growth = +12.3% (4th Best)

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV. The pandemic accelerated the movement to online retail. In February 2020 NonStore $ were +8.6% YTD. In December monthly sales exceeded $100B for the 1st time. They ended 2020 at +21.4%, +$162.9B. This was 63% of the total $ increase for Relevant Retail Channels. Their 2020 performance far exceeded their 12.9% increase in 2019 and every month in 2021 has produced record $. September was -2.5% vs August but +10.6% vs 2020. YTD $ are +15.2%. YTD Avg Annual Growth = +17.9%

Note: Almost without exception, online sales by brick ‘n mortar retailers are recorded with their regular store sales.

Recap – 2020 was quite a year. April & May had the 2 biggest year over year sales decreases in history while December sales broke $600B for the first time. 2021 may become even more memorable. March>September are 7 of the 8 biggest $ales months in history with the 7 largest year over year monthly sales increases ever. The total increase was +$861B, which is 5 times the -$174B decrease from March>May 2020 which caused so much concern. At yearend 2020, Restaurants and Gas Stations were still struggling but Auto had largely recovered. Relevant retail had segments that also struggled but they still led the way for Total Spending to finish the year +0.5% vs 2019. 2021 has been even better. In June > September all major groups are positive vs both 2020 and 2019. The recovery has also become real for virtually all channels and monthly sales continue to set records. In fact, the current annual growth rates of +9.2% for Total retail and +10.4% for Relevant Retail are the highest in history. Retail has recovered but we’ll keep checking.

2020 U.S. PET FOOD SPENDING $36.84B…Up ↑$5.65B

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The Pandemic of 2020 caused much turmoil in the retail marketplace. The Pet Industry grew but the results by segment were mixed. Total spending reached $83.74B, up $5.31B (+6.8%). Food saw panic binge buying in the 1st half. It slowed slightly in the 2nd half, but spending was still strong. The other necessary segment, Veterinary, also had double digit growth. The 2 discretionary segments, Supplies and especially Services were hit hard. Here are the specifics:

  • Pet Food – $36.84B; Up $5.65B (+18.1%)
  • Pets & Supplies – $15.16B; Down $1.65B (-9.8%)
  • Veterinary – $24.85B; Up $3.05B (+14.0%)
  • Pet Services – $6.89B; Down $1.73B (-20.1%)

The industry truly is a “sum” of its integral segments, and each segment has very specific and often very different buying behavior from the many consumer demographic segments. For this reason, we’re going to analyze each of the industry segments first. This will put the final analysis of Total Pet Spending into better perspective. Note: The numbers in this report come from or are calculated by using data from the current and past US BLS Consumer Expenditure Surveys. In 2020, this was gathered by the U.S. Census Bureau from over 42,000 interviews and spending diaries. The final data was then compiled and published by the US BLS.

We will start with the largest Segment, Pet Food (and Treats). In 2020 Pet Food Spending totaled $36.84B in the U.S., a $5.65B (+18.1%) increase from 2019. This was the largest increase in history. It’s interesting that 4 of the 5 greatest $ increases and the 2 biggest $ decreases have all occurred in the last 6 years. The current trend in high priced, super premium foods magnifies the results of any changes in consumer purchasing behavior. In earlier research we discovered a distinct, long term pattern in Pet Food Spending. In 2018 we broke the pattern due to outside influences – 1st the FDA warning, then with COVID in 2020. Here is Pet Food Spending since 1997 in full Retail Dollars and adjusted for inflation.

The pattern began in 1997. Retail Pet Food Spending increases for 2 consecutive years then reaches a plateau year or even drops. There was a notable exception in the period from 2006 to 2010. During this time, there were two traumas which directly impacted the Pet Food Retail market. The first was the Melamine recall, which resulted in radically increased prices as consumers insisted on made in USA products with all USA ingredients. The second affected everyone – the great Recession in 2009. This was the first time that annual U.S. retail spending had declined since 1956. The net result was that the plateau period was extended to include both 2009 and 2010.

For 20 years, Pet Food was driven by short term trends. A new food trend catches the consumers’ attention and grows…for 2 years. Then sales plateau or even drop…and we’re on to the next “must have”. After 2014, the changes  became more pronounced and the situation got even more complicated. These complications are due to a number of factors starting with the move to high priced super premium foods, but including increased competition, especially from the internet, and behavioral changes, like increased value shopping. Let’s take a closer look at spending since 2014.

First, some specifics behind the record $5.65B (18.1%) increase to $36.84B. In 2020, the average U.S. Household spent a total of $280.38 on Pet Food. This was an 18.7% increase from the $236.26 spent in 2019. This doesn’t exactly “add up” to the 18.1% increase in total Food Spending. With additional data provided from the US BLS, here is what happened.

  • 0.5% less U.S. CUs
  • Spent 40.8% more $
  • 15.7% less often

By the way, if 67% of U.S. CUs are pet parents then their annual Pet Food Spending is $418.48. Here’s a rolling history.

2014 marks the beginning of the Super Premium era. It began in the 2nd half of 2014 with the 25>34-year-old Millennials making the 1st move. In 2015 the Baby Boomers got on board in a big way, producing a $5.42B increase in spending, the biggest lift in history at the time. 2016 saw a spending change that was accelerated by the high prices of Super Premium Pet Foods. After consumers choose to upgrade to a more expensive pet food, their #1 priority becomes, “Where can I buy it for less?” “Value Shopping” on the internet was a major contributing factor in the big spending drop in 2016.

2017 was an up year which, based upon history, should have been due to a “must have” trend. There were some possible candidates, but nothing stood out. A deeper dive into the data showed that the $4B increase in Pet Food spending in 2017 didn’t come from a new trend. It came from a deeper demographic penetration of Super Premium foods. Value shopping in a highly competitive market, especially on the internet had made Super Premium pet foods more accessible to a broad swath of consumers.

Like Pet Food, human behavior has changed over the years in regard to our pets. In the 90’s, Pet Owners became Pet Parents. Then, after the turn of the century we began truly humanizing our pets. This movement is very accurately reflected in the evolution of Pet Food. We became increasingly more conscious of fulfilling the health needs of our pets, beginning with the first move to premium foods in 2004. This ramped up considerably after the Melamine scare in 2007. Now consumers read pet food labels, research ingredients and expect their pet foods to meet the same quality standards as the best human foods. This was very evident in 2018. It should have been a year of increased spending but the consumers’ reaction to the FDA grain free warning threw the pattern out the window. In the beginning of 2019 Pet Food spending stabilized as some doubts were raised about the validity of the warning. In the second half of the year Food Spending increased +$2.3B. Some Pet Parents began to return to the topline Super Premium Foods. In some cases, they opted for even more expensive varieties. We also saw some new groups get on board the Super Premium Express.

