Retail Channel Monthly $ Update – October Final & November Advance

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By 2021, the market had generally recovered from the impact of the pandemic. In 2022, we are being hit by extreme inflation, with rates higher than we have seen in 40 years. Obviously, this can affect retail sales, so we’ll continue to track the retail market with data from two reports provided by the Census Bureau and factor in the CPI from US BLS.

The Census Bureau Reports are the Monthly and the Advance Retail Sales Reports. 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 begin with the Final Report for October and then go to the Advance Report for November. Our focus is comparing 2022 to 2021 but also YTD 2019. We’ll show both actual and the “real” change in $ as we factor inflation into the data.

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 2021
    • Current Month Real change – % vs same month in 2021 factoring in inflation
  • Current YTD change – % & $ vs 2021
    • Current YTD Real change – % vs 2021 factoring in inflation
  • Current YTD change vs 2019 – % & $
    • Current Real change YTD vs 2019 – % factoring in inflation
  • Monthly & YTD $ & CPIs which are targeted by channel will also be shown. (CPI details are at the end of the report)

First, the October Final. All groups were up from last month and for October and YTD vs 2021. However, factoring inflation into the data, only Restaurants and Gas Stations were up for the month and in YTD $, only Restaurants were up. Here is the October data for the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The October Final is $0.4B more than the Advance. Relevant Retail had the only negative: -$0.9B; Restaurants: +0.1B; Auto: +$0.6B; Gas Stations: +$0.6B. Sales are up from last month and consumers continue to spend more vs 2021. However, the “real” numbers tell a slightly different story. Only Restaurants and Gas Stations (just barely) are really up for the month but again only Restaurants are really up in YTD $. Auto & Gas Stations also remain really down YTD vs 2019. The inflation impact on Relevant Retail is significant and concerning. Their Real YTD $ales vs 2021 have been negative for 7 months. They do have the best performance since 2019 as 61.4% of their 32.1% growth is “Real”.

Now, let’s see how some Key Pet Relevant channels did in October

Overall – 9 of 11 were up from September. Vs Oct 2021, 10 reported more $ but only 6 were really up. In YTD vs 2021, again 10 reported increases but only 4 were real. Vs 2019, for the 2nd consecutive month, all were “really” up.

  • Building Material Stores – Sales are flat vs Sept for Home Ctr/Hdwe but up 7.8% YTD vs 21. Farm stores are +11.4% vs Sept but only +5.8% YTD vs 2021. The Bldg/Matl group has a YTD inflation rate of 11.0% which has produced negative real numbers. The pandemic caused consumers to focus on their homes which has produced sales growth of 36.7% since 2019. Importantly, 57% of this lift was real, primarily because the bulk of the lift came from 20>21, prior to the inflation wave. Avg Growth Rate: HomeCtr/Hdwe: 10.9%, Real: 6.4%; Farm: 12.3, Real: 7.9%
  • Food & Drug – Both channels are truly essential. Except for the pandemic food binge buying, they tend to have smaller fluctuations in $. However, they are radically different in inflation. The YTD rate for Grocery products is 4 times higher than for Drugs/Med products. Drug Store $ are now positive in all measurements and 88% of their growth since 2019 is real. The Real Sales for Supermarkets are down for the month & YTD. Also, only 14% of their growth since 2019 is real. Avg Growth Rate: Supermarkets: +6.7%, Real: +1.0%; Drug Stores: +4.7%, Real: +4.2%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up only 0.02% from September but 2022 YTD sales are still 1.9% above 2021. Their current inflation rate is 3.0% which is down from 7.5% in April but YTD it is still 5.6%. It was even higher in 20>21, +6.5%. However, 71% of their 48% lift since 2019 is real. Their Avg Growth Rate was: +14.1%; Real: +10.4%.
  • Gen Mdse Stores – All channels were up from September and only Discount Dept Stores were down for the month and YTD vs 2021. All real numbers for all channels monthly and YTD vs 2021 are negative. Disc. Dept Stores were hurting before COVID but their YTD sales are again “really” up vs 2019. The other channels have 38% real growth. Avg Growth Rate: SupCtr/Club: 5.9%, Real: 2.2%; $/Value Strs: +7.7%, Real: +4.1%; Disc. Dept.: +2.8%, Real: +0.1%
  • Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are up 24% from September. The big news is that their sales growth in 2022 has been strong enough that for the 1st time they are positive in all measurements vs 2021 and vs 2019. They have made remarkable progress. Avg Growth Rate: +3.6%, Real: +0.9%
  • Internet/Mail Order – The growth of the “hero” of the Pandemic is slowing. Sales are up from September and for all other measurements. Their YTD growth rate is only half of their average since 2019, but 89% of their 78.4% growth since 2019 is real. Avg Growth Rates: +21.3%, Real: +19.3%. As expected, they are by far the growth leaders since 2019.
  • A/O Miscellaneous – This is a group of specialty retailers. Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level by December 2021 as annual sales reached $100B for the first time. Their sales dipped in January, July, September & October but all measurements have been positive for every other month. In 2022, they are by far the Sales increase leaders over 2021. Plus, 86% of their 58.8% growth since 2019 is real. Average Growth Rate is: +16.7%, Real: +14.6%. They are 2nd in growth since 2019 to the internet. I’m sure Pet Stores are helping.

There is no doubt that high inflation is an important factor in Retail. In actual $, all channels reported increases in monthly and YTD sales over 2021. When you factor in inflation, the number with any “real” growth falls to 6 for monthly & 4 for YTD. This is a clear indication of the ongoing strong impact of inflation at the retail channel level. Recent data indicates that Inflation again slowed a little. Let’s look at the impact on the Advance Retail $ numbers for November.

We have had memorable times since 2019. Some big negatives, including the 2 biggest monthly drops in history but a lot of positives in the Pandemic recovery. Total Retail reached $600B in a month for the first time and broke the $7 Trillion barrier in 2021.  Relevant Retail was also strong as annual sales reached $4T and all big groups set annual $ales records in 2021. In 2022 radical inflation is a big factor with the largest increase in 40 years. At first this reduces the amount of product sold but not $ spent. Only Relevant Rtl & Total were up from Oct., but all groups were up vs November & YTD 2021. However, in the amount of product sold: Monthly: All are down but Restaurants & Gas. YTD: All are down but Restaurants

Overall – Inflation Reality Inflation vs 2021 continues to beat the $ increase rate. Only Rel. Retl is up vs October, but all are up for the month and YTD vs 2021. Restaurants are really positive vs 2021. Gas Stations are really up for the month vs 2021 but all others are down. The real YTD sales vs 2021 are down for all but Restaurants for the 8th straight month.

Total Retail – Every month in 2022 has set a monthly sales record. November $ are $697B, the 5th highest of all time. 2022 has become somewhat normal as sales dipped in September then grew in October & November. November $ are +1.2% vs October but are up 6.5% vs November 2021 and 9.6% vs YTD 2021. However, when you factor in inflation, monthly sales are down -0.5% and YTD sales are down for the 9th consecutive month. Plus, only 39% of the 32% growth since 2019 is real. The Avg Growth Rate is: +9.7%, Real: +4.1%. Even as inflation slows, it continues to have an impact.

Restaurants – They were hit hard by the pandemic and didn’t truly start to recover until March 2021. Sales in the last 9 months of 2021 exceeded $70B and 2021 was the biggest year in history, $876B. January sales fell from December but then turned up, setting new all-time monthly records in March>May. $ fell in June, set a new record in July and then fell again in Aug>Sep. October sales rose and hit $90B for the 1st time but fell in November. They are the only big group that is positive in all measurements vs 2021 & 2019. Inflation is high at 8.4% for November and 7.5% YTD and contrary to the trend, it is not improving. 56.5% of their 32.4% growth since 2019 is real. Their Avg Growth Rate: +9.8%, Real: +5.8%. They only account for 12.7% of Total Retail $ales, but their performance helps to improve the overall retail numbers.

Auto (Motor Vehicle & Parts Dealers) – This group actively worked to overcome the stay-at-home attitude with great deals and a lot of advertising. They finished 2020 up 1% vs 2019 and hit a record $1.48T in 2021. In 2022 sales got on a rollercoaster – Jan down, Feb/Mar up, Apr>May down, then flipping monthly with November being down. They have 4 down months in actual sales which are the only reported sales negatives by any big group vs 2021. This is bad but their real YTD sales numbers are much worse. Extremely high inflation has pushed their real YTD sales down -9.1% vs 2021, the worst of any group. Plus, their 23.8% growth since 2019 is really down -11.8%. Avg Growth: +7.4%, Real: -4.1%. Inflation has slowed markedly in the last 6 months. It is likely that the 4 drops in $ales were tied to high inflation.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and obviously need less gas. This group started recovery in March 2021 and reached a record $584B for the year. Sales fell Jan>Feb, turned up Mar>Jun, fell in Jul>Sep, up in Oct then down in Nov. They have the biggest increases vs 2021 and 2019 but it is not reality. Gasoline inflation has slowed but is still high at 10.8% and 35.5% YTD. Monthly real sales are now positive, but YTD sales are still really down -2.8% vs 2021 and -3.1% vs 2019. Avg Growth Rate: +14.3%, Real: -1.1%.The YTD numbers show a big impact of inflation. Consumers spend more but buy less, even less than they bought 3 years ago.

Relevant Retail – Less Auto, Gas and Restaurants – This the “core” of U.S. retail and accounts for 60+% of Total Retail Spending. There are a variety of channels in this group, so they took a number of different paths through the pandemic. However, their only down month was April 2020. They finished 2020, up +7.1% and 2021 got even better as they reached a record $4.50T. They have led the way in Total Retail’s recovery which became widespread across the channels. Sales fell in Jan>Feb, then went on an up/down roller coaster from Mar>Nov with November up 6.8%. All months in 2022 set new records but their YTD increase is 28% below their 9.8% avg growth since 2019. Now, we’ll look at the impact of inflation. 60.9% of their 32.2% growth since 2019 is real. However real sales vs 2021 are down -2.3% for the month and -1.0% YTD. This shows that inflation is only a 2022 problem. Their Avg Growth Rate: +9.8%, Real: +6.1%. The performance of this huge group is critically important. This is where America shops. Real YTD sales are down 1% so the amount of products that consumers bought in 2022 is less than in 2021. They just paid more. That’s not good.

Inflation is slowing slightly but the impact is still there. All groups but Restaurants have no YTD real growth vs 2021 and Auto & Gas Stations are still “really down” vs YTD 2019. We’ve now had 9 straight months of real YTD drops for Total Retail and 8 straight for Relevant Retail. We are still in Inflation Phase II. Consumer spending grows but the amount bought declines. Auto sales in 4 of the last 9 months were down vs 2021, but inflation slowed so they have avoided Phase III, when consumer spending drops. Inflation also fell for Gas Stations so their monthly real sales are now positive.

Here’s a more detailed look at November by Key Channels

  • Relevant Retail: Avg Growth Rate: +9.8%, Real: +6.1%. 8 of 11 channels were up from October and 8 were up vs October 2021, but 10 were up YTD vs 2021. The negative impact of inflation is less but still there in the “real” data.
  • All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. They are up from October but down vs November 2021. Their YTD reported numbers have been positive vs 2019 since April but they are still “really” down in all measurements vs both 2019 & 2021. Avg Growth: +0.2%, Real: -2.7%.
  • Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. Inflation is a big factor in their current numbers. Sales are up from October and vs 2021. Their real numbers are all down vs 2021 and only 37.1% of their 19.7% lift from 2019 is real. Avg Growth: +6.2%, Real: +2.4%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Inflation has hit them hard. $ are up from October. The increases vs 2021 are strong but inflation is stronger. Real sales are down and only 12.9% of the growth since 2019 is real. Avg Growth: +6.8%, Real: +0.9%.
  • Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. Sales are down slightly from October but are ahead in all measurements vs 2021 – actual & “real”. Their inflation rate is low so 89% of their 16.0% growth from 2019 is real. Their Avg Growth is: +5.1%, Real: +4.5%.
  • Clothing and Accessories – They were nonessential, and clothes mattered less when you stayed home. That changed in March 2021 with strong growth through May 2022. November sales are +16.1% from October and +1.7% from 21 but real sales are down -1.8%. YTD $ are up 6.8% and 86% of their growth from 2019 is real. Avg Growth: +5.1%, Real: +4.4%.
  • Home Furnishings – Sales dipped Mar>May in 2020. Then as consumers’ focus turned to their homes, furniture became a priority. Inflation has been high. Monthly Sales are -3.3% vs 2021 and only up 1.0% YTD vs 2021. All of their real numbers vs 2021 are very negative. Only 12.5% of their growth since 2019 is real. Avg Growth: +6.0%, Real: +0.8%.
  • Electronic & Appliances – This channel has many problems. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. Sales are up from October but down vs 2021. Deflation pushed their real November sales +2.6%. Sales are even down vs 2019, but deflation kept their “real” YTD sales up +0.02% vs 2019. Avg Growth: -0.7%, Real: +0.01%.
  • Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. This year’s spring lift ended in May. Sales fell in November after a slight lift in October. Monthly & YTD sales are up vs 2021, but when you factor in double-digit inflation, the real amount sold is down for both measurements. However, 55.7% of their strong 36.8% sales growth since 2019 is real. Their Avg Growth is: +11.0%, Real: +6.6%.
  • Sporting Goods, Hobby and Book Stores – Consumers turned their attention to recreation and Sporting Goods stores sales took off. Book & Hobby Stores recovered more slowly. November $ jumped +17.3% from October and are ahead of 2021, monthly & YTD. However, real YTD $ are down again vs 2021. Inflation in this group is lower than most groups and most comes from Sporting Goods. 78.7% of their 39.0% growth since 2019 is real. Avg Growth is: +11.6%, Real: +9.3%.
  • All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 +0.9% but sales took off in March 21. They set a new monthly $ales record in December. Sales are -1.9% from October but up vs 2021. Since April they have held the top spot in YTD increase vs 2021. Their YTD growth since 2019 is 2nd only to NonStore and 81% of the 44.8% growth since 2019 is real. Their Avg Growth is: +13.1%, Real: +10.9%.
  • NonStore Retailers – 90% of their volume comes from Internet/Mail Order/TV. The pandemic accelerated online spending. They ended 2020 +21.4%. The growth continued in 2021. In December monthly sales exceeded $100B for the 1st time and they broke the $1 Trillion barrier for the year. Their YTD Growth has slowed significantly in 2022 but all measurements are positive. 87.6% of their 73.2% increase since 2019 is real. Their Avg Growth is: +20.1%, Real: +18.0%.