After the 2019 recovery came the pandemic of 2020. There is nothing more necessary to a Pet Parent than pet food. This spurred binge buying, especially in the 1st half of the year and drove the biggest annual spending increase in history.

The growth of Pet Food spending since 2014 reflects the rise of Super Premium but also another trend – the spectacular increase in the number and use of Pet Medications and Supplements, which are often produced in the form of treats. Together, the strength of Pet Food and these product subcategories reflect the Pet Parents’ absolute number 1 current concern – the health, wellbeing and safety of their Pet Children, which starts with the quality of their food. How big is this trend? Prior to the pandemic, at Global Pet Expo 2020, the 2 product categories with the most exhibitors were #1 Treats and #2 Supplements.

Now let’s look at some specific 2020 Pet Food Spending Demographics. First, we’ll look at income. Prior to 2014 it was a less dominant factor in Food spending. However, the move to Super Premium has brought it more to the forefront. In 2015 the spending of the over $70K group exceeded the <$70K for the first time. In 2020 it was almost twice as much. In 2020 the 2 big groups below $70K spent more than 2019 but all 3 big groups under $100K spent less than they did in 2015. The over $100K income group spent twice as much in 2020 as they did in 2015. Due to this movement to higher income groups, we have added a new measurement – spending over/under $100K. In 2015, the 50/50 divide on Pet Food spending was about $70K. In 2020 it is now approximately $107K, breaking the $100K barrier for the first time. It is also up from 87K in 2019. That’s a big change. The chart below shows the annual spending for the major income groups from 2015 through 2020. This should put the 2020 numbers into better perspective.

Before we get into the details for 2020, we should note the uniqueness of 2 years. With competitive pricing on Super Premium Foods and the consumers’ commitment to pet health, 2017 was the only year since 2015 with spending growth in every major income group. In 2018 the FDA grain free warning turned this situation around as all groups spent less. Now, 2020.

2020 National Numbers: $280.38 per CU (+18.7%); $36.84B; Up $5.65B (+18.1%); 2015>2020 – Up $7.35B (+24.9%)

The spending pattern was mixed. The groups <$70K and the $100K> group spent more while the middle income group spent substantially less. The inflation rate in 2020 fell from 2.9% to 0.1% which may have helped the low income groups.

Here are 2020 specifics:

  • Under $30K: (25.4% of CU’s) – $146.95 per CU (+22.3%) – $4.61B – Up $0.57B (+14.2%). Obviously, this group is very price sensitive. It is also getting smaller. The number of CU’s was down 6.5% in 2020 and 18.8% since 2015. This decrease masks the true food situation. While their Total Food spending is lower than 2015, their Avg CU spending on food in 2020 is up 22.2%. Their Total Pet Food spending is being driven down by the substantial and consistent decline in the number of CUs. This makes their spending increase in 2020 even more significant. Even this lowest income group remains fully committed to their pets.
  • $30K>$70K: (31.1% of CU’s) – $193.98 per CU (+1.2%) – $8.17B – Up $0.02B (+0.3%). This group had a 2.0% decrease in the number of CUs which basically negated their slight increase in spending. The Pet Food spending within this big group was definitely mixed. The $30>39K group lost CUs but they radically increased spending, +$0.95B (+45.4%). The $40>49K group grew +0.6% in numbers but they dialed back their spending -$0.13B. The average income for Retirees is now $42K so many are included in this group. They undoubtedly contributed to the growth in CUs but even their +$0.62B increase in Pet Food spending couldn’t turn the $40>49K group positive. Now, the most negative group, $50>69K. They lost 4.5% in CUs and spent -16.3% less per CU on Pet Food. These 2 factors pushed their Total Pet Food Spending down -$0.79B (-20.9%). It was a big drop but not enough to overcome the lift from $30>39K.
  • $70K>$99K: (15.0% of CU’s) – $203.13 per CU (-33.7%) – $3.75B – Down $2.15B (-36.4%). The Pet Food Spending for this group had been very stable. In 2017, this changed as they got “on board” with Super Premium Pet Food. They also became more sensitive, reacting to the FDA warning in 2018, bouncing back in 2019 and then plummeting due to Covid in 2020. They are middle income, with family responsibilities and under considerable monetary pressure.
  • $100K> (28.5% of CU’s) – $515.06 per CU (+44.0%) – $20.31B – Up $7.20B (+55.0%). 87% are college grads so they saw the value of Super Premium food very early. Their 2018 decrease in spending due to the FDA warning was minimal, -0.05B as many opted to move up to even more expensive types of food. They came back strong in 2019 and then were the driving force behind the huge lift in 2020. We should note that their lift was not universal. CUs making $100>149K or over $200K spent $8.89B more, while CUs making $150>199K spent $1.68B less. However, without the overall $100K> group, Pet Food Spending would have been down -$1.55B in 2020.

In 2018, the decrease in Pet Food spending was widespread across incomes. In fact, groups totaling 83.9% of all U.S. households spent less on Pet Food. In 2019, the rebound spending increase only happened for households with incomes above $40K, 61.4%. In 2020 the Pandemic lift occurred at both ends of the income spectrum but the $100K> group was the only true driver as their lift was 127% of the total increase. Besides the biggest increase in history, 2020 was significant for another reason. In the era of Super Premium, Pet Food spending has become increasingly tied to income. In 2020, the 50/50 dividing line on share of spending exceeded $100K for the 1st time. Now, Spending by Age Group…

2020 National Numbers: $280.38 per CU (+18.7%); $36.84B; Up $5.65B (+18.1%); 2015>2020 – Up $7.35B (+24.9%)

One assessment, although it is not 100% accurate, is very close. That assessment is that It’s a generational thing. Baby Boomers and Millennials spent more. Gen X, Gen Z and those born before 1946 spent less.

  • 55>64 (19.1% of CU’s) – $583.23 per CU (+90.2%) – $14.63B – Up $7.09B (+94.0%). This group (all Baby Boomers) has been at the forefront of recent major spending swings. In 2015 many of them upgraded to Super Premium. In 2016 this group looked for and found a better price. In 2017 they led a deeper penetration of the upgrade. In 2018 they had a -$3.5B reaction to the FDA warning. They began to recover in 2019 but it was far short of the drop. Then came 2020, which saw an unprecedented lift in spending. There were 3 major contributing factors. First was panic, binge buying due to pandemic. They also were still recovering from the FDA warning. Finally, the pandemic caused the loss of over 2 million <25 CUs. Many of them moved back with their parents. They obviously took their pets with them, so this contributed to the spending explosion in the 55>64 year old group.
  • 45>54 (17.2% of CU’s) – $247.46 per CU (-21.7%) – $5.45B – Down -$1.63B (-23.1%). This group is #1 in income and total CU expenditures. Up until 2015 they were #1 in Pet Food spending. They bought premium food but didn’t “buy in” to Super Premium until 2017. They were negatively impacted by the FDA warning, but they rebounded stronger than any other group. In 2020, their spending dropped significantly. The decrease corresponded almost exactly to a $1.68B drop by the $150>199K income group. Although some may have dialed back their purchases. It is likely that most found value and cheaper prices by buying on the internet. They actually spent 9.7% more but 28.7% less often.
  • 65>74 (15.6% of CU’s) – $248.30 per CU (-1.1%) – $5.20B – Up $0.32B (+6.5%). This group is now all Baby Boomers and growing (+2.0%). They are starting to retire but many are still working (0.6 per CU). Because of their reduced income, they are often slower to react to industry trends. However, they have shown slow but consistent growth every year since 2015. They are Boomers so their Pets are a major priority. They spend 1.13% of their total CU expenditures on their pets. Only the 55>64 yr olds spend a higher percentage.
  • 35<44 (17.0% of CU’s) – $195.39 per CU (-13.9%) – $4.38B – Down -$0.61B (-12.2%). They are primarily young Gen Xers. They are 2nd in income and CU spending but have the biggest families so value shopping is a way of life. Their spending pattern tends to match the older Gen Xers but is less volatile. Their drop in frequency was 14.7%.
  • 25>34 (16.0% of CU’s) – $222.60 per CU (+26.9%) – $78B – Up +$0.87B (+22.3%). In recent years the spending pattern of these Millennials has foreshadowed the overall market for the following year. However, no one could have predicted the pandemic. They reacted strongly with a 22.3% increase in $. They spent 30.6% more, 2.8% less often. Another situation should be noted. They are the most stable in spending. That is surprising.
  • 75> (11.2% of CU’s) – $140.98 per CU (-5.1%) – $2.00B – Down -$0.02B (-1.1%). Both the effort and the expense of Pet Parenting become issues as we reach 75+. However, they remain committed to their Pets and high quality food.
  • <25 (3.8% of CU’s) – $74.69 per CU (-24.5%) – $0.39B – Down -$0.37B (-48.4%). The number of CUs fell by 2.2M, -31.2%. Many moved back with their parents or in with other adults. It’s obvious by the big drop in CU Pet Food spending that those who maintained their households had a lower percentage of pet ownership.

The situation in the age groups in 2020 seems to be a generational divide. With Boomers & Millennials on the plus side and everyone else on the downside. Another significant event was that the title for top Pet Food spending CU was passed back to young Baby Boomers from old Gen Xers. The Boomers built the Pet Industry. Their dominance will inevitably fade but it will take a long time. Need proof? Look at the ongoing strong performance by the 65>74 year olds.

We need to drill deeper. Let’s take a look at the segments with the biggest change in spending in 9 categories. The segments that are outlined in black “flipped” from 1st to last or vice versa from 2019. The red outline stayed the same.

We have seen some big spending swings in recent years. Some were industry driven. Others were due to an outside influences like the FDA warning in 2018 and now the Pandemic in 2020. These outside influences had a common driver – fear. The FDA warning caused Pet Parents to back away from grain free dog food. The Pandemic caused many of them to stock up on (binge buy) their Super Premium Pet Food. This produced the biggest Pet Food Spending Lift in history. 2019 saw a recovery lift but it was almost a “normal” year in between the 2 big swings in 2018 and 2020.

The 2020 lift was truly a spectacular year of growth, but it was also somewhat stable as 5 of the 9 segments with the biggest growth were the same as 2019 and are often the best performers. The 55>64 yr olds are a true subset of the Baby Boomer group. They have been on top 3 times since 2015. Only 2 segments flipped from 1st to last and they are really the same group, Gen X. Among the losers, Renters repeated but the others were new. There were a few definite surprises. Gen X, 2 people CUs and the Big Suburbs are usually among the leaders in spending.

You see that the biggest increases were notably larger than the decreases. This was the pattern across the demographic categories. The lift was driven by specific segments. In fact, 49% of 96 demographic segments actually spent less on Pet Food. This is not what you would expect in a year that produced the biggest spending increase in history.

This Pandemic lift was fear driven and very emotional. Although most groups now view pets as part of the family, there is one group that will always be at the top, Baby Boomers. They were the first Pet Parents and their love for their Pet Children truly fueled the spectacular growth of the Pet Industry. This emotional connection has driven many big swings in spending in recent years. There is another consideration. Generations are segments with almost the same individuals every year. The 2020 lift was largely driven by a specific group – Baby Boomers. We’ll see what 2021 brings.

U.S. CU INCOME AND SPENDING IN 2020

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The Pandemic of 2020 had a huge impact on life in America. The stay at home mandates and lockdowns especially affected the Retail Trade. The effects weren’t always negative. In our regular analysis of Data from the Census Bureau’s Monthly Retail Trade reports, we saw some channels, deemed essential that actually benefited from the pandemic restrictions. Although Restaurants, Auto and Gas Stations were initially hit hard, the essential channels in the Relevant Retail group benefited from a lift in consumer spending so much that spending in the whole Retail Sector turned positive for 2020 vs 2019. Admittedly, the increase was small, +0.5% but Sales have continued to grow in 2021 in virtually all channels as at least Retail Spending has essentially recovered from the pandemic.