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

Recap – The Retail recovery from the pandemic was largely driven by Relevant Retail and by the end of 2021 it had become very widespread. In 2022, a new challenge came to the forefront – extreme inflation, the worst in 40 years. Overall, and in most product categories it has slowed in Jul>Nov. On the surface, the Retail impact is almost invisible. Sales in the total market and in the Relevant Retail group continue to grow but the growth rate has markedly slowed compared to last year. Overall, the retail market is generally in phase II of strong inflation – spending grows but the amount purchased falls. November is the traditional start of the Holiday Shopping season, so the obvious question is, “How is it going?” The channels most impacted are – Clothing, General Merchandise, Electronics, Nonstore, Sporting Gds and Miscellaneous. These channels produced 61% of Relevant Retail November Sales but 100% of the increase from October & 59% of the lift from 2021. They were up 5.3% from 2021 and real sales were +0.4%, much better than -2.3% for Relevant Retail. The Holiday lift has begun but it is rather small. BTW – 67% of the increase came from Nonstore.

Finally, here are the details and updated inflation rates for the CPIs used to calculate the impact of inflation on retail groups and channels. This includes special aggregate CPIs created with the instruction and guidance of personnel from the US BLS. I also researched data from the last Economic Census to review the share of sales by product category for the various channels to help in selecting what expenditures to include in specific aggregates. Of course, none of these specially created aggregates are 100% accurate but they are much closer than the overall CPI or available aggregates.

Monthly CPI changes of 0.2% or more are highlighted.

I’m sure that this list raises some questions. Here are some answers to some of the more obvious ones.

  1. Why is the group for Non-store different from the Internet?
    1. Non-store is not all internet. It also includes Fuel Oil Dealers, the non-motor fuel Energy Commodity.
  2. Why is there no Food at home included in Non-store or Internet?
    1. Online Grocery purchasing is becoming popular but almost all is from companies whose major business is brick ‘n mortar. These online sales are recorded under their primary channel.
  3. 6 Channels have the same CPI aggregate but represent a variety of business types.
    1. They also have a wide range of product types. Rather than try to build aggregates of a multitude of small expenditure categories, it seemed better to eliminate the biggest, influential groups that they don’t sell. This method is not perfect, but it is certainly closer than any existing aggregate.
  4. Why are Grocery and Supermarkets only tied to the Grocery CPI?
    1. According to the Economic Census, 76% of their sales comes from Grocery products. Grocery Products are the driver. The balance of their sales comes from a collection of a multitude of categories.
  5. What about Drug/Health Stores only being tied to Medical Commodities.
    1. An answer similar to the one for Grocery/Supermarkets. However, in this case Medical Commodities account for over 80% of these stores’ total sales.
  6. Why do SuperCtrs/Clubs and $ Stores have the same CPI?
    1. While the Big Stores sell much more fresh groceries, Groceries account for ¼ of $ Store sales. Both Channels generally offer most of the same product categories, but the actual product mix is different.

 

Petflation 2022 – November Update: Prices increase to +12.0% above 2021

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Inflation continues to make headlines. The YOY increases in the monthly Consumer Price Index (CPI) are larger than we have seen in decades but are slowing a little. November prices fell -0.1% from October. The CPI was still up +7.1% vs 2021, but down from +7.7% last month. The grocery price surge also slowed but they’re still up 12.0% over 2021. That’s 9 straight months of double-digit YOY monthly percentage increases. These are the first 10+% increases since 1981. As we have seen in recent years, even minor price changes can affect consumer pet spending, especially in the discretionary pet segments, so we will continue to publish monthly reports to track petflation as it evolves in the market.

Total Pet prices were 4.1% higher in December 2021 than in December 2020, while the overall CPI was up 7.0%. The gap narrowed as Petflation accelerated and reached 96.7% of the national rate in June. National inflation has slowed since July, but Petflation has increased, passing the National rate in July and is +12.0% in November, 69.0% higher than the national rate of 7.1%. We need to look a little deeper into the numbers. This and future reports will include:

  • A rolling 24 month tracking of the CPI for all pet segments and the national CPI. The base number will be pre-pandemic December 2019 in this and future reports, which will facilitate comparisons.
  • Monthly comparisons of 22 vs 21 which will include Pet Segments and relevant Human spending categories. Plus
    1. CPI change from the previous month
    2. Inflation changes for recent years (20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2022 vs 2019
    4. Average annual Year Over Year inflation rate from 2019 to 2022
  • YTD comparisons
    1. YTD numbers for the monthly comparisons #2>4 above

In our first graph we will track the monthly change in prices for the 24 months from November 2020 to November 2022. We will use December 2019 as a base number so we can track the progress from pre-pandemic times through an eventual recovery. Inflation is a complex issue. This chart is designed to give you a visual image of the flow of pricing. You can see the similarities and differences in patterns between segments and compare them to the overall U.S. CPI. The current numbers plus those from 12 and 24 months earlier are included as are the year-end numbers for 2020 & 2021.This will give you some key waypoints for comparisons.

The pandemic hit home in 2020. In November, the national CPI was only +1.3% and Pet prices were +0.1%. As you can see, Veterinary and Services prices generally inflated after mid-2020, similar to the overall CPI while Food and Supplies prices generally deflated until late 2021. After that time, Petflation took off. Pet Food prices consistently increased but the other segments had mixed patterns until July 2022, when all increased. In August>October Petflation accelerated, except for a miniscule dip in Veterinary in October. In November, Services and Food prices surged, Veterinary stabilized, but Supplies fell. However, Total Petflation since December 2019 passed the National CPI lift for the 1st time.

  • U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 2021 and continued to grow until flattening out in Jul/Aug 2022. 43% of the overall 15.9% increase since 2019 happened from Jan>June 2022.
  • Pet Food – Prices stayed generally below December 2019 levels from April 2020 to September 2021, when they turned up. There was a sharp increase in December but 90% of the 16.6% increase has happened since January.
  • Pet Supplies – Supplies prices were high in December 2019 due to the added tariffs. They then had a “deflated” roller coaster ride until mid-2021 when they returned to December 2019 prices and essentially stayed there until 2022 when they turned sharply up reaching a new all-time pricing high in January, beating the 2009 record. They plateaued from February> May, turned up in June, flattened in July, turned up in Aug>Oct then fell in November.
  • Pet Services – Normally inflation is 2+%. Perhaps due to closures, prices increased at a lower rate in 2020. In 2021 consumer demand increased but there were fewer outlets. Inflation grew in 2021 with the biggest lift in Jan>Apr. Inflation was stronger in 2022 but it got on a rollercoaster in Mar>June. It has turned up again July>Nov.
  • Veterinary – Inflation has been pretty consistent in Veterinary. Prices turned up in March 2020 and grew through 2021. A pricing surge began in December which put them above the overall CPI. In May prices fell and stabilized in June. Prices turned up again and despite an October dip they have been above the National CPI since July.
  • Total Pet – The blending of patterns made Total Pet appear calm. In December 2021 prices surged. The segments had mixed up & downs Mar>Jun but Petflation has accelerated since July and passed the U.S. CPI in November.

Next, we’ll turn our attention to the Year over Year inflation rate change for November and compare it to last month, last year and to previous years. We’ve added some human categories to put the pet numbers into perspective.

Overall, Prices were -0.1% vs October but were up 7.1% vs November 2021. The Grocery increase is down to 12.0% which is still a big negative but there is another area of concern. 6 of 9 categories had increases from October. 4 were over 0.5%, 3 were Pet. The U.S. CPI rate is slowing but Petflation, especially in Food & now Services, is getting worse.

  • U.S. CPI– Prices are -0.1% from October. The YOY increase is +7.1%, down from the 9.1% peak in June. The targeted inflation rate is <2% so we are still about 4 times higher than the target. However, a 5th slight decline is good news.
  • Pet Food– Prices are +0.8% vs October and 15.7% vs Nov 21. They are now 31% higher than the Food at Home inflation rate – not good news! The YOY increase is being measured against a time when prices were essentially at 2019 levels, but that increase is still over 4 times the pre-pandemic 3.7% increase from 2018 to 2019.
  • Food at Home – Prices are down -0.04% from October. The increase from 2021 is 12.0%, down slightly from 12.4% last month. Inflation for this category since 2019 is the highest on the chart and is 49% more than the national CPI.
  • Pets & Supplies – Prices fell -0.4% from October, the 2nd biggest decrease overall and the only one in Pet. They still have the lowest increase since 2019 but are still the 3rd highest in monthly increase vs 2021 for Pet Segments.
  • Veterinary Services – November prices rose +0.1% from October. They are +11.0% from 2021 and trail only Food in the Pet Industry. They also remain 2nd in the increase since 2019 with 19.2% compared to Food at home at 23.4%.
  • Medical Services – Prices turned sharply up at the start of the pandemic but then inflation slowed and fell to a low rate in 2021. In November prices fell again and 2022 prices are now 14% below the pre-pandemic 2018>19 rate.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021/22. November prices spiked, +1.1% from October and +7.4% vs 2021, reaching yet another new record high.
  • Haircuts & Other Personal Services – Prices are +1.4% from Oct. and +6.8% from 2021. They are +16.9% since 2019.
  • Total Pet– Petflation is strong, 3.4 times the rate of last year and is 69.0% ahead of the National CPI. All but Supplies increased prices in November, but inflation is still primarily being driven by Food & Veterinary. Inflation can cause reduced purchase frequency in Supplies, Services and Veterinary. Super Premium Food has been generally immune as consumers are used to paying a lot and it is needed every day. We’ll see if consumers are willing to pay the new high prices for food and buy the more discretionary products/services at the same frequency as they did in the past.

Now here’s a look at Year-to-Date numbers. How does 2022 compare to previous years…so far?

The increase from 2021 to 2022 is the biggest for 8 of 9 categories. The average annual increase since 2019 is 3.4% or more for all but Pet Food & Pet Supplies. This is largely due to deflation in the 1st half of 2021.

  • U.S. CPI – The current increase is still almost double the average increase from 2019>2022, but nearly 4 times the average annual increase from 2018>2021. Inflation is a big problem that started recently.
  • Pet Food – Inflation is growing stronger, especially after deflation in the 1st half of 2021 kept YTD prices low.
  • Food at Home – The 2022 YTD inflation beat the U.S. CPI by 41%. You can see the impact of supply chain issues.
  • Pets & Pet Supplies – Prices have been at record levels since January. Although the 2021>22 increase is being measured against a “flat” 2021, it is significant and just behind Food & Veterinary in the Pet Industry.
  • Veterinary Services – Trails only Food at Home in inflation since 2019 and is the only segment on the chart with a 3+% inflation rate each year throughout the pandemic and recovery. No matter what, just charge more.
  • Medical Services – Prices went up significantly at the beginning of the pandemic, but inflation slowed in 2021. In 2022 prices surged but have now slowed. However, the inflation rate is still 26% higher than pre-pandemic 2018>19.
  • Pet Services – May set a record for the biggest year over year monthly increase in history. Prices fell in June but began to grow again in July, reaching record highs in Sep>Nov. The November YTD increase of 6.2% is the largest in history. Demand has grown for Pet Services while the availability has decreased, a formula for inflation.
  • Haircuts & Personal Services – The services segments, essential & non-essential were hit hardest by the pandemic. After a small decrease in March, prices turned up again. The YTD rate just passed 2020>21 and is 96% more than 2018>19. Consumers are paying over 15% more than in 2019. This usually reduces the purchase frequency.
  • Total Pet – We have seen basically two different inflation patterns. After 2019, Prices in the Services segments continued to increase, and the rate accelerated as we moved into 2021. The product segments – Food and Supplies, were on a different path. They generally deflated in 2020 and didn’t return to 2019 levels until mid-year 2021. Food prices began a slow increase, but Supplies remained stable until near yearend. In 2022, Food and Supplies prices turned sharply up. Food prices have continued to climb. Supplies prices stabilized Apr>May, grew Jun>Oct, then fell in November. The Services segments have had ups & downs but are generally inflating. The net is a November YTD Petflation increase vs 2021 of 8.8%, ahead of the high 8.1% National rate. In March, it was only 72.5% of the CPI.

Petflation is growing stronger. Will it impact spending? Let’s put it into perspective. The 8.8% current YTD increase in Total Pet is still below the 8.9% record set in 2009 but about 6 times more than the 1.5% avg since then. Pet spending continues to move to higher income groups, but the impact of inflation varies by segment. Supplies is the most affected as many categories are price sensitive. Super Premium Food has become widespread because the perceived value has grown. Higher prices generally just push people to value shop. Veterinary prices have strongly inflated for years, resulting in a reduction in visit frequency. Spending in the Services segment is driven by higher incomes, so inflation is less impactful. We’ll just have to wait and see the overall impact on Pet Spending of the continued strong Petflation.

2021 U.S. Pet Spending by Generation – Gen X Moves to the Top!

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In 2021 Americans spent $99.98B on our companion animals, 1.12% of $8.94 Trillion in total expenditures. Pet Spending was up $16.23B (+19.4%), the biggest increase in history. In 2020 Consumers focused on the necessary segments – Food and Veterinary, while the discretionary segments – Supplies and Services, suffered. Out of fear of shortages, Pet Parents binge bought Food early in the pandemic. On the negative side, closures caused Services to have a radical reduction in frequency. In 2021 there was no repeat of the Food binge so $ fell. However, all other segments had record increases.

In this report we will look at the post pandemic surge in Pet Spending for the most popular demographic measurement – by Generation. Although Gen Z $ are often bundled with Millennials for long term comparisons, we will also compare their 2021 spending vs 2020. Using data from the US BLS Consumer Expenditure Survey we’ll compare the Generations.

We’ll start by defining the generations and looking at their share of U.S. Consumer Units (CUs are basically Households)

GENERATIONS DEFINED

Gen Z: Born after 1996

In 2021, Age under 25

Millennials: Born 1981 to 1996

In 2021, Age 25 to 40

Gen X: Born 1965 to 1980

In 2021, Age 41 to 56

Baby Boomers: Born 1946 to 1964

In 2021 Age 57 to 75

Silent/Greatest: Born before 1946

In 2021, Age 75+

  • Baby Boomers still have the largest number of CU’s at 43.6M and 32.7% of the total. They had a slight increase in 2021 but generally they have been losing ground. In fact, they have 1.5M fewer CU’s than in 2016.
  • The Oldest Generations will continue to lose CUs primarily due to death or movement to permanent care facilities.
  • Gen X has the second most CUs but lost a little ground in 2021.
  • Millennials have the largest number of individuals, but they rank only third in the number of CU’s.
  • Both Gen Z & Millennials gained CUs. The pandemic recovery saw many younger folks leave their parents’ homes.

Now let’s look at some key CU Characteristics

Significant changes were the decrease in homeownership and CU size. This was primarily driven by the oldest group. Gen Xers still have the biggest CUs and the most Earners while Millennials have the most children <18 per CU.

  • CU Size – is down from 2.5 due to a decrease by the Silent/Greatest generations. CUs with 2+ people still account for 69.5% of all U.S. CUs (down from 70.2% in 2020) and 80.6% of pet $ (up from 80.3% primarily due to a huge lift by 2 person CUs). Millennials are actively building their H/Hs. However, CU size, with all the related responsibilities, still peaks with the Gen Xers and then starts dropping. The Boomers are the last group with 2+ CUs but that will end soon. Gen Z joined the 2+ group for the 1st time in 2020 and moved to 2.1 in 2021.
  • # Children <18 – 27.1% of U.S. CU’s have children, down from 27.6% and they generate 31.9% of Pet Spending, down from 38.4%. The slight drop in CUs came from families with an oldest child under 6 or over 18. The drop in Total Pet Spending came solely from an $8B decrease by families with an oldest child over 18. All other CUs, with or without children spent more. The net result was CUs without children spent $16.53B more while those with children spent -$0.3B less. Overall, there was no change in the # of children per CU in 2021 but there was 1 change within groups. Gen X CUs fell from 0.9 to 0.8 in the average number of children <18. We noted the $8B drop in spending with an oldest child over 18. This group is often Baby Boomers.
  • # Earners – Pet spending is often tied to the number of earners in a CU. In 2021, all Earner & No Earner CUs spent more on their pets. 2+ earner CUs still spent the most, but No Earner CUs had the biggest increase, +$6.3B (+60.5%). No Earners are usually older and retired. This includes the oldest Boomers but also the Silent/Greatest generations.
  • Homeownership – Owning and controlling your own space has always been a major factor in increased Pet Ownership and spending. In 2021 homeownership decreased to 64.72% from 65.81%. Gen Z & Millennials had increases but Gen X and the oldest group had decreases. The homeowners share of Total Pet Spending fell from 83.3% to 80.0% due to a -$3.7B drop from those without a mortgage. This is the group that binge bought food in 2020. Homeowners with mortgages and Renters spent $19.9B more on their pets. We should also note that the number of homeowners w/no Mtge was unchanged overall and for Boomers & Gen X. It grew slightly for Gen Z & Millennials but this was offset by a decrease from the Silent/Greatest generations.
    • As expected, Gen Z are the most common renters in society. Homeownership by Millennials has moved up to 49% but it is still only 75% of the national average.
    • Gen Xers have been above the national avg since 2018 and Homeownership continues to increase with age.

Next, we’ll compare the Generations to the National Avg.:

In Income, Total CU Spending, Total Pet Spending and the Pet Share of Total CU Spending

CU National Avg: Income – $87,432; Total CU Spending – $66,906; Total Pet Spending – $748.93; Pet Share – 1.12%

  • Income – The Gen Xers are still at the top but their lead fell slightly. The incomes of Boomers and Silent/Greatest continued to fall. Millennials’ income beat the national average in 2020 and continues to grow. The income of Gen Z passed that of the oldest Americans so they are no longer in last place.
  • Total Spending – The Gen Xers make the most and spend the most but it’s not out of line with their income. Millennials increased their spending so that it now beats the national average. Like their income, Boomers’ spending fell even further below the national average. Due to a big lift in spending in relation to income, the oldest group is once again deficit spending in relation to their after tax income. With continued strong increases in both Income and spending, the retail importance of Millennials is growing.
  • Pet Spending – Again only 2 groups exceed the national average, but Gen X returned to the top spot. Millennials are still 3rd, 24% below Gen X but only 6% below Boomers. The oldest and youngest groups still trail.
  • Pet Spending Share of Total Spending – The national number grew from 1.04% to 1.12%. The growth was driven by increases from all groups but Gen Z and Boomers. In 2020 Boomers were the only group to spend more than 1% of their total expenditures on their pets. In 2021 Boomers are still the leaders but only Gen Z spent less than 1% of their total expenditures on their pets – perhaps the surest sign of the growing importance of the Pet industry.

Now, let’s look at Total Pet Spending by Generation in terms of market share as well as the actual annual $ spent for 2016 through 2021. The 2021 numbers are boxed in red (decrease) or green (increase) to note the change from 2020.

  • Boomers are no longer the biggest force in Pet Spending. Gen X took over the top spot in 2021…barely.
  • The pandemic both continued and broke some long-term spending patterns. Spending in the oldest group is low and had been slowly falling. It surged in 2022. In contrast, the youngest group (combined Millennials & Gen Z) is the only one showing consistent year after year growth. Gen X had also been growing every year… until 2020. They did have the biggest “recovery” in 2021. The Boomers have been on a rollercoaster ride because they are the most likely group to have a strong reaction to trends, especially in this era of super premium foods. They also have the money to act on their feelings. In 2020 this was very apparent as they were the primary group that panic bought Pet Food out of fear of possible shortages due to the pandemic. In 2021 they couldn’t quite equal their 2020 $.
  • In 2021, only Boomers spent less. Silent/Greatest: +$1.31B. Boomers: -1.90B. Gen X: +9.67B. Millennials: +$6.44B. Gen Z: +$0.71B.
  • Boomers – Ave CU spent $764.68 (-36.10); 2021 Total Pet spending = $32.94B, Down $1.90B (-5.5%)
    • 2016>2021: Up $3.33B; They stayed on the roller coaster as spending turned down but is still +10.2% vs 2016.
  • Gen X – Ave CU spent $941.87 (+276.65); 2021 Total Pet Spending = $33.62B, Up $9.67B (+40.3%)
    • 2016>2021: Up $14.28B Their annual Pet spending growth since 2015 had been strong and consistent until a drop in 2020. In 2021 they became #1 in CU Pet spending and Total $. Their spending is up 74% from 2016.
  • Millennials + Gen Z – Ave CU spent $650.97 (+$117.16); 2021 Total Pet Spending = $26.75B, Up $7.15B (+36.5%)
    • 2016>2021: Up $15.31B; As the income and overall spending of Millennials grows, their pet spending has also grown every year. The “youngsters” have the biggest increase in $ since 2016 of any group, $15.31B, +134%.
    • Millennials Only– Ave CU spent $716.51 (+$151.44); 2021 Total Pet Spending= $25.11B, Up $6.44B (+34.5%)
    • Gen Z Only – Ave CU spent $271.27 (+$16.59); 2021 Total Pet Spending= $1.64B, Up $0.71 (+76.9%)
  • Silent + Greatest – Ave CU spent $488.50 (+$134.30); 2021 Total Pet Spending = $6.66B, Up $1.31B (+24.6%)
    • 2016>2021: Down $0.24B; They also had a huge lift in CU pet spending but CU count fell 12.3%, -30% from 2016.

Gen X took over the top spot in Total Pet Spending, but Millennials’ performance was also strong. Only Boomers spent less in 2021, but their CU spending still exceeds the national average. The pet spending “torch” is slowly being passed.

Let’s look at the individual segments. First, Pet Food…

  • Pet Food trends are more pronounced for Boomers, and they had the only decrease. Pet parenting is fading In the older generations, but they finally moved to Super Premium. The younger groups have had more consistent growth.
  • Since 2014, Millennials’ have led the way in food trends, and they are the only group with an annual increase every year since 2016. The panic food buying in 2020 by Boomers was more of an emotional reaction than a trend.
  • Boomers – Ave CU spent $280.45 (-161.61); 2021 Pet Food spending = $11.82, Down $7.49B (-38.8%)
    • 2016>2021: Down $0.1B Big reactions to every trend. They spent less than 2020 and even less than in 2016.
  • Gen X – Ave CU spent $306.27 (+$75.91); 2021 Pet Food spending = $11.12B, Up $2.82B (+34.0%)
    • 2016>2021: Up $4.26B They reacted to the FDA warning by further upgrading their food. No pandemic panic buying for them. They value shopped. In 2021 they surged to the top in CU Pet Food Spending.
  • Millennials + Gen Z – Ave CU spent $191.28 (+$0.26); 2021 Pet Food Spending = $7.86B, Up $0.79B (+11.2%)
    • 2016>2021: Up $3.05B They are the only group with increased spending every year since 2016. Their income is growing as is a commitment to their pets. They often pioneer food upgrades and the pandemic had little impact.
    • Millennials Only – Ave CU spent $206.12 (-$0.82); 2021 Pet Food spending = $7.23B, Up $0.37B (+5.4%)
    • Gen Z Only – Ave CU spent $104.44 (+$51.47); 2021 Pet Food spending = $0.63B, Up $0.42B (+209.0%)
  • Silent/Greatest – Ave CU spent $262.00 (+$114.43); 2021 Pet Food spending = $3.61B, Up $1.44B (+66.1%)
    • 2016>2021: Up $0.57B; Their CU #s are fading but they are committed to pets as they upgraded food in 2021.

Pet Food Spending is driven by trends – new Super Premium Foods, FDA warnings and even fear of pandemic shortages. Millennials lead in thoughtful changes and Boomers lead in emotion but Gen X leads in CU $.   Now, Supplies Spending.

  • All groups spent more but Gen X increased their lead at the top with a 71% spending increase.. The younger groups dominate this segment as Gen Xers and Millennials/Gen Z together account for 68% of Supplies spending.
  • Gen X – Ave CU spent $265.43 (+$112.96); 2021 Pet Supplies spending = $9.40B, Up $3.91B (+71.2%)
    • 2016>2021: Up $4.15B; Gen Xers are again the leader in CU spending. They were affected by tarifflation in 2019, but essentially held their ground in 2020. In 2021 spending exploded as they made up for 2019 & 2020.
  • Baby Boomers – Ave CU spent $154.03 (+$52.18); 2021 Pet Supplies spending = $6.72B, Up $2.31B (+52.3%)
    • 2016>2021: Up $0.35B In 2019 tarifflation hit. In 2020 they focused on Food! In 2021 they made it back to 2018 $
  • Millennials + Gen Z – Ave CU spent $165.99 (+$42.23); 2021 Pet Supplies spending = $6.82B, Up $2.30B (+50.8%)
    • 2016>2021: Up $4.01B; Millennials earn their share in Supplies spending. They were the least impacted by the tariffs in 2019 and spent more in 2020. Their spending then took off in 2021, with a 53% increase.
    • Millennials Only– Ave CU spent $180.37 (+$55.32) 2021 Pet Supplies spending= $6.32B, Up $2.20B (+53.3%)
    • Gen Z Only – Ave CU spent $82.95 (-$28.97); 2021 Pet Supplies spending = $0.50B, Up $0.10B (+25.4%)
  • Silent + Greatest – Ave CU spent $64.27 (+$16.52); 2021 Pet Supplies spending = $0.87B, Up $0.13B (+18.0%)
    • 2016>2021: Down $0.63B; This $ conscious group was hit hard by tariffs and the pandemic, but had a small lift.

In 2016 most Consumers value shopped for super premium food and spent some of their savings on Supplies. Supply prices dropped in 2017 and everyone under 72 spent more! Late 2018 saw added tariffs but only Boomers dialed back spending. In 2019 the sharply rising prices drove spending down in all groups. In 2020 Millennials and Gen X spent a little more while the older groups spent a lot less. In 2021 spending took off in all groups as they made up for recent years.

Next, we’ll turn our attention to the Service Segments. First, Non-Veterinary Pet Services

  • Gen Z & the oldest group spent less. Gen X is still #1 in CU spending and $. Gen X/Millennial/Gen Z share = 62.5%
  • Gen X – Ave CU spent $91.64 (+$21.66); 2021 Pet Services spending = $3.25B, Up $0.72B (+28.7%)
    • 2016>2021: Up $1.52B; In 2020 they had the 2nd biggest drop. In 2021 they had the 2nd biggest lift but are still #1.
  • Baby Boomers – Ave CU spent $70.06 (+$19.46); 2021 Pet Services spending = $3.06B, Up $0.86B (+39.5%)
    • 2016>2021: Down $0.15B; The biggest $ drop in 2020 and the biggest lift in 2021, but they’re still behind 2016 $.
  • Millennials + Gen Z – Ave CU spent $59.51 (+$11.43); 2021 Pet Services spending = $2.45B, Up $0.69B (+39.1%)
    • 2016>2021: Up $1.32B; In 2020 they had the smallest decrease of any group and with the 2021 lift they have more than doubled their 2016 spending. Despite a 31% increase in CUs Gen Z’s Services spending fell.
    • Millennials Only– Ave CU spent $66.61 (+$17.09); 2021 Pet Services spending = $2.33B, Up $0.70 (+42.9%)
    • Gen Z – Ave CU spent $18.53 (-$16.39); 2021 Pet Services spending = $0.11B, Down $0.01B (-10.2%)
  • Silent + Greatest – Ave CU spent $26.29 (-$1.29); 2021 Pet Services spending = $0.35B, Down $0.07B (-16.4%)
    • 2016>2021: Down $0.42B; They definitely have the need but spending continues to fall, down 55% from 2016.