This data is gathered directly from Retailers by the Census Bureau so it is essentially the “sellers’ point of view”. The US Bureau of Labor Statistics conducts an annual Consumer Expenditure Survey (CEX), which is also designed and executed by Census Bureau Personnel. This presents the spending situation from the “buyers’ point of view”. The data is gathered from diaries and interviews of over 42,000 U.S. CUs (Financially Independent Consumer Units – essentially Households). The early days of the pandemic caused some problems in information gathering and responses, especially in the Diary method. These variances generally showed up in specific small segments. The overall data and the numbers for larger groups were still well within acceptable guidelines. The Census Bureau adapted their methodology to better fit the situation so that by the 2nd half of 2020, the response rate had returned to more normal levels.

The 2020 Consumer Expenditure Data was just released by the US BLS. You are all familiar with some of the data as I use it to develop mid-year and annual reports on Spending in the Pet Industry segments and Total Pet. The data goes way beyond that. It details the CU spending on over 1650 specific expenditures by over 80 demographic segments. Yes, it covers Pet Food $ but it also includes the amount spent on underwear for Children under 2 years old as well as the amount spent on bottled gas for an owned vacation home. To say that it is detailed would be a serious understatement. It also points out another major difference between the CEX and the Monthly Retail Trade report. Both are about spending. However, the Monthly Retail Trade report shows where the $ were spent but doesn’t provide details on what was bought. The CEX is essentially the opposite. It details what was purchased but doesn’t say where the consumers bought it. These 2 viewpoints are both important in getting an overall view of the situation.

I am currently building the database for my Pet Industry reports but I thought that the unique nature of 2020 merited a preliminary summary of the overall spending situation. This will put the Pet spending data into a better perspective. We’ll start with some basics and then get a little more specific for some relevant expenditures. However, if you want to know the spending situation on bottled gas for owned vacation homes, you’ll have to send me a separate request.

# of CU’s (000) – The number of CU’s in 2020 was 131,234K – down -1,008K (-0.8%). That’s 1 million less than in 2019. How unusual is that? I can’t say for sure as I only have annual data going back to 1984. However, in these records an annual drop in CUs has NEVER happened before. The 2 smallest increases were 30 thousand (+0.03%) in 1993 and 77 thousand (+0.06%) in 2009. Both 1993 and 2009 were years with significant recessions.

Let’s look at what groups lost CUs and where the people may have gone.

Here are some big decreases:

  • <25: -2,288K (-31.2%)
  • Renter: -3,083K (-6.4%)
  • Born <1946: -1517K (-9.0%)

The loss in the oldest Americans is not unexpected and is primarily due to movement to assisted living or passing on. There was an increase in homeownership, but it was far less than the drop in renters. The <25 group is getting older, but it should still be growing, not dropping precipitously.

Here are some significant increases:

  • Married, Child 18+: +322K (+3.3%)
  • 2+ Adults, No Kids: +689K (+3.2%)
  • 5+ CUs: +726K (+5.8%)

This clearly shows that a lot of the <25 group, moved back home with their parents or in with other adult friends.

This data shows that the CU count drop was driven by the pandemic economic impact on the younger crowd. Before we get into the $. Let’s look at some CU characteristics for 2020. We’ll note the changes from 2019

Number in CU

  • Avg: 2.5
  • Children <18: 0.6
  • Adults 65>: 0.4
  • Earners: 1.3

Housing Tenure

  • Homeowners: 66% (up from 64%)
    • With Mtge: 39% (up from 37%)
    • W/O Mtge: 27%
  • Renters: 34% (↓ from 36%)

Race/Ethnicity

  • African Americans: 12.7% (↓ from 13.1%)
  • White (Not Hisp), Asian or A/O: 73.1% (↓ from 73.4%)
    • White, Not Hispanic: 66.4% (↓ from 66.6%)
    • Asian: 4.7% (↓ from 4.8%)
    • All Other: 2.0%
  • Hispanic/Latino: 14.2% (↑ from 13.6%)

HS Grads w/at least Some College: 69% (↑ from 67%)

BA/BS> : 46.7% (↑ from 44.3%)

At least 1 vehicle: 90% (↑ from 89%)

Now let’s get into the $, First Gross Income

CU Gross Income – The average CU income in 2020 was $84,352. That’s up +$1500 (+1.8%) from 2019. Considering the impact of the pandemic on the workplace, any increase seems surprising. Let’s see what groups had the biggest gains and losses in earnings. The changes are expressed in percentages to allow better comparison of the impact.

Here are some big “winners”:

  • Bottom 80% of CU Incomes: +4.7%
  • < 25: +16.1%
  • Singles: +10.3%
  • Renters: +4.1%
  • Unmarried, 2+ Adults: +12.3%
  • 5+ CUs: +6.8%
  • 3+ Earners: +7.5%
  • Married, Child 18+: +4.0%
  • HS Grads: +4.6%

The income increase primarily occurred in CU’s with the lowest 80% of income. You see big increases in groups like <25 and Singles which lost a significant number of CUs. Obviously, things improved for those in these groups that held their ground. Many of the “lost” CUs moved in with parents or other adults. This had a positive impact on the income of those CUs – like Unmarried 2+ Adults, Married Couples w/child over 18, 3+ Earners and 5+ CUs. You also see that HS Grads had the biggest income increase, which is not the “normal” way of things.

And here are some that didn’t do that well:

  • Top 20% of CU Incomes: -0.2%
  • Mgrs & Professionals: -4.7%
  • Self Employed: -1.1%
  • 55>64: -4.8%
  • Homeowners w/Mtge: -1.0%
  • College Grads: -1.2%

The overall income of CUs increased 1.8% but not for the highest earners. The income for the 20% of CUs with the highest income actually fell -0.2%. The 2 highest income occupations – Managers & Professionals and Self Employed had drops in income, as did College Grads. The 55>64 year olds, the highest income group of Baby Boomers and Homeowners w/Mtge also lost ground. Overall, CU Income was up, but it was not a “normal” year.

Note: Income Disparity – CUs in the bottom 80% of Income make $51,072 per year. That is only 60.5% of the average CU income of $84,352. It is also just 23.4% of the income for the top 20%. The upper 20% (26.1M CUs) make more than 4 times as much as the bottom 80% (105.1M CUs). The top 20% earn 51.5% of the $11.1T in Total U.S. Income.

CU After Tax Income – In 2020 this was $74,949, up $3,462 (+4.8%) from 2019. The increase in these spendable $ was more than double the increase in gross income $ and almost triple the percentage increase. Let’s take a look.