This segment had slow annual growth until 2017 which saw a small drop in spending due to an extremely competitive environment. In 2018, the increased number of outlets really hit home and spending exploded. 2019 brought another small decrease as Gen Xers & Millennials looked for and found a better deal. 2020 brought pandemic restrictions and closures. 2021 produced a record lift due to a 9.2% increase in spending and an 18.8% increase in frequency.

Now, Veterinary Services

  • Boomers are still the biggest spenders in this segment, but they only lead Gen Xers in $ because of more CUs.
  • The younger groups have a consistently growing commitment to this Pet Parenting responsibility. The combined Veterinary spending of Millennials/Gen Z and Gen Xers has increased $11.29B (+138%) since 2016.
  • Boomers – Ave CU spent $260.14 (+$53.87); 2021 Veterinary spending= $11.35B, Up $2.41B (+27.0%)
    • 2016>2021: Up $3.24B; In 2020, Boomers focused on needed segments – Food & Veterinary. In 2021 they changed their focus to Supplies, Services and Veterinary, including a Veterinary spending increase of $2.4B.
  • Gen X – Ave CU spent $278.53 (+$66.12); 2021 Veterinary spending= $9.86B, Up $2.21B (+28.9%)
    • 2016>2021: Up $4.37B; In 2016 their Veterinary spending exceeded the national CU Average. In 2018, they took over the top spot in CU spending and increased their lead in 2021. This produced a $2.2B lift in Veterinary $.
  • Millennials + Gen Z– Ave CU spent $234.18 (+$63.24); 2021 Veterinary Spending $9.62B, Up $3.38B (+54.0%)
    • 2016>2021: Up $6.92B; They had the biggest lift and spending is up 256% from 2016. Veterinary is a big priority.
    • Millennials Only – Ave CU spent $263.41 (+$79.85); 2021 Veterinary spending = $9.23B, Up $3.18B (+52.5%)
    • Gen Z Only – Ave CU spent $65.35 (+$10.48); 2021 Veterinary spending = $0.40B, Up $0.20B (+101.5%)
  • Silent + Greatest – Ave CU spent $135.94 (+$4.64); 2021 Veterinary spending $1.83B, Down $0.19B (-9.2%)
    • 2016>2021: Up $0.02B; Their pets’ health is still a priority. Spending fell due to a 12.3% decrease in CUs.

Gen Xers and Millennials have consistently increased their commitment to Veterinary Services. Back in 2015, their share of Veterinary Spending was 36%. It is now 60%. This indicates a big, fundamental change in spending behavior.

One last chart to compare the share of spending to the share of total CU’s to see who is “earning their share”.

  • Gen X Performance – Total: 126.9%; Food: 121.9%; Supplies: 149.0%; Services: 134.5%; Veterinary: 113.9%
    • Gen Xers returned to the top spot in performance. This year they earned their share in Total Pet and all industry segments. Except for the 2020 dip they increased their Total Pet Spending every year since 2016. In 2021 they made up for the dip with a big increase in every segment. Their spending has become more balanced and they are now the performance leader in every segment. Gen Xers range in age from 41 to 56 so they are just entering the peak earning years. Expect their commitment and pet spending to continue to grow.
  • Baby Boomers Performance – Total: 100.9%; Food: 105.2%; Supplies: 86.4%; Services: 102.8%; Veterinary: 106.4%
    • Boomers led the way in building the industry but are no longer the “top dogs” in $. They earn their share in all but Supplies and are still the spending leader in the “needed” segments – Food & Veterinary. They are also the most emotional Pet Parents, so their spending is subject to radical swings like 2020’s panic, binge buying of Pet Food. They should still be a major force in the Pet Industry for many more years, but the Gen Xers have now stepped up and the Millennials are also preparing to eventually take their turn at the top.
  • Millennials Performance – Total: 95.8%; Food: 80.2%; Supplies: 101.2%; Services: 97.8%; Veterinary: 107.7%
    • Millennials are now the only group to have increased their pet spending every year since 2016. Their spending is more evenly balanced, and performance has improved but their future as the Pet Parenting spending leaders is still a long way off. Their income, home ownership and pet spending are all increasing. They are educated and well connected. Indications are that they may lead the way in adopting new trends, especially in food. Their progress is good news, but in reality, their leadership is probably at least a decade away.
  • Silent/Greatest Performance – Total: 66.1%; Food: 104.1%; Supplies: 36.1%; Services: 38.6%; Veterinary: 55.6%
    • Pet Parenting is more challenging in old age, but they remain committed. 1.09% of their total spending is on pets.
  • Gen Z Performance – Total: 36.1%; Food: 40.1; Supplies: 46.6%; Services: 27.2%; Veterinary: 26.7%
    • They are just beginning so the numbers are low. Their performance actually fell due to a 31% increase in CUs.

Baby Boomers are still the heart of the industry, but Gen Xers are now the $ leaders. Expect Gen X’ growth to continue as they are pursued by Millennials. Both groups seem ready, willing and able to take their turn at the top. Pet Spending has become more balanced across the generations. This bodes well for the continued strong growth of the industry.

 

2021 U.S. TOTAL PET SPENDING $99.98B…Up ↑$16.23B

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In 2021 Total Pet Spending in the U.S. was $99.98B, a $16.23B (19.4%) increase from 2020. Pet Food spending fell because there was no binge buying in 2021. However, spending in the other segments skyrocketed producing the industry’s biggest increase in history. Pet Parents began to use Pet Services again, got all of the Vet services that their “children” needed and bought all the supplies that they had been putting off during the pandemic.

  • A $2.44B (-6.6%) decrease in Food
  • A $8.65B (+57.0%) increase in Supplies
  • A $7.82B (+31.5%) increase in Veterinary
  • A $2.21B (+32.0%) increase in Services

Let’s see how these numbers blend together at the household (CU) level. Weekly, 24.4 million CU’s (1/5) spent $ on their Pets – food, supplies, services, veterinary or any combination – up from 22.5M in 2020 but down from 27.1M in 2019.

In 2021, the average U.S. CU (pet & non-pet) spent a total of $748.93 on their Pets. This was a +17.4% increase from the $637.78 spent in 2020. However, this doesn’t “add up” to a 19.4% increase in Total Pet Spending. With additional data provided from the US BLS, here is what happened.

  • 1.8% more CU’s
  • Spent 9.5% more $
  • 7.1% more often

If 68% of U.S. CU’s are pet parents, then their annual CU Total Pet Spending was $1101.37. 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>2021 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 followed by a small decrease.
  • In 2014-15, the Super Premium Food upgrade began, with the biggest lift coming in 2015.
  • 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).
  • In 2021 there was no Food binge but in all other segments consumers made up for all the lost ground…and more!

Now we’ll look at some Demographics. First, 2021 Total Pet Spending by Income Group

Only the $100>149K income group spent less, but $150K> accounted for 87% of the record $16.23B increase.

Nationally: · Total Pet: ↑$16.23B   · Food: ↓$2.44B  · Supplies: ↑$8.65B  · Services: ↑$2.21B  · Veterinary: ↑$7.82B

  • < $70K – (55.2% of U.S. CUs); CU Pet Spending: $430.09, +6.3%; Total $: $31.77B, ↑$1.86B (+6.2%) ..
    • Food ↓$0.09B
    • Supplies ↑$1.63B
    • Services ↑$0.17B
    • Veterinary ↑$0.15B
    • Money matters a lot to this group. In the pandemic they focused on Pet needs, especially Veterinary. In 2021 they spent less on food but more in all other segments, especially Supplies and they beat their previous $ high in 2017.
  • >$70K – (44.8% of U.S. CUs); CU Pet Spending: $1143.31, +22.0%; Total $: $68.21B, ↑$14.37B (+26.7%) from…
    • Food ↓$2.35B
    • Supplies ↑$7.02B
    • Services ↑$2.04B
    • Veterinary ↑$7.67B
    • This group continues to grow, up 4.9% in 2021. They accounted for 88.5% of the spending increase. However, it is more complicated. The $70>99K & $150K> groups had big increases, including lifts in all segments. The $100>149K had a big drop in Food because they binge bought in 2020 which turned their Total Spending down.
  • < $30K – (25.5% of U.S. CUs); CU Pet Spending: $335.90, +7.0%; Total $: $11.26B, ↑$1.07B (+10.5%) from…
    • Food ↑$0.05B
    • Supplies ↑$0.69B
    • Services ↑$0.11B
    • Veterinary ↑$0.21B
    • This lowest income group has had relatively stable spending in recent years but they remain committed to their pets. They spent more in all segments, especially Supplies & Veterinary, and beat their previous $ record in 2017.
  • $30>$70K – (29.7% of CUs); CU Pet Spending: $509.14, +6.7%; Total $: $20.51B, ↑$0.79B (+4.0%) from…
    • Food ↓$0.14B
    • Supplies ↑$0.94B
    • Services ↑$0.06B
    • Veterinary ↓$0.07B
    • Due to a big lift in Supplies they managed to eke out a small  increase. The small drop in Veterinary spending comes after a 23% increase in 2020. By the way, they too set a $ record, barely – $20.51B over $20.46B.
  • $70>$99K – (14.8% of CUs); CU Pet Spending: $794.91, +43.8%; Tot $: $15.74B, ↑$5.10B (+48.0%) from…
    • Food ↑$2.45B
    • Supplies ↑$0.86B
    • Services ↑$0.22B
    • Veterinary ↑$1.57B
    • 2020 had double digit % drops in every segment. In 2021, all were up 26+%. A big turnaround for middle income.
  • $100K>$149K– (14.2% of CUs); CU Pet Spend: $977.96, -21.1%; Tot $: $18.50B, ↓$4.87B (-20.8%) from…
    • Food ↓$8.92B
    • Supplies ↑$1.59B
    • Services ↑$0.67B
    • Veterinary ↑$1.80B
    • They were the group leader in 2015 & 2017. In 2016, they were the worst performers. In 2018/2019 their Total $ were stable. In 2020 they drove most of the Food binge buying. In 2021 they had strong lifts in Supplies, Services & Veterinary but a huge drop in Food turned Total $ down. They are reactive and have the money to take action.
  • $150K> – (15.8% of CUs); CU Pet Spending: $1621.19, +56.0%; Total $: $33.98B, ↑$14.14B (+71.3%) from…
    • Food ↑$4.12B
    • Supplies ↑$4.57B
    • Services ↑$1.15B
    • Veterinary ↑$4.30
    • In 2020, the $150>199K group drove the overall spending in the highest income group down for the 1st time in my records going back to 2013. In 2021 they were spectacular. Both the $150>200K & $200K> groups had double digit increases in all segments and they generated 87% of the Total Industry Increase. This demonstrates the growing importance of higher income CUs to the Pet Industry. FYI – The $200K> group has 8.6% of CUs but generates 20.6% of all Pet $ and their 2021 increase was $9.0B, 55.5% of the $16.23B record lift.
  • < $100K – (70.0% of CUs); CU Pet Spending: $507.21, +16.5%; Total $: $47.50B, ↑$6.96B (+17.2%)…
    • Food ↑$2.36B
    • Supplies ↑$2.49B
    • Services ↑$0.39
    • Veterinary ↑$1.72
    • A spending sandwich, heavily loaded on the top.  <30K: +$1.07B; $30>49K: -$1.90B; $50>99K: +$7.79B
  • >$100K – (30.0% of CUs); CU Pet Spending: $1316.02, +16.7%; Total $: $52.48, ↑$9.27B (+21.5%) from…
    • Food ↓$4.80B
    • Supplies ↑$6.16B
    • Services ↑$1.82B
    • Veterinary ↑$6.10B
    • We added the over/under $100K measurement last year because $100K> exceeded 50% of the $ for the 1st time. Their lead is growing. However, you see that the big Food $ drop by $100>149K still had a major impact.

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 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. The key results were the big drop from $70>99K and the huge lift from $100>149K. This helped drive the 50/50 $ divide up to $103K, a huge change from $94K in 2019. 2021 brought a record lift and record spending in all segments but Food. This increase was driven by the highest income groups, over $150K. The 50/50 spending divide moved up to $107K as CU income continues to grow in importance in Total Pet Spending.

Next let’s look at 2021 Total Pet Spending by Age Group

Only the 55>64 year-olds spent less. Everyone else spent more.

Nationally: · Total Pet: ↑$16.23B   · Food: ↓$2.44B  · Supplies: ↑$8.65B  · Services: ↑$2.21B  · Veterinary: ↑$7.82B

  • <25 – (4.9% of U.S. CUs); CU Pet Spending: $269.75, -4.7%; Total $: $1.79B, ↑$0.35B (+24.2%) from…
    • Food ↑$0.27B
    • Supplies ↓$0.03B
    • Services ↑$0.02B
    • Veterinary ↑$0.09B
    • The increase came from a 31% gain in CUs as a huge number moved out of their parents’ home.
  • 25-34 – (15.7% of U.S. CUs); CU Pet Spending: $701.04, +19.5%; Total $: $14.90B, ↑$2.48B (+20.0%) from…
    • Food ↑$0.12B
    • Supplies ↑$0.93B
    • Services ↑$0.17B
    • Veterinary ↑$1.26B
    • These Millennials have often led the way in new food trends. In 2020 they stepped up in the pandemic and the lift continued into 2021, with spending increases in all segments & 20% overall.
  • 35-44 – (17.2% of CUs); CU Pet Spending: $937.83, +57.7%; Total $: $21.39B, ↑$8.10B (+60.9%) from…
    • Food ↑$1.24B
    • Supplies ↑$4.00B
    • Services ↑$0.78B
    • Veterinary ↑$2.08B
    • They have the largest families and are building their careers, so they are very sensitive to and cautionary in times of change. In 2020, they had double digit % decreases in all but Supplies. In the 2021 recovery they spent more in all segments, had the biggest increase of any age group and moved to the top in Total Pet CU $pending.
  • 45-54 – (16.7% of U.S. CUs); CU Pet Spending: $828.19, +19.9%; Total $: $18.51B, ↑$3.03B (+19.6%) from…
    • Food ↑$1.12B
    • Supplies ↑$0.85B
    • Services ↓$0.02B
    • Veterinary ↑$1.08B
    • This group has the highest income and occupied the top spot in Pet Spending in 2018. In 2019 & 2020 their spending and rank fell. In 2021, except for a minor decrease in Services $ due to fewer CUs, they spent substantially more on their pets. They fell to 3rd place in Total Pet spending but at a record level.
  • 55-64 – (18.5% of U.S. CUs); CU Pet Spending: $849.56, -11.7%; Total $: $20.95B, ↓$3.20B (-13.3%) from…
    • Food ↓$7.89B
    • Supplies ↑$1.73B
    • Services ↑$0.75B
    • Veterinary ↑$2.20B
    • 90% are still younger Baby Boomers and they are especially reactive. They were the primary drivers behind the 2020 binge spending on Pet Food. In 2021 they turned their attention to the other segments with a $4.7B increase in spending. However, it didn’t make up for the $7.9B drop in Food $.
  • 65-74 – (16.1% of U.S. CUs); CU Pet Spending: $711.22, +20.1%; Total $: $15.14B, ↑$2.91B (+23.8%) from…
    • Food ↑$0.93B
    • Supplies ↑$0.83B
    • Services ↑$0.39B
    • Veterinary ↑$0.75B
    • This group is growing, +5.1% and are all Baby Boomers. They are careful with their money, but their commitment to their pets is very apparent. They spent more in all segments in 2021 and are the only other age group besides the 25>34 yr-olds to spend more in both 2020 and 2021.
  • 75> – (10.9% of U.S. CUs); CU Pet Spending: $504.45, +54.7%; Total $: $7.30B, ↑$2.57B (+54.4%) from…
    • Food ↑$1.76B
    • Supplies ↑$0.34B
    • Services ↑$0.12B
    • Veterinar ↑$0.34B
    • Pet Parenting is more difficult, and money is tight for these oldest Pet Parents, but their commitment is still there. They had a 10% decrease in 2020 due to drops in Supplies & Services. In 2021 they came back strong with increases in all segments and the 2nd highest % increase of any age group.

Age Group Recap: In 2020 the age spending pattern in Total Pet matched Pet Food. It was generational, Boomers and Millennials spent more. Everyone else spent less. In 2021 it was radically different. Except for the 55>64 group’s big drop in Food and 2 other decreases of $0.03B or less, every age group spent more in every segment. Almost a universal lift.

Next, we’ll take a look at some other key demographic “movers” in 2021 Total Pet Spending. The segments that are outlined in black “flipped” from 1st to last or vice versa from 2020. The red outline stayed the same.

In 2021, 80 of 96 Demographic Segments (83%) spent more on their Pets. In 2020 only 46 segments (48%) spent more. That’s a huge improvement. However, it came with a lot of turmoil. 16 of the 24 segments (2/3) flipped from 1st to last or vice versa from 2020. Last year only 6 flipped. 10 of the 16 flipped to the bottom. Invariably, they binge bought pet food in 2020 and “paid for it” in 2021. Only 1 segment held its position. White, Not Hispanic stayed on top. This is not unexpected. They are perennial winners. You also see huge increases. 7 are over $10B. Despite the big drops in Pet Food $ by the losers, 9 of the drops are far smaller than the increases. There are 2 exceptions – Married, Oldest child over 18 and Self-Employed. Both binge bought Pet Food in 2020 but their 2021 increases in the discretionary segments were small. We should also note that in the # of Earners category, all segments spent more. In 2020, all Racial/Ethnic groups spent more.  Let’s look at some specifics.

9 of the winners are the usual “suspects” with the only surprises being Retirees and No Earner, 2+ CUs. 35>44 is not usual, but they do have the 2nd highest income in the Age Category. In fact, 8 winners rank 1st or 2nd in income in their category, which is more evidence of the growing importance of income in Total Pet Spending.

10 of the 12 “losers” in 2021 had at least a $7B increase in Pet Food spending in 2020 and flipped from 1st to last in 2021. African Americans also spent 48% more on Pet Food in 2020 and gave it all back in 2021 but their Pet Spending is so small that it is often overlooked. In the # of Earners category, the only 2020 Food Binge Buying came from 2 Earner CUs. All segments obviously did well in 2021 with at least a $1.1B increase. By the way African Americans and 1 Earner Singles both have CU incomes at least 30% below the National Average.

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. That brought us to 2021 which became the strongest year in history. 2020 Food Binge buying didn’t increase the usage rate and obviously wasn’t repeated in 2021. However, Pet Parents spent a lot of time with their Pet “Children” during the pandemic. This caused them to have an even better understanding of what was needed to better improve the lives of their pets and strengthen the human animal bond between them. In 2021 virtually all Pet Parents decided to fill those wants and needs. The result was a record increase in Total Pet and in all segments but food which also produced annual spending records. Although 83% of all segments spent more, the higher their income, the more they spent.

2021 U.S. VETERINARY SERVICES SPENDING $32.67B…UP ↑$7.82B

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Veterinary Services is the 2nd largest segment in the Pet Industry. For years, high inflation has been a problem in the segment. Spending grew 24.0% from 2014>2019. Prices rose 17.4%, an avg of 3.3%. This caused a reduction of visit frequency and only 28% of the growth was “real” (avg annual growth +1.3%). In late 2020 & 2021, COVID focused Pet Parents on their “children’s” needs, including Veterinary Services. In 2021 Veterinary Spending reached  $32.67B, up $7.82B (+31.5%) from 2020. Inflation was high at 4.2% but 87% of the growth was real. In this report, we’ll take a closer look at the demographics behind the 2021 numbers. (Note: All 2021 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 2021 was $244.51 up 29.1% from $189.35 in 2020. (Note: A 2021 Pet CU (68%) Spent $359.57) More specifically, the increase in Veterinary spending came as a result of:

  • 1.8% more CU’s
  • Spending 11.9% more $
  • 15.4% more often

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

The big 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, 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 through 2021.

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

Veterinary Spending has become even more strongly driven by income. Spending by the <$70 group was essentially flat and $30>70K actually spent less. By far the biggest lift, +$4.3B, came from $150K> group. The 50/50 spending break point in $ also grew significantly from $96K in 2020 to $113K in 2021, an 18% increase.

National: $244.51 per CU (+29.1%) – $32.67B – Up $7.82B (+31.5%)

  • Over $150K (15.8% of CUs) – $534.38/CU (+42.3%) $11.26B, Up $4.30B (+61.8%) This highest income group is the biggest Veterinary Spender as 15.8% of CUs generated 34.5% of 2021 $ and 55% of the increase from 2020.
  • $100>150K (14.2% of CUs) – $360.90/CU (+34.9%) $6.84B, Up $1.80B (+35.6%) Spending by this middle/upper income group slowed in 2019 due to inflation, but it took off in 2020>21 as they reacted strongly to their pet needs.
  • $70K>100K (14.8% of CUs) – $268.25/CU (+41.0%) $5.31B, Up $1.57B (+41.9%) Spending grew steadily from 2016>19. In 2020 pandemic monetary pressures caused them to spend less but they had a strong rebound in 2021.
  • $30K>70K (29.7% of CUs) – $152.41/CU (+1.8%) $6.04B, Down $0.07B (-1.1%) From 2016 to 2020 their spending pattern was remarkably similar to the big spending $150K+ group. That changed in 2021 as they were the only group to spend less in Vet $ while $150K> had the biggest lift. They also fell from 2nd to 3rd in total Veterinary spending.
  • Under $30K (25.5% of CUs) $94.06/CU (+4.9%) $3.21B, Up $0.21B (+7.2%) This group is very price sensitive. Except for a big spending dip in 2018, they have slowly but consistently increased Veterinary spending. They are now 32% ahead of their 2016 Veterinary Services $, although 56% of the increase was due to inflation.

Now, here is Veterinary Spending by Age Group

Every group spent more but the biggest lifts came from the 55>64 & 35>44 groups. Both spent $2+B more than in 2020.

National: $244.51 per CU (+29.1%) – $32.67B – Up $7.82B (+31.5%)

  • <25 (4.9% of CUs) – $63.90/CU (-2.2%) – $0.42B – Up $0.09B (+28.2%) The biggest factor in the lift by this youngest group was that they moved out of their parents homes. 31.1% more CUs spent 2.5% more $ …4.6% less often.
  • 25>34 (15.7% of CUs) – $237.68/CU (+33.5%) – $5.00B – Up $1.26B (+33.7%) The commitment of these Millennials to their pets is growing. After being stable from 2017>19, the pandemic caused Veterinary spending to take off In 2020 and the lift continued in 2021 due to increased frequency. 0.2% more CUs spent 4.2% more $ …28.2% more often.
  • 35>44 (17.2% of CUs) – $285.97/CU (+42.6%) – $6.55B – Up $2.08B (+46.5%) In 2019, these mostly Gen Xers radically increased their spending and became #1 in Veterinary $. In 2020 spending decreased and they fell to 3rd place. In 2021 they had the biggest % increase and moved up to #2. 2.8% more CUs spent 16.0% more $ …22.9% more often
  • 45>54 (16.7% of CUs) – $273.46/CU (+23.4%) – $6.09B – Up $1.08B (+21.6%) This group has the highest income, but value is important. In 2017, the slowed inflation caused them to spend significantly more money. In 2018, prices turned up and continued to inflate in 2019. Spending dropped precipitously to their 2016 level and they lost the top spot in Veterinary $. 2020 brought a big spending lift which continued into 2021. However, their 2021 increase didn’t match the 35>44 & 54>64 groups so they fell to #3. 1.5% fewer CUs spent 16.3% more $…6.1% more often
  • 55>64 (18.5% of CUs) – $309.26/CU (+42.4%) – $7.65B – Up $2.20B (+40.4%) This group was the leader in Veterinary Spending prior to 2015. In 2015 they upgraded to Super Premium Food and Vet Spending fell. In 2016 inflation slowed and 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, so they moved back to the top in Veterinary Spending. They maintained this position in 2021 due to a more balanced increase in both the amount and frequency of purchases. 1.4% fewer CUs spent 22.8% more $ …15.9% more often
  • 65>74 (16.1% of CUs) – $225.67/CU (+12.7%) – $4.85B – Up $0.75B (+18.4%) This group is growing and is now all Boomers so they are committed to their pets. In 2020 their visit frequency fell due to the pandemic, but they spent 37% more $. In 2021 they spent 5% less but much more often. 5.1% more CUs spent 5.1% less $ …18.8% more often
  • 75> (10.9% of CUs) – $144.36/CU (+21.4%) – $2.10B – Up $0.34B (+19.6%) 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 their spending has grown every year. Although the pandemic hit them hard, they still took care of their pets with increased Veterinary spending through 2021. 1.4% fewer CUs spent 14.3% more $…6.2% more often

Now, let’s take a look at some other key demographic “movers” behind the 2021 Veterinary Spending numbers.

Veterinary spending increased by $7.82B (+31.5%) in 2021. Even with a high 4.2% inflation rate, 87% of the growth was real. 2021 had widespread positivity. 90 of 96 demographic segments (93.8%) spent more on Veterinary Services while only 6 segments spent less. In 9 categories all segments spent more. There was also less turmoil as only 3 flipped from first to last or vice versa while 8 segments maintained their position from 2020.

Virtually all of the “winners” are often found at the top. The only one that is somewhat of a surprise is Millennials, but in recent years they have become more concerned about Veterinary care for their Pet “children”. Their income exceeded the national average for the 1st time in 2020 and continues to grow so they are more able to afford the ever inflating cost of Veterinary Services.

There are also no big surprises in the “losers” group. The surprise is, and it’s a big one, that 9 of the 12 “losers” earned their spot at the bottom because they had the smallest spending increase in their category. That is very real proof of just how great 2021 was for the Veterinary Segment.

In our earlier analysis we saw that the increase was widespread across Income and Age groups. All age groups spent more and only 1 income group, $30>69K spent less and it was only -1.1%. In fact, the drop by the $30>69K group was driven by those with an income from $30>49K. The $50>69K segment had a 42% spending increase. The lift was widespread beyond Age and Income. In 9 categories all segments spent more. Besides the income category only Generations and CU composition had any segments that spent less on Veterinary Services. The segments were Single Parents and the Silent/Greatest Generations. This is not a surprise as both have low incomes and high life pressures

In recent years there had been a strong youth movement in Veterinary Spending from the <45 crowd. That changed in 2020 as the 45> groups accounted for 94% of the segment’s $3B increase. In 2021 the older crowd held on but their share of the record $7.8B increase fell to 56% – a little more balanced.

Generations is still the most popular demographic measurement. Baby Boomers fueled the growth of the Pet Industry and are still the leaders in Food and Veterinary $. However, in 2021 big increases in Services and Supplies pushed Gen X to the top in Total Pet $. Boomers have led the way in Veterinary $ for years but their lead is narrowing. As recently as 2017 their Veterinary spending was greater than all of the younger generations combined. In 2021 the younger groups spent 72% more than the Boomers. Boomers will remain a force in the industry for years to come. but the “torch” is slowly but surely being passed as Veterinary and Total Pet spending becomes demographically widespread.