Three higher income groups that had decreased gross income turned it around to produce an increase in after Tax $

  • Top 20% of CU Incomes: +0.8%
  • Homeowner w/Mtge: +3.0%
  • College Grads: +1.0%

This next group was negative in gross $. All but Self-Employed improved performance in net income but they still stayed negative. The Managers & Professionals had the biggest improvement, going from -4.4% to -0.4%.

  • 55>64: -3.3%
  • Mgrs & Profess: -0.4%
  • Self-Employed: -1.1%

In this group, the poorer got “richer” with a bigger increase in after Tax $. I added the <$30K group to our list because their performance was amazing.

  • Bottom 80% CU Inc.: +9.3%
  • <30K Income: +23.7%
  • <25: +19.4%
  • HS Grads: +9.7%
  • Renters: +7.7%
  • Singles: +12.4%
  • Unmarried, 2+ Adults +13.9%

There is 1 Winner in gross income that actually did worse in after tax income – Married, Child 18+: +1.0% (↓from 4.0%)

Now let’s move on to spending. First, Total Expenditures in 2020.

CU Total Expenditures – The Average CU in 2020 had total expenditures of $61,334, down -$1702 (-2.7%) from 2019. This is not unexpected with the trauma and restrictions of the pandemic. Let’s see what groups had the biggest losses and those with gains in spending. The changes are expressed in percentages to allow better comparison of the impact.

Here are some groups with Big Decreases in Spending:

  • Top 20% of Income: -5.5%
  • Mgrs & Prof: -6.7%
  • Self-Employed: -5.0%
  • 2 Earners: -4.2%
  • 2+ CUs: -3.8%
  • College Grads: -5.8%
  • Asians: -8.3%
  • Boomers: -7.5%
  • Urban, 2.5>5M Pop: -9.1%

You can see that in general, the biggest dips in spending came from the highest earning groups and it was skewed a little older but generally widespread, with 2+ people CUs (70.2% of the total) down -3.8%.

Now let’s see some groups that went against the trend and Increased their Spending in 2020:

  • 2nd Highest Income 20%: +1.1%
  • Lowest 20% of Income: +0.2%
  • Service Workers: +0.3%
  • 3+ Earners: +1.4%
  • Single, 1 Earner: +3.3%
  • < Assoc Degree: +0.4%
  • African Americans: +0.2%
  • Gen Z & Millennials: +2.2%
  • Urban <100K Pop: +3.0%

In general, the increases came from lower income groups, but it was somewhat mixed with both the 2nd highest income and lowest income groups spending more. That means that 40% of CUs spent more but were not able to overcome the drops by other groups, especially the big decrease from the highest earners.

We noted the extreme disparity in Income. Is there also a big Disparity in Spending? Yes! The Top Earning 20% of CUs still spend essentially as much (37.3% of the Total $8.0T) as the bottom 60% (39.3%). Per CU, they spend 2.8 times as much. Total Spending fell $287B from 2019 to 2020. 73.4% of this drop came from CUs in the top 20% in income.

We have looked at the demographics of the change in spending from 2019 to 2020. Now let’s look at some significant changes in how the money was spent.

Food, Booze & Apparel

  • Food at Home: +6.4%
  • Food away from Home: -32.6%
  • Alcohol at Home: +4.5%
  • Alcohol away from Home: -43.9%
  • Apparel: -23.8%
  • Laundry/Dry Clean: -52.6%

As we know, Supermarket Spending was up +10.7%. This shows that a lot of that lift came from nonfood items. The Restaurant & Bar numbers reflect the big drop that we saw in sales at Retail Restaurant outlets. We should also note that the 20% of CUs making the most money had a 44.8% increase in Wine at home. Their drop in Restaurant spending was also equal to the total $ spent by CUs with the lowest 40% of income. Although Clothing stores began to recover in 2021, you see the impact of store closings. Plus, if you work from home, clothes are less of a priority, and you need less dry cleaning.

Housing: +3.5%

  • Owned Home: +9.9%
    • Mtge Interest: +8.7%
    • Insurance: +9.5%
    • Maintain/Repair Serv: +18.6%
    • DIY Repair Supplies: +24.4%
  • Rental: -0.5%
    • Rent: -0.8%
    • Insurance: +8.0%
    • Maintain/Repair Serv: +32.3%
    • DIY Repair Supplies: +42.5%

We see the impact of the additional CUs acquiring homes. We also see the focus on home maintenance that drove the big spending lift in Home Centers and Hardware. One thing is constant. Insurance companies charge more!

Housekeeping Supplies: +9.3%

  • Laundry Supplies: -8.1%
  • TP & Paper Towels: +2.7%
  • Lawn & garden: +29.1%

Laundry – do less. Toilet Paper – buy more. Plus, don’t forget to maintain your yard!

Household Furniture & Equipment: +11.8%

  • All Furniture: +2.5%
  • Outdoor Furniture: +64.7%
  • Outdoor Equipment: +440.2%
  • Office Furn. Home Use: +143.9%
  • Computer Hdwe, NonBus: +41.9%
  • Portable Heat/Cool Equip: +19.4%

If you spend more time at home, including working there on a regular basis, you’re going to need furniture and equipment to do it comfortably. A home office requires office furniture. You’ll also want to upgrade your home computer. If your office is set up in a small room or basement, you need to insure a comfortable air temperature. Finally, when you take a break, why not comfortably relax in the backyard?

Transportation: -8.5%

  • Buy New Car/Truck: +2.9%
  • Buy Used Car/Truck: -0.7%
  • Leased Vehicles: +12.3%
  • Gasoline: -24.3%
  • Insurance: +1.9%
  • Parking: -45.8%
  • Rental Vehicles: -43.9%
  • Air Fares: -68.8%
  • Mass Transit: -53.7%

We saw in our Retail Channel analysis that the Auto Industry had broken even by year end 2020. That was largely driven by aggressive deals on new cars. That is reflected in these numbers. We also travelled significantly less, which is reflected by Gasoline, Mass Transit, Parking, Air Fares and Rental Cars. Once again, we can always count on insurance companies …as that spending went up +1.9%.