Retail Channel Monthly $ Update – September Final & October Advance

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By 2021, the market had generally recovered from the impact of the pandemic. Now we are being hit by extreme inflation, with rates higher than we have seen in 40 years. Obviously, this can affect retail sales, so we’ll continue to track the retail market with data from two reports provided by the Census Bureau and factor in the CPI from US BLS.

The Census Bureau Reports are the Monthly and the Advance Retail Sales Reports. 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 begin with the Final Report for September and then go to the Advance Report for October. Our focus is comparing 2022 to 2021 but also YTD 2019. We’ll show both actual and the “real” change in $ as we factor inflation into the data.

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 2021
    • Current Month Real change – % vs same month in 2021 factoring in inflation
  • Current YTD change – % & $ vs 2021
    • Current YTD Real change – % vs 2021 factoring in inflation
  • Current YTD change vs 2019 – % & $
    • Current Real change YTD vs 2019 – % factoring in inflation
  • Monthly & YTD $ & CPIs which are targeted by channel will also be shown. (CPI details are at the end of the report)

First, the September Final. All groups were down from August but the $ for all were up for September and YTD vs 2021. However, factoring inflation into the data, only Restaurants and Gas Stations were up for the month and in YTD $, only Restaurants were up. Here is the September data for the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The September Final is $2.2B more than the Advance. Relevant Retail had the biggest change: +$2.5B; Restaurants: +0.8B; Auto: No Chge; Gas Stations: -$1.0B. Sales are down from last month, but consumers continue to spend more vs 2021. However, the “real” numbers tell a slightly different story. Only Restaurants and Gas Stations (just barely) are really up for the month but again only Restaurants are really up in YTD $. Auto & Gas Stations also remain really down YTD vs 2019. The inflation impact on Relevant Retail is significant and concerning. Their Real YTD $ales vs 2021 have been negative for 6 months. They do have the best performance since 2019 as 62.3% of their 32.1% growth is “Real”.

Now, let’s see how some Key Pet Relevant channels did in September

Overall – 10 of 11 were down from August. Vs Sept 2021, all reported more $ but only 5 were really up. In YTD vs 2021, all reported increases but only 4 were real. Vs 2019, for the 1st time in 2022, all were “really” up.

  • Building Material Stores – Sales are down from August but YTD Home Ctr/Hdwe is up 8.8% vs 21 and Farm stores are +12.8%. The Bldg/Matl group has a YTD inflation rate of 11.9% which has produced negative real numbers. The pandemic caused consumers to focus on their homes which has produced sales growth over 37% since 2019. Importantly, 60% of this lift was real, primarily because the bulk of the lift came from 20>21, prior to the inflation wave. Avg Growth Rate: HomeCtr/Hdwe: 11.0%, Real: 6.7%; Farm: 12.1, Real: 7.9%
  • Food & Drug – Both channels are truly essential. Except for the pandemic food binge buying, they tend to have smaller fluctuations in $. However, they are radically different in inflation. The YTD rate for Grocery products is 4 times higher than for Drugs/Med products. Drug Store $ are down from August but up vs 2021. Real sales are down vs Sept 2021 but 88% of their growth since 2019 is real. The Real Sales for Supermarkets are down for the month & YTD. Also, only 15% of their growth since 2019 is real. Avg Growth Rate: Supermarkets: +6.6%, Real: +1.1%; Drug Stores: +4.8%, Real: +4.2%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Their sales fell $1B from August but 2022 YTD sales are still 1.7% above 2021. Their current inflation rate is 3.0% which is down from 7.5% in April but YTD it is still 5.9%. It was also high in 20>21, +4.8%. However, 71% of their 48% lift since 2019 is real. Their Avg Growth Rate was: +14.0%; Real: +10.4%.
  • Gen Mdse Stores – Only $/Value store sales were up from August. However, all are now up for the month and YTD vs 2021. All real numbers for all channels except the monthly for $ stores vs 2021 are negative. Disc. Dept Stores were hurting before COVID but their YTD sales are again “really” up vs 2019. The other channels have 38% real growth. Avg Growth Rate: SupCtr/Club: 5.7%, Real: 2.1%; $/Value Strs: +7.7%, Real: +4.2%; Disc. Dept.: +2.7%, Real: +0.05%
  • Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are down from August but up vs 2021. Real sales are down vs September 2021 but the growth vs 2021 has been strong enough that it turned real YTD sales positive vs 2021 and finally vs 2019. They still have a ways to go. Avg Growth Rate: +2.9%, Real: +0.3%
  • Internet/Mail Order – The growth of the “hero” of the Pandemic is slowing. Sales are down from August but up for all other measurements. Their YTD growth rate is only half of their average since 2019, but 90% of their 79.3% growth since 2019 is real. Avg Growth Rates: +21.5%, Real: +19.6%. As expected, they are by far the growth leaders since 2019.
  • A/O Miscellaneous – This is a group of specialty retailers. Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level by December 2021 as annual sales reached $100B for the first time. Their sales dipped in January, July and now September but all measurements have been positive for every other month. In 2022, they are by far the Sales increase leaders over 2021. Plus, 86% of their 59.4% growth since 2019 is real. Average Growth Rate is: +16.8%, Real: +14.8%. They are 2nd in growth since 2019 to the internet. I’m sure Pet Stores are helping.

There is no doubt that high inflation is an important factor in Retail. In actual $, all channels reported increases in monthly  and YTD sales over 2021. When you factor in inflation, the number with any “real” growth falls to 5 for monthly & 4 for YTD. This is a clear indication of the ongoing strong impact of inflation at the retail channel level. Recent data indicates that Inflation again slowed a little. Let’s look at the impact on the Advance Retail $ numbers for October.

We have had memorable times since 2019. Some big negatives, including the 2 biggest monthly drops in history but a lot of positives in the Pandemic recovery. Total Retail reached $600B in a month for the first time and broke the $7 Trillion barrier in 2021.  Relevant Retail was also strong as annual sales reached $4T and all big groups set annual $ales records in 2021. Now, radical inflation is a big factor with the largest increase in 40 years. At first this reduces the amount of product sold but not $ spent. We saw this again in October. $ grew from September and all groups were up vs October & YTD 2021. However, in the actual amount of product sold, monthly & YTD vs 2021, all but Restaurants were down.

Overall – Inflation Reality The monthly increase vs 2021 continues to be lower than the inflation rate. The spending for all groups increased from September and all are up for the month and YTD vs 2021. Restaurants are all positive, but for all others, the monthly sales are really down vs 2021 and the real YTD sales vs 2021 are down for the 7th straight month.

Total Retail – Every month in 2022 has set a monthly sales record. October $ are $688B, the 6th highest of all time. 2022 has become somewhat normal as sales dipped slightly in September then bounced back in October. October $ are +3.6% vs September but are up 7.9% vs October 2021 and 9.9% vs YTD 2021. However, when you factor in inflation, monthly sales are down -0.7% and YTD sales are down for the 8th consecutive month. Plus, only 40% of the 32% growth since 2019 is real. The Avg Growth Rate is: +9.7%, Real: +4.1%. Even as inflation slows slightly it continues to have an impact.

Restaurants – They were hit hard by the pandemic and didn’t truly start to recover until March 2021. Sales in the last 9 months of 2021 exceeded $70B and 2021 was the biggest year in history, $876B. January sales fell from December but then turned up, setting new all-time monthly records in March>May. $ fell in June, set a new record in July and then fell again in Aug>Sep. October brought a new record as sales hit $90B for the 1st time. They are the only big group that is positive in all measurements vs 2021 & 2019. Inflation is high at 8.5% for October and 7.4% YTD and contrary to the trend, it is getting worse. 58% of their 32.4% growth since 2019 is real. Their Avg Growth Rate: +9.8%, Real: +5.9%. They only account for 12.7% of Total Retail $ales, but their strong performance helps to improve the overall retail numbers.

Auto (Motor Vehicle & Parts Dealers) – This group actively worked to overcome the stay-at-home attitude with great deals and a lot of advertising. They finished 2020 up 1% vs 2019 and hit a record $1.48T in 2021. In 2022 sales got on a rollercoaster – Jan down, Feb/Mar up, Apr>May down, then flipping monthly with October being up. They have 4 down months in actual sales which are the only reported sales negatives by any big group vs 2021. This is bad but their real YTD sales numbers are much worse. Extremely high inflation has pushed their real YTD sales down -10.2% vs 2021, the worst of any group. Plus, their 24.3% growth since 2019 is really down -7.1%. Their Avg Growth: +7.5%, Real: -2.4%.Inflation has slowed in the last 5 months. It is likely that the 4 drops in $ales vs 2021 were tied to high inflation.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and obviously need less gas. This group started recovery in March 2021 and reached a record $584B for the year. Sales fell Jan>Feb, turned up Mar>Jun, fell in Jul>Sep, now up in Oct. They have the biggest increases vs 2021 and 2019 but it is not reality. Gasoline inflation has slowed but $ are still really down vs 2021. Inflation is still 18.1% and 38.3% YTD, the highest of any expenditure category. It has even caused consumers to buy 4.1% less than they did in 2019. Avg Growth Rate: +14.3%, Real: -1.4%. The YTD numbers show a big impact of inflation. Consumers spend more but buy less, even less than they bought 3 years ago.

Relevant Retail – Less Auto, Gas and Restaurants – This the “core” of U.S. retail and accounts for 60+% of Total Retail Spending. There are a variety of channels in this group, so they took a number of different paths through the pandemic. However, their only down month was April 2020. They finished 2020, up +7.1% and 2021 got even better as they reached a record $4.50T. They have led the way in Total Retail’s recovery which became widespread across the channels. Sales fell in Jan>Feb, then went on an up/down roller coaster from Mar>Oct with October up 4.4%. All months in 2022 set new records but their YTD increase is 21% below their 9.7% avg growth since 2019. Now, we’ll look at the impact of inflation. 61.4% of their 32.1% growth since 2019 is real. However real sales vs 2021 are down -1.7% for the month and -0.8% YTD. This shows that inflation is only a 2022 problem. Their Avg Growth Rate: +9.7%, Real: +6.2%. The performance of this huge group is critically important. This is where America shops. Real YTD sales are down almost 1% so the amount of products that consumers bought in 2022 is less than in 2021. They just paid more. That’s not good.

Inflation is slowing slightly but the impact is still there. All groups but Restaurants have no YTD real growth vs 2021 and Auto & Gas Stations are still “really down” vs YTD 2019. We’ve now had 8 straight months of real YTD drops for Total Retail and 7 straight for Relevant Retail so we are still in Phase II of inflation. Consumer spending grows but the amount bought declines. Actual Auto sales in 4 of the last 8 months were down vs 2021. However, inflation slowed so they have avoided Phase III, when consumers actually cut back on spending. If inflation grows again, Phase III could become reality.

  • Relevant Retail: Avg Growth Rate: +9.7%, Real: +6.2%. 9 of 11 channels were up from September but only 8 were up vs October 2021. 10 were up YTD vs 2021. The negative impact of inflation is less but still there in the “real” data.
  • All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. They are up from September but down vs October 2021. Their YTD reported numbers have been positive vs 2019 since April but they are still “really” down in all measurements vs both 2019 & 2021. Avg Growth: +0.5%, Real: -2.4%.
  • Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. Inflation is a big factor in their current numbers. Sales are up from September and vs 2021. Their real numbers are all down vs 2021 and only 37.9% of their 19.5% lift from 2019 is real. Avg Growth: +6.1%, Real: +2.4%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Inflation has hit them hard. $ are up from September. The increases vs 2021 are strong but inflation is stronger. Real sales are down and only 14.0% of the growth since 2019 is real. Avg Growth: +6.7%, Real: +1.0%.
  • Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. Sales increased from September and are ahead in all measurements vs 2021 – actual & “real”. Their inflation rate is low so 86% of their 15.6% growth from 2019 is real. Their Avg Growth is: +5.0%, Real: +4.4%.
  • Clothing and Accessories – They were nonessential, and clothes mattered less when you stayed home. That changed in March 2021 and resulted in explosive growth through May 2022. October sales are +2.5% from 21 but real sales are down -1.5%. YTD $ are up 7.3%% and 86% of their growth from 2019 is real. Avg Growth: 5.1%, Real: 4.4%.
  • Home Furnishings – Sales dipped Mar>May in 2020. Then as consumers’ focus turned to their homes, furniture became a priority. Inflation has been high. Sales are down for the month and only slightly up YTD vs 2021. All of their real numbers vs 2021 are very negative. Only 16.4% of their growth since 2019 is real. Avg Growth: +6.3%, Real: +1.1%.
  • Electronic & Appliances – This channel has problems beyond the pandemic. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. Sales are up from September but down in all measurements vs 2021. Actual $ are even down vs 2019, but deflation kept their “real” YTD sales up +0.6% vs 2019. Avg Growth: -0.4%, Real: +0.2%.
  • Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. This year’s spring lift ended in May. Sales rose slightly after dropping in September. Monthly & YTD sales are up vs 2021, but when you factor in double-digit inflation, the real amount sold is down for both measurements. However, 56.9% of their strong 36.7% sales growth since 2019 is real. Their Avg Growth is: +11.0%, Real: +6.5%.
  • Sporting Goods, Hobby and Book Stores – Consumers turned their attention to recreation and Sporting Goods stores sales took off. Book & Hobby Stores recovered more slowly. October $ fell 3.8% from September but are still ahead of 2021, monthly & YTD. However, real $ are down again vs 2021. Inflation in this group is lower than most groups and most comes from Sporting Goods. 78.3% of their 38.2% growth since 2019 is real. Avg Growth is: +11.4%, Real: +9.1%.
  • All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 +0.9% but sales took off in March 21. They set a new monthly $ales record in December. Sales are up 3.6% from September and since April they have held the top spot in YTD increase vs 2021. Their YTD growth since 2019 is 2nd only to NonStore. Plus, 81.3% of the 45.0% growth since 2019 is real. Their Avg Growth is: +13.2%, Real: +11.0%.
  • NonStore Retailers – 90% of their volume comes from Internet/Mail Order/TV. The pandemic accelerated online spending. They ended 2020 +21.4%. The growth continued in 2021. In December monthly sales exceeded $100B for the 1st time and they broke the $1 Trillion barrier for the year. Their YTD Growth has slowed significantly in 2022 but all measurements are positive. 87.8% of their 73.2% increase since 2019 is real. Their Avg Growth is: +20.1%, Real: +18.0%.

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

Recap – The Retail recovery from the pandemic was largely driven by Relevant Retail. While the timing varied between channels, by the end of 2021 it had become very widespread. In late 2021 and now in 2022, a new challenge came to the forefront – extreme inflation. It isn’t the worst in history, but it is the biggest increase in prices in 40 years. Overall, and in most product categories it has slowed in Jul>Oct. Services also slowed a little in October. On the surface, the Retail impact is almost invisible. Sales in the total market and in the Relevant Retail group continue to grow but the growth rate has markedly slowed compared to last year. Overall, the retail market is generally in phase II of strong inflation – spending grows but the amount purchased falls. The channels in the graph illustrate this perfectly and show how widespread that it has become. 8 of 11 channels are up for the month & 10 YTD vs 21. However, if you factor in inflation, only 3 are up for month and 4 YTD. Inflation is real and there are real and even worse consequences if it continues.

Finally, here are the details and updated inflation rates for the CPIs used to calculate the impact of inflation on retail groups and channels. This includes special aggregate CPIs created with the instruction and guidance of personnel from the US BLS. I also researched data from the last Economic Census to review the share of sales by product category for the various channels to help in selecting what expenditures to include in specific aggregates. Of course, none of these specially created aggregates are 100% accurate but they are much closer than the overall CPI or available aggregates.

Monthly CPI changes of 0.2% or more are highlighted.

I’m sure that this list raises some questions. Here are some answers to some of the more obvious ones.

  1. Why is the group for Non-store different from the Internet?
    1. Non-store is not all internet. It also includes Fuel Oil Dealers, the non-motor fuel Energy Commodity.
  2. Why is there no Food at home included in Non-store or Internet?
    1. Online Grocery purchasing is becoming popular but almost all is from companies whose major business is brick ‘n mortar. These online sales are recorded under their primary channel.
  3. 6 Channels have the same CPI aggregate but represent a variety of business types.
    1. They also have a wide range of product types. Rather than try to build aggregates of a multitude of small expenditure categories, it seemed better to eliminate the biggest, influential groups that they don’t sell. This method is not perfect, but it is certainly closer than any existing aggregate.
  4. Why are Grocery and Supermarkets only tied to the Grocery CPI?
    1. According to the Economic Census, 76% of their sales comes from Grocery products. Grocery Products are the driver. The balance of their sales comes from a collection of a multitude of categories.
  5. What about Drug/Health Stores only being tied to Medical Commodities.
    1. An answer similar to the one for Grocery/Supermarkets. However, in this case Medical Commodities account for over 80% of these stores’ total sales.
  6. Why do SuperCtrs/Clubs and $ Stores have the same CPI?
    1. While the Big Stores sell much more fresh groceries, Groceries account for ¼ of $ Store sales. Both Channels generally offer most of the same product categories, but the actual product mix is different.

Petflation 2022 – October Update: Prices increase to +11.6% above 2021

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Inflation continues to make headlines. There have been year over year increases in the monthly Consumer Price Index (CPI) larger than we have seen in decades. October prices rose 0.4% from September, and the CPI was still up +7.7% vs 2021, but down from +8.2% last month. The grocery price surge slowed a little but they’re still up 12.4% over 2021. That’s 8 straight months of double-digit YOY monthly percentage increases. These are the first 10+% increases since 1981. As we have seen in recent years, even minor price changes can affect consumer pet spending, especially in the discretionary pet segments, so we will continue to publish monthly reports to track petflation as it evolves in the market.

Total Pet prices were 4.1% higher in December 2021 than in December 2020, while the overall CPI was up 7.0%. The gap narrowed as Petflation accelerated and reached 96.7% of the national rate in June. National inflation has slowed since July, but Petflation has increased, passing the National rate in July and is +11.6% in October, 50.6% higher than the national rate of 7.7%. We need to look a little deeper into the numbers. This and future reports will include:

  • A rolling 24 month tracking of the CPI for all pet segments and the national CPI. The base number will be pre-pandemic December 2019 in this and future reports, which will facilitate comparisons.
  • Monthly comparisons of 22 vs 21 which will include Pet Segments and relevant Human spending categories. Plus
    1. CPI change from the previous month
    2. Inflation changes for recent years (20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2022 vs 2019
    4. Average annual Year Over Year inflation rate from 2019 to 2022
  • YTD comparisons
    1. YTD numbers for the monthly comparisons #2>4 above

In our first graph we will track the monthly change in prices for the 24 months from October 2020 to October 2022. We will use December 2019 as a base number so we can track the progress from pre-pandemic times through an eventual recovery. Inflation is a complex issue. This chart is designed to give you a visual image of the flow of pricing. You can see the similarities and differences in patterns between segments and compare them to the overall U.S. CPI. The current numbers plus those from 12 and 24 months earlier are included as are the year-end numbers for 2020 & 2021.This will give you some key waypoints for comparisons. (Note: Some key peaks and valleys are also highlighted.)

The pandemic hit home in 2020. In October, the national CPI was only +1.3% and Pet prices were down -0.4%. There are 2 different patterns between the Services and the Products segments. Veterinary and Services prices generally inflated after mid-2020, similar to the overall CPI. Food and Supplies prices generally deflated until late 2021. After that time, Petflation took off. Pet Food prices consistently increased but the other segments had mixed patterns until July, when all increased. In August>October Petflation accelerated, except for a miniscule dip in Veterinary last month.

  • U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 2021 and continued to grow until flattening out in Jul/Aug 2022. 43% of the overall 16.0% increase since 2019 happened from Jan>June 2022.
  • Pet Food – Prices stayed generally below December 2019 levels from April 2020 to September 2021, when they turned up. There was a sharp increase in December but 90% of the 15.6% increase has happened since January.
  • Pet Supplies – Supplies prices were high in December 2019 due to the added tariffs. They then had a “deflated” roller coaster ride until mid-2021 when they returned to December 2019 prices and essentially stayed there until 2022 when they turned sharply up reaching a new all-time pricing high in January, beating the 2009 record. Prices plateaued from February> May but turned up in June. The CPI flattened in July but turned up in Aug>Oct.
  • Pet Services – Normally inflation is 2+%. Perhaps due to closures, prices increased at a lower rate in 2020. In 2021 consumer demand increased but there were fewer outlets. Inflation grew in 2021 with the biggest lift in Jan>Apr. Inflation was stronger in 2022 but it got on a rollercoaster in Mar>June. It has turned up again July>Oct.
  • Veterinary – Inflation has been pretty consistent in Veterinary. Prices turned up in March 2020 and grew through 2021. A pricing surge began in December which put them above the overall CPI. In May prices fell and stabilized in June. Prices turned up again and despite an October dip they have been above the National CPI since July.
  • Total Pet – The blending of the different segment patterns made Total Pet appear calm. In December 2021 prices surged in all. The segments had mixed up & downs Mar>Jun but Total Petflation has accelerated since July.

Next, we’ll turn our attention to the Year over Year inflation rate change for October and compare it to last month, last year and to previous years. We’ve added some human categories to put the pet numbers into perspective.

Overall, Prices were up 0.4% vs September but were up 7.7% vs October 2021. The Grocery increase is down to 12.4% which is still a big negative but there is another area of concern. Only 2 of 9 categories had increases over 1% from last month, but both are “Pet”. The National CPI rate is slowing but Petflation, especially in Food & Supplies, is getting worse.

  • U.S. CPI– Prices are up 0.4% from August. The YOY increase is +7.7%, down from the 9.1% peak in June. The targeted inflation rate is <2% so we are still 4 times higher than the “target”. However, a 4th slight decline is good news.
  • Pet Food– Prices are +1.0% vs September and 15.0% vs Oct 21. They are now 21% higher than the Food at Home inflation rate – not good news! The YOY increase is being measured against a time when prices were essentially at 2019 levels, but that increase is still over 4 times the pre-pandemic 3.7% increase from 2018 to 2019.
  • Food at Home – Prices are up 0.5% from September. The increase from 2021 is 12.4%, down slightly from 13.0% last month. Inflation for this category since 2019 is the highest on the chart and is 46% more than the national CPI.
  • Pets & Supplies – Prices grew 1.4% from September, the biggest increase of any segment. However, they stayed in 3rd place in terms of monthly increase over 2021 for pet segments and still have the lowest increase since 2019.
  • Veterinary Services – October prices fell -0.03% from September. They are +11.1% from 2021 and trail only Food in the Pet Industry. They also remain 2nd in the increase since 2019 with 19.5% compared to Food at home at 23.1%.
  • Medical Services – Prices sharply increased at the start of the pandemic in 2020 but then inflation slowed and fell to a low rate in 2021. In October prices dipped but 2022 prices are still 6% above the pre-pandemic 2018>19 rate.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021/22. October prices are +0.7% from September and +6.3% vs 2021, reaching another new record high.
  • Haircuts & Other Personal Services – Prices are +0.2% from Sep. and +5.6% from 2021. They are +15.8% since 2019.
  • Total Pet– Petflation is strong, 3 times the rate of last year and is 50.6% ahead of the National CPI. All but Veterinary increased prices in October, but inflation is still primarily being driven by Food & Veterinary. Inflation can cause reduced purchase frequency in Supplies, Services and Veterinary. Super Premium Food has been generally immune as consumers are used to paying a lot and it is needed every day. We’ll see if consumers are willing to pay the new high prices for food and buy the more discretionary products/services at the same frequency as they did in the past.

Now here’s a look at Year-to-Date numbers. How does 2022 compare to previous years…so far?

The increase from 2021 to 2022 is the biggest for 7 of 9 categories. The average annual increase since 2019 is 3.8% or more for all but Pet Food & Pet Supplies. This is largely due to deflation in the 1st half of 2021.

  • U.S. CPI – The current increase is still almost double the average increase from 2019>2022, but about 4 times the average annual increase from 2018>2021. Inflation is a big problem that started recently.
  • Pet Food – Inflation is growing stronger, especially after deflation in the 1st half of 2021 kept YTD prices low.
  • Food at Home – The 2022 YTD inflation beat the U.S. CPI by 36%. You can see the impact of supply chain issues.
  • Pets & Pet Supplies – Prices have been at record levels since January. Although the 2021>22 increase is being measured against a “flat” 2021, it is significant and just slightly behind Food & veterinary in the Pet Industry.
  • Veterinary Services – Trails only Food at Home in inflation since 2019 and is the only segment on the chart with a 3+% inflation rate each year throughout the pandemic and recovery. No matter what, just charge more.
  • Medical Services – Prices went up significantly at the beginning of the pandemic, but inflation slowed in 2021. In 2022 there is another pricing surge as the inflation rate is 34% higher than pre-pandemic 2018>19.
  • Pet Services – February & May set records for the biggest year over year monthly increases in history. Prices began to grow again in July, reaching record highs in September & October. The October YTD increase of 6.1% is the largest in history. Demand has grown for Pet Services while the availability has decreased, a formula for inflation.
  • Haircuts & Personal Services – The services segments, essential & non-essential were hit hardest by the pandemic. After a small decrease in March, prices turned up again. The YTD rate is even with 2020>21 but still 93% more than 2018>19. Consumers are paying 15% more than in 2019. This usually reduces the purchase frequency.
  • Total Pet – We have seen basically two different inflation patterns. After 2019, Prices in the Services segments continued to increase, and the rate accelerated as we moved into 2021. The product segments – Food and Supplies, were on a different path. They generally deflated in 2020 and didn’t return to 2019 levels until mid-year 2021. Food prices began a slow increase, but Supplies remained stable until we neared yearend. In 2022, everything changed as Food and Supplies prices turned sharply up. Food prices continued to climb. Supplies pricing stabilized then grew in Jun>Oct. The Services segments have had ups & downs, but both are generally inflating. The net was an October YTD Petflation increase vs 2021 of 8.4%, surpassing the high 8.3% National rate. In March, it was only 72.5% of the CPI.

Petflation is growing stronger. Will it impact spending? Let’s put it into perspective. The 8.4% current YTD increase in Total Pet is still below the 8.9% record set in 2009 but 5+ times more than the 1.5% avg since then. Pet spending continues to move to higher income groups, but the impact of inflation varies by segment. Supplies is the most affected as many categories are price sensitive. Super Premium Food has become widespread because the perceived value has grown. Higher prices generally just push people to value shop. Veterinary prices have strongly inflated for years, resulting in a reduction in visit frequency. Spending in the Services segment is driven by higher incomes, so inflation is less impactful. We’ll just have to wait and see the overall impact on Pet Spending of the continued strong Petflation.

2021 U.S. PET SERVICES SPENDING $9.10B…Up ↑$2.21B

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Except for a small decline in 2017, Non-Vet Pet Services had shown slow but 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, spending plummeted -$1.73B in 2020 due to COVID closures and restrictions. 2021 brought a strong recovery as spending grew by $2.21B (+32.0%) a new record and hit $9.1B, also a record. In this report we will drill down into the data to see what groups drove the recovery. (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 2021 was $68.13, up from $52.53 in 2020. (Note: A 2021 Pet CU (68%) Spent $100.19)

More specifically, the 32.0% increase in Total Pet Services spending came as a result of:

  • 1.8% more households
  • Spending 9.18% more $
  • 18.78% more often

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

After the big lift in 2018, spending essentially flattened out in 2019. 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+% and in the 2nd half of 2019 spending declined for the 1st time in 18 months. The 2020 pandemic brought restrictions and closures which drove spending radically down. In 2021 the recovery began and accelerated in the 2nd half of the year. Now, let’s look at some specific demographics of 2021 Services spending.