Healthcare: -0.3%

  • Medical Insurance: +3.9%
  • Physicians’ Services: -17.1%
  • Hospital Room/Services: -4.3%
  • Drugs: -2.0%
  • OTC Vitamins: +14.0%
  • Medical Equip/Supp: -12.4%

Health Care spending was down. Much of the expenses for COVID were covered and elective treatments were reduced. Even regular doctor visits declined. You can see that some people increased home remedies and of course, we can always count on the Insurance Industry – spending up +3.9%.

Entertainment: -5.8%

  • Fees/Admissions: -51.8%
  • Online Gaming Serv: +131.4%
  • Video Game Softwre: +36.7%
  • Video Game Hdwre: +51.7%
  • Video Streaming Serv: +34.5%
  • Musical Instruments: +35.4%

We still needed to have fun but as you see movies and in person events largely went away. We turned strongly to the internet. The big increase in musical instruments is interesting. Remember, a Musical Instruments Store chain made the list of the Top 100 Retailers for the very first time in 2020.

We have largely been focused inside the home. Let’s take a look at what was happening in terms of outdoor recreation and living. Remember sales in Sporting Goods Stores took off in the latter part of the year.

Outdoor Entertainment & Recreation: +48.9%

  • Camping trailers: +941.9%
  • Motorized RVs: +294.9%
  • Motorized Boats: +79.1%
  • Rental of RVs: -24.5%
  • Athletic/Exercise Gear: +32.0%
  • Hunting/Fishing Equip: +42.0%
  • Winter Sports Equip: -10.4%
  • Water Sports Equip: +33.1%
  • Fireworks: +154.4%

You can see that we moved towards the outdoors, and the commitment was strong. We didn’t rent. We bought! Winter Sports was an exception because you can’t just go skiing. You need to go to a resort. The lift in home fireworks was huge and probably reflects consumers trying to make up for the cancellation of a lot of the planned July 4th celebrations.

Miscellaneous Expenditures of Interest

Here are some other interesting big changes in expenditures that don’t immediately fit into previous categories.

  • Personal Care Services: -30.3%
  • Digital Book Readers: +35.6%
  • College Tuition: -18.4%
  • Elem/HS Tuition: +42.9%
  • Marijuana: -6.5%
  • Lottery/Gambling Losses: -12.2%
  • Funeral Expenses: +53.4%
  • Charity Contributions: +66.1%
  • Political Contributions: +63.0%

These generally are expected changes, but they may be bigger than expected. I was surprised by the increase in Charitable and Political contributions. It does reinforce the fact that Americans want to get involved in a crisis. I must admit that I was stunned that we spent less on Marijuana. Gambling losses were down but never fear, betting has moved online. Plus, the Top 20% in Income loss 34.5% more on gambling than in 2019.

One last thing: Government Stimulus Money. Each of these 5 groups has 20% of Total CUs, based upon income level. Here is their share of Stimulus $:

  • Total $timulus – $251B
  • Under $24K – 15.3%
  • $25>45K – 20.0%
  • $46>75K- 22.2%
  • $76>124K – 24.0%
  • $125> – 18.5%

The payment was relatively balanced. However, it is concerning that the smallest share went to the lowest income group. Perhaps, the program should have been skewed even more towards lower income groups.

The data in the report often provides specific examples which reflect the trends seen in our ongoing analysis of sales by Retail Channel. I hope that it gives you a better feel for the monetary impact of COVID on U.S. Households in 2020.

Retail Channel Monthly $ Update – July Final & August Advance

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In May 2020, the Retail market began its recovery after hitting bottom in April. The road back has been long and complex and Consumer spending behavior continues to evolve. Now, the virus is resurging so we will continue to track the impact on the recovery of the retail marketplace with data from two reports provided by the U.S. Census Bureau.

The Reports are the Monthly Retail Sales Report and the Advance Retail Sales Report. Both are derived from sales data gathered from retailers across the U.S. and are published monthly at the same time. The Advance Report has a smaller sample size so it can be published quickly – about 2 weeks after month end. The Monthly Final Report includes data from all respondents, so it takes longer to compile the data – about 6 weeks. Although the sample size for the Advance report is smaller, the results over the years have proven it to be statistically accurate with the final monthly reports. The biggest difference is that the full sample in the Final report allows us to “drill” a little deeper into the retail channels.

We will begin with the Final Retail Report for July and then move to the Advance Retail Report for August. Remember, the retail impact of the pandemic began in March 2020, peaked in April, then recovery started in May. We will compare 2021 to both 2020 and 2019 to document the progress that the retail market has made towards a full recovery.

Both reports include the following:

  • Total Retail, Restaurants, Auto, Gas Stations and Relevant Retail (removing Restaurants, Auto and Gas)
  • Individual Channel Data – This will be more detailed in the “Final” reports and we fill focus on Pet Relevant Channels

The information will be presented in detailed charts to facilitate visual comparison between groups/channels of:

  • Current Month change – % & $ vs previous month
  • Current Month change – % & $ vs same month in 2020 and 2019
  • Current YTD change – % & $ vs 2020 and 2019
  • Monthly and Year To Date $ will also be shown for each group/channel

First, the July Final. Retail hit bottom in April 2020 but began recovery, hitting record $ in December. $ fell in January & February but they took off in March, setting a new all time $ record. In April $ fell but they rebounded in May to another record high. June & July saw more dips. Here are the major retail groups. (All Data is Actual, Not Seasonally Adjusted)

The final total is $3.3B less than the Advance report projected a month ago. All groups were down slightly. The specifics were: Relevant Retail: -$2.1B; Gas Stations: -$0.2B; Restaurants: -$0.4B; Auto: -$0.5B. Sales vs June were down in all but Gas Stations and Restaurants. Total Retail $ were the 3rd highest month of all time. Total $ales broke $600B for the 1st time in December and has now done it 7 times. Auto still has the strongest recovery and is in fact prospering – annual YTD growth rate since 2019 is +12.8%. Except for the spending dips vs June, for the second consecutive month all groups, including Restaurants, were positive in all other measurements.

Now, let’s see how some Key Pet Relevant channels were doing in July.