First, by Income Group.

Like 2018, all groups spent more in 2021. However, the biggest lifts came from higher incomes, $100K+. The <$70K groups had small increases and in fact, their 2021 spending was basically even with 2016. The 2021 50/50 dividing line in $ for Services was $133K. That is up from $123K last year and from $125K in 2019. It is still by far the highest of any segment. It is readily apparent that income is overwhelmingly the primary driver in Pet Services spending.

  • <30K (25.5% of CU’s) – $22.47 per CU (+14.3%) – $0.77B, Up $0.11B (+16.8%) – This segment is getting smaller and money is tight, so Services spending is less of an option. The lift did push their Services $ up to their 2016>18 level.
  • $30>70K (29.7% of CU’s) – $38.53 per CU (+7.2%) – $1.53B, Up $0.06B (+4.2%) – In 2020, they had the only increase and finished second in $ to the $150K> group. In 2021 they fell to 3rd place but they are the only group to spend more in both 2020 & 2021.
  • $70>100K (14.8% of CU’s) – $52.60 per CU (+25.6%) – $1.04B, Up $0.22B (+26.4%) – The spending of this middle income group had slowly but consistently grown since 2016. Then came the pandemic and the $ plummeted in 2020, even falling below 2016. They rebounded somewhat in 2021 but the $ are still below 2018 & 2019.
  • $100>150K (14.2% of CU’s) – $97.92 per CU (+55.7%) – $1.86B, Up $0.67B (+56.6%) – They had strong consistent growth from 2016>19. In 2020 they had the biggest drop, -40%. They came back in 2021 but below 2018 & 2019 $.
  • $150K> (15.8% of CU’s) – $185.52 per CU (+24.5%) – $3.91B, Up $1.15B (+41.6%) – They moved steadily down after peaking in 2018. Spending took off in 2021. Their CU Services spending is now 2 to 9 times more than other groups.

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

All age groups but 45>54 spent more on Services in 2021. This highest income group fell from the top spot, which they had occupied since 2019 to #3. The biggest lifts came from 35>44 and 55>64 year-olds. Here are the specifics:

  • 75> (10.9% of CU’s) – $31.76 per CU (+37.5%) – $0.46B – Up $0.12B (+35.6%) 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 gave it all back. In 2021 spending surged with a big increase in frequency. 1.4% fewer CU’s spent 4.2% more $, 32.0% more often.
  • 65>74 (16.1% of CU’s) – $63.47 per CU (+33.3%) – $1.36B – Up $0.39B (+40.1%). This group is also very value conscious and growing in numbers. From 2016 to 2019 their spending was very stable. In 2020 it fell 20% due to a big drop in frequency. In 2021 they came back strong. 5.1% more CU’s spent 11.2% more $, 20.0% more often.
  • 55>64 (18.5% of CU’s) $84.25 per CU (+58.5%) – $2.09B – Up $0.75B (+56.3%) After a big drop in 2017, they began to slowly increase Services spending. A big drop in frequency drove spending down in 2020 but they had a strong recovery and took the top spot in Pet Services $ in 2021. 1.4% fewer CUs spent 28.5% more $, 23.4% more often.
  • 45>54 (16.7% of CU’s)- $75.57 per CU (+0.3%) – $1.68B – Down $0.02B (-1.2%) This highest income group was #1 in Services $ until 2016. They regained the top spot in 2019 and held on in 2020 despite a 20% drop in frequency. In 2021 they increased frequency but $ fell and they are now #3. 1.5% fewer CU’s spent 8.4% less $, 9.4% more often.
  • 35>44 (17.2% of CU’s) – $89.32 per CU (+56.9%) – $2.05B – Up $0.78B (+61.3%) Spending exploded in 2018 with a $1B increase pushing them to #1. In 2019 and 2020 spending fell. In 2021 they had the largest increase and moved up to #2 in Services $. 2.8% more CU’s spent 18.6% more $,32.3% more often.
  • 25>34 (15.7% of CU’s) – $60.85 per CU (+15.1%) – $1.28B – Up $0.17B (+15.4%) This group of Millennials “found” the Services segment in 2018. Their spending slowly fell in 2019 & 2020 but reached a record high in 2021 due solely to a big increase in frequency. 0.2% more CU’s spent 6.0% less $, 22.5% more often.
  • <25 (4.9% of CU’s) – $27.44 per CU (-15.4%) – $0.18B – Up $0.02B (+10.9%) After 2018 spending fell and stabilized. In 2021 CUs radically increased but frequency plummeted. 31.1% more CU’s spent 46.7% more $, 42.4% less often.

In 2020, 62% of the $1.7B decrease in Services $ came from the 55> groups. In 2021, only 45>54 yr-olds spent less and the biggest increase was from the 35>44 group. However, the groups over 55 years old accounted for $1.26B (57%) of the record $2.21B increase. The old folks had a strong pandemic recovery.

Finally, here are some key demographic “movers” that drove the big lift in Pet Services Spending in 2021. The segments that are outlined in black “flipped” from 1st to last or vice versa from 2020. A red outline stayed the same.

You see the turmoil in 2021 as no segment held its position and 10 of 12 categories had at least 1 flip. However, unlike 2020 the turmoil was positive as 9 segments flipped from last to first and 5 categories had no segments that spent less on Services. In fact, 86 of 96 segments (90%) spent more on Services. This beat the previous best of 88% in 2018 and was a big change from 2020 when 79% spent less.

You see from the graph that the biggest positives were all substantially larger than the biggest decreases. This speaks to the strength and widespread nature of the lift in $ in the segments. We should also note that regardless of Race/Ethnicity, your housing arrangements, the number of people in your household, the region of the country or the type of area that you lived in, you spent more on Pet Services. That’s a pretty all-encompassing lift.

9 of the winners flipped from last to 1st. This shows that the big Services spenders understandably lost the most due to pandemic restrictions and closures. However, they bounced back strong because Pet Services are a regular part of their Pet Parenting. The winners also demonstrate the importance of income to Services. While this segment has become more demographically widespread, higher incomes dominate. 8 of the 12 winners are either 1st or 2nd in income in their categories. The only winner that is somewhat of a surprise is 35>44 yr olds. Usually 45+ yr-old groups dominate.

Almost all of the losers are not unexpected. Once again, if we look at income, 8 of 12 are at or near the bottom in income in their category. 2 are not – the 45>54 yr-olds and Asians have the highest income in their category. Asians are not a surprise loser. Apparently, cultural differences cause them to spend less on their Pets than other Racial/Ethnic groups. The high-income 45>54 yr-olds are a surprise. They have been at or near the top in Services spending for years. In 2021 they finished 3rd. It looks like they may have value shopped for a better price.

With 90% of demographic segments spending more on Services, the recovery was strong and widespread. There are no truly unique patterns, but one trend should be noted. Income is becoming even more important in Services spending. The 50/50 income dividing line in Services spending is now up to $133,000. That is 50% more than the average CU income and 90% more than the median income. 25% of CUs account for 50% of Services $ and 72% of the $2.2B lift.

Overview – After the huge lift 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.

2021 brought a strong recovery with the biggest increase in history. The segments that were hit the hardest by the pandemic generally had the strongest recovery. However, the recovery had a widespread demographic reach. 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. Like other segments Services has experienced strong inflation in 2022. In the past, this has minimally impacted this income driven segment. We’ll see what 2022 brings.

 

 

 

2021 U.S. PET SUPPLIES SPENDING $23.81B…Up ↑$8.65B

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Total Pet spending grew to $99.98B in 2021, up $16.23B (+19.4%) from 2020, the biggest increase in history. In a big turnaround the Supplies segment led the way with a $8.65B, 57.0% increase to $23.81B. (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys)

Spending plummeted in 2019 & 2020 down -$4.6B due to Tarifflation and the Pandemic. In 2021, with lower prices and an easing of restrictions, spending turned up sharply in the 1st half then skyrocketed up in the 2nd half. We’ll “drill down” into the data to try to determine what and who are “behind” the explosive growth in Supplies Spending in 2021.

In 2021, the average household spent $178.20 on Supplies, up 54.3% from $115.52 in 2020. (Note: A 2021 Pet CU (68%) Spent $262.06) This doesn’t exactly match the 57.0% total $ increase. Here are the specific details:

  • 1.8% more CU’s
  • Spent 40.7% more $
  • 9.7% more often

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

Since the great recession, spending in the Supplies segment has been driven by price. Although many supplies are needed by Pet Parents, when they are bought and how much you spend is often discretionary. 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 $. 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 $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. Prices deflated but with retail restrictions and the consumers focus on needed items, both the amount spent and frequency of purchase of Supplies fell.

In 2021 the recovery began with a strong lift in the 1st half that reached record levels in the 2nd half. Pet parents bought all the supplies that they had been putting off for 2 years because of Tarifflation and the Pandemic. It was the greatest lift in history, but 2021 spending ended up where it was headed in 2018 before being “derailed” by outside influences.

That gives us an overview of the recent spending history. Now let’s look at some specifics regarding the “who” behind the 2021 lift. First, we’ll look at spending by income level, the most influential demographic in Pet Spending.

National: $178.20 per CU (+54.3%) – $23.81B – Up $8.65B (+57.0%).

All big income groups spent more but the 50/50 $ divide increased astronomically from $92K to $114K.

  • <$30K (25.5% of CU’s)- $76.26 per CU (+33.0%) $2.62B– Up $0.69B (+35.9%). This group is very price sensitive, but their big spending lift finally put them ahead of 2016 $ despite the fact that they have 15% fewer CUs.
  • $30K>70K (29.7% of CU’s)- $123.83 per CU (+27.2%) $4.91B Up $0.94 (+23.6%). This big, lower income group closely matches both the national pattern and that of the $150K+ group. Tarifflation had a big impact, but COVID and the recovery were less pronounced. Amazingly enough, until 2019 they were the leader in Total Supplies $.
  • $70>$100K (14.8% of CU’s) – $160.38 per CU (+36.3%) – $3.18B Up $0.86B (+37.2%). This middle-income group had been consistent in Supplies spending. 2020 hit them hard but they too rebounded stronger than the drop.
  • $100K>$150K (14.2% of CU’s) – $229.43 per CU (+56.7%)- $4.35B Up $1.59B (+57.6%). This high income group had the 2nd biggest COVID drop & traded Supplies $ for Food & Veterinary. In 2021 they had the 2nd strongest recovery.
  • $150K> (15.8% of CU’s) – $415.37 per CU (+83.9%) $8.75B Up $4.57B (+109.2%). The more money that you have. The more that you can spend. The $200K> segment almost tripled their Supplies spending in 2021.

Every big group spent more but the biggest increases came from higher incomes. Only the $40>49K group spent less in 2021 but they had spent 25% more in 2020 so they returned to pre-pandemic 2019 $pending… but with 9% fewer CUs.

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

National: $178.20 per CU (+54.3%) – $23.81B – Up $8.65B (+57.0%).

It’s simple. Under 25 spent a little less. Over 25 spent a lot more.

  • 35>44 (17.2% of CU’s) $312.65 per CU (+120.3%) – $7.17B; Up $4.0B (+126.3%) This group is second in income and overall expenditures. The strong inflation drove the $ down in 2019 but the Pandemic had little additional impact. Spending skyrocketed in 2021 as 2.8% more CUs spent 92.6% more $, 14.4% more often.
  • 55>64 (18.5% of CU’s) $180.26 /CU (+65.5%) – $4.46B – Up $1.73B (+63.2%). When prices turned sharply up in the 2nd half of 2018 and 2019, spending stalled then dropped. Spending fell again in 2020 as they binge bought pet food. They had a strong recovery in 2021 as 1.4% fewer CU’s spent 51.2% more on Supplies, 9.5% more often.
  • 45>54 (16.7% of CU’s) $186.48 per CU (+27.4%) – $4.15B – Up $0.85B (+25.6%). Except for 2019 and now 2021, this highest income age group had been the leader in Supplies spending since 2007. They came back from the pandemic drop but now are in 3rd place for Supplies $. 1.5% fewer CU’s spent 24.4% more, 2.4% more often.
  • 25<34 (15.7% of CU’s) $177.00 per CU (+32.9%) – $3.72B; Up $0.93B (+33.2%). 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 actually increased spending in the pandemic. The lift grew even stronger in 2021 primarily due to increased purchase frequency. 0.2% more CUs spent 9.7% more $, 21.1% more often.
  • 65>74 (16.1% of CU’s) $130.28 per CU (+35.6%) – $2.80B – Up $0.83B (+42.5%). This older group is very price sensitive so rising prices caused them to cut back on spending in 2019. Like the 25>34 yr-olds, they also increased spending in 2020 and spending soared in 2021. However, it was not due to increased frequency. 5.1% more CUs spent 32.0% more, 2.7% more often. Their purchase size was radically higher.
  • 75> (10.9% of CU’s) $67.13 per CU (+56.0%) – $0.98B, Up $0.34B (+53.7%). This lowest income group is truly price sensitive and their spending was severely impacted by the Pandemic. They had a strong recovery in 2021 but didn’t quite make it back to their 2018 level. 1.4% fewer CU’s spent 22.8% more, 27.1% more often.
  • <25 (4.9% of CUs) $80.11/CU (-27.6%) $0.53B – Down $0.03B (-5.1%). Most moved out of their parents homes but their average CU spending fell a lot. 31.1% more CUs spent 15.8% less $, 14.8% less often.

The COVID recovery was widespread and spectacular. Only <25 spent less and the performance of 35>44 was amazing.

Next, let’s take a look at some other key demographic “movers” in 2021 Pet Supplies Spending. The segments that are outlined in black “flipped” from 1st to last or vice