  • Overall– 7 of 11 channels were down vs June but all were up vs July 2020 and 10 vs July 2019. In YTD $, all were up vs 2020 and 10 vs 2019. July was the 6th biggest month in history for Relevant Retail.
  • Building Material Stores – Their amazing lift may finally be slowing. The surge came as a result of pandemic spending patterns developed in 2020. Consumers began focusing on their homes. Their Spring lift has slowed in 2021 but Building and Farm stores are still going strong. Sporting Goods stores have a similar spending pattern. Sales took off in May 2020, hit a record peak in December and continued strong into 2021, peaking in March. July $ fell slightly from June. However, YTD they are +49.6% vs 2019. That’s an Annual Growth Rate of 22.3%!
  • Food & Drug – Supermarkets were +$77.7B in 2020. $ are up vs June but YTD are on par with the 2020 binge. They are still up 15.8% vs July 2019 and 14% vs YTD 2019. Drug Stores were +$17B (+5.7%) for 2020. They had a record March. Sales have fallen since then. However, all other measurements are positive and YTD $ are +7.2%.
  • General Merchandise Stores – $ in all channels fell in Jan & Feb then spiked in March. In April, sales in all but $ stores declined but they bounced back in May. In June sales dipped for again for all. In July $ Stores dipped again but along with Clubs/SuperCtrs they are leading the way with a combined growth rate of +8.6%. These channels promote value. Their success reinforces its importance to consumers. Disc. Dept Strs are also back in the game.
  • Office, Gift & Souvenir Stores– $ increased slightly from June and were +25% vs July 2020. The pandemic hit them hard. They are still down vs 2019 – monthly and YTD. Recovery is a long way off, but things are improving.
  • Internet/Mail Order – Their $ fell slightly in July but the pandemic continues to foster this channel’s growth. In July of 2019, their YTD growth was +14.0%. Now, their avg growth rate is +19.6% – a 40.0% increase.
  • A/O Miscellaneous – This is a group of small to midsized specialty retailers – chains and independents. It includes Florists, Art Stores and Pet Stores (22>24% of total $). Pet Stores were usually essential, but most stores were not. In May 2020 they began their recovery. Their 2020 total sales were up +11.6%. Their July $ were down slightly from June but still #3 of all time. YTD sales are +28.2% vs 2020 and +39.5% vs 2019. Very strong!

Relevant Retail began recovery in May and reached a record level in December. $ fell in Jan & Feb, turned up again in March and began a monthly up/down rollercoaster. July $ are down but virtually all channels are showing growth. The key drivers are the Internet, SuperCtrs/Clubs/$ Stores and Hdwe/Farm. Now, the Advance numbers for August.

2020 was a memorable year for both its traumas and triumphs. In April & May we experienced the 2 biggest retail spending drops in history, but the problems actually began in March. Retail sales began to recover in June and in October, YTD Total Retail turned positive for the 1st time since February. In December, Total Retail broke the $600B barrier – a historic first. Sales fell from their December peak in both January and February but still set monthly sales records. Then they took off again in March, setting a new monthly sales record of $633B. April sales were down slightly but they took off again in May to set yet another spending record, $643.1B. June>August $ fell but August was still the 5th biggest $ month in history. Auto, Gas Stations and Restaurants were down from July, but all the major groups were positive in all other measurements for the third straight month. Some other areas of the economy are still suffering, some spending behavior has changed, and inflation has become a factor in some increases. However, consumers continue to spend “big bucks”, especially in Relevant Retail, and the overall Retail marketplace continues its strong recovery.

Total Retail – In March, Total Retail hit $633.1B, a record for the most spending in any month in any year. In April, $ales dipped to $625.5B but were still $218.3B more than April 2020 – a record increase that was more than double the size of last year’s record drop. In May, sales set another new record, $643.1B. June>August sales dipped slightly but August was $629.1B, the 5th biggest month in history. Moreover, the current YTD average annual sales growth rate since 2019 is 9.0%, the highest ever in records going back to 1992. Total Retail has not just recovered. It is stronger than ever.

Restaurants – This group has no negative measurements vs 2020 or 2019 for 3 straight months. Last February YTD sales were up 8.1% vs 2019. The Pandemic changed that. Restaurants started to close or cease in person dining in March and sales fell -$33.3B (-52.5%) compared to March 2019. Sales bottomed out in April at $30.1, the lowest April sales since 2003. Sales started to slowly increase in May but never reached a level higher than 88% compared to the previous year. 2021 started off slowly. Through February, YTD sales were down -16.7% from pre-pandemic 2020 and -10.0% from 2019. In March sales took off and grew steadily from April Through July. Sales dipped slightly in August but were still strong vs 2019 & 2020. YTD their $ are plus 30.6% vs 2020 and +3.1% vs 2019. Their recovery is getting stronger.

Auto (Motor Vehicle & Parts Dealers)   – Staying home causes your car to be less of a focus in your life. Sales began to fall in March and hit bottom in April. Auto Dealers began combating this “stay at home” attitude with fantastic deals and a lot of advertising. It worked. They finished 2020 up 1% vs 2019 and have returned to a strong positive pattern in 2021. The “attitude” grew amazingly positive in March and slowed only slightly in April>August as sales exceeded $127B in all 6 months – the 6 biggest months in history. To show how well consumers responded to their campaign you just need to look at the data. This group has exceeded $110B in monthly sales only 15 times in history. 12 of those occurred after the onset of the pandemic.  YTD Avg Annual Growth Since 2019 = +11.8% – the best performance of any big group.

Gas Stations – Gas Station $ales have been a mixed bag. If you drive less, you visit the gas station less often. Sales turned down in March 2020 and reached their low point in April. They moved up but generally stayed about 15% below 2019 levels for the rest of 2020. In February they were still behind 2020 in monthly and YTD $ but ahead of 2019 in both measurements. In March, sales skyrocketed and continued to grow in April > July to a record $53.5B. They fell in August but are still +36% from 2020. They have been positive in all measurements vs 2019 & 2020 since March. Their comeback continues but there is another factor that must be considered – inflation. Gas prices can be pretty volatile. They dipped in the first 2 months of the pandemic but then returned to more normal levels for the balance of 2020. They began strongly inflating in 2021. In fact, the August 2021 prices were 42.7% above 2020. That means that the 36.2% year over year $ lift in August was actually a decrease in the amount of gas sold. YTD Annual Avg Growth Rate Since 2019 = +4.5%

Relevant Retail – Less Auto, Gas and Restaurants – This is what we consider the “core” of U.S. retail and has traditionally accounted for about 60% of Total Retail Spending. When you look at the individual channels in this group, you see a variety of results due to many factors – non-essential closures, binge buying, online shopping and a consumer focus on “home”. However, overall, April 2020 was the only month in which spending in this group was down vs 2019. Monthly $ales exceeded $400B for the first time ever in December ($407B). They finished 2020 up $260B, +7.1%. Their performance was the only reason that Total Retail was able to finish 2020 with positive numbers, +0.5%. Sales fell in January and February but set monthly records. In March they turned sharply up and then down in April. They bounced back in May then fell in June & July. In August sales rose again and it was the 5th largest month on record. We should also note that that while December 2020 is still #1, March > August are six of the eight highest $ months of all time. The Relevant Retail Market has exceeded $366B in monthly sales 8 tImes in history. 7 of those have occurred since the onset of the pandemic. It is also very important that the Relevant Retail group has posted positive numbers versus last year and YTD for every month since April 2020 and their average YTD growth rate since 2019 now stands at +10.1%. In August Department Stores “got on board” so all channels are now positive in all measurements vs both 2020 and 2019. However, the primary drivers throughout the pandemic were and continue to be Nonstore, Grocery, SuperCenters/Clubs/$ Stores plus an exceptionally long 2020 “spring lift” from Hardware/Farm and Sporting Goods.

Now let’s look at what is happening in the individual retail channels to see where the $ are coming from. August $ were up slightly from July but none of the increases were “off the charts”. However, it was still the 5th largest month in history for Relevant Retail outlets. The groups are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets.

Sales in only 4 of 13 channels were down vs July but all were up vs August 2020, vs August 2019 and YTD vs 2020 and 2019. (Relevant Retail YTD Avg Annual Growth Rate since 2019 = +10.1%)

After hitting bottom in April 2020, Relevant Retail has now beaten the previous year’s $ for 16 consecutive months. The group set an all-time record of $407B in December and finished 2020 +$260B vs 2019. 2021 started strong, with record sales in every month. March > August were 6 of the 8 biggest of all time. Essential channels are still the primary drivers:

  • Nonstore Retailers – The biggest driver. Online shopping continues to grow in # of households and in $.
  • Food & Beverage – Grocery– Restaurant $ are improving but consumers continue to eat & drink more at home.
  • Bldg Materials/Garden/Farm– Their “Spring” lift may be ending but consumers are still focused on their homes.
  • SuperCtrs/Club/Value/$ Strs – They kept the GM channel strongly positive. Value is still a big consumer priority.

Regarding the Individual Large Channels (Includes YTD Avg Annual Growth Rate since 2019)

General Merchandise Stores – Sales rose in August and all other numbers are positive. Even Department Stores $ are now finally all positive. After dipping to +7.5% in February, the growth rate by Club/SuperCtr/$ stores has remained near the current 8.5%. These stores are still the key to this channel.

  • YTD Avg Annual Growth: All GM = +7.1%; Dept Stores = +0.4%; Club/SuprCtr/$ = +8.5%

Food and Beverage, plus Health & Personal Care Stores – Sales in Grocery were down in March>May from 2020 – No surprise, as these were 2020 binge months. In June>August they beat 2020 $. The Health, Personal Care group finished 2020 at +1.8%. 2021 has started even better. August was up +0.4% and YTD they are +10.1% vs 2020 and 2019.

  • YTD Avg Annual Growth: Grocery = +6.8%; Health/Drug Stores = +4.9%

Clothing and Accessories; Electronic & Appliances; Home Furnishings – March > August have been spectacular for all these channels. The increase in Clothing vs August 2020 was not “off the chart” but was still +36.6%. All of these groups were up vs July and they remained positive in all measurements vs 2020 or 2019 for the 6th consecutive month.

  • YTD Avg Annual Growth: Clothing = +4.7%; Electronic/Appliance = +3.5%; Furniture = +10.3%

Building Material, Farm & Garden & Hardware – Their Spring lift began on time in 2020 but may be finally slowing. They have greatly benefited from consumers focusing on their home needs. They finished 2020 +53B (+13.8%). Sales took off in March, set a record in April then trended down May > August. They are still +15.4% YTD. Avg Annual Growth = +13.6%

Sporting Goods, Hobby and Book Stores – Book & Hobby stores are open but Sporting Goods stores have driven the lift in this group. Consumers turned their attention to personal recreation and sales in Sporting Goods outlets took off. The group ended 2020 +5.5% vs 2019. The growth accelerated in 2021. January > August set monthly records and August was the 2nd biggest month in history. August YTD they are +36.1% vs 2020. Avg Annual Growth = +17.0%

All Miscellaneous Stores – Pet Stores were deemed essential but most other stores were not, so closures hit this group particularly hard. Sales hit bottom at -$3.8B in April then began to rebound. They finished with a strong December and ended 2020 -$1.0B, -0.7%. In March sales took off and reached the $14+B level in May and they have stayed there. Sales fell -2.0% in August but their YTD sales are now 28.4% above 2020 and 25.0% more than 2019. Their recovery has become very real. YTD Avg Annual Growth = +11.8% (4th Best)

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV. The pandemic accelerated the movement to online retail. In February 2020 NonStore $ were +8.6% YTD. In December monthly sales exceeded $100B for the 1st time. They ended 2020 at +21.4%, +$162.9B. This was 63% of the total $ increase for Relevant Retail Channels. Their 2020 performance far exceeded their 12.9% increase in 2019 and every month in 2021 has produced record $. August was +5.9% vs July and +10.6% vs 2020. Their YTD $ are +15.7%. YTD Avg Annual Growth = +17.8%

Note: Almost without exception, online sales by brick ‘n mortar retailers are recorded with their regular store sales.

Recap – 2020 was quite a year. April & May had the 2 biggest year over year sales decreases in history while December sales broke $600B for the first time. 2021 may become even more memorable. March>August became the 6 biggest $ales months in history with the 6 largest year over year monthly sales increases ever. The total increase was +$783B, which totally dwarfs the -$174B decrease from March>May 2020 which caused so much concern. At yearend 2020, Restaurants and Gas Stations were still struggling but Auto had largely recovered. Relevant retail had segments that also struggled but overall, they led the way for Total Spending to finish the year +0.5% vs 2019. 2021 has grown even more positive. In June > August all major groups are positive vs both 2020 and 2019. The details show that the recovery in Relevant retail has become real for virtually all channels and monthly sales continue to set records. Retail has recovered and so far the resurgence of COVID has not negatively impacted Retail. We’ll keep checking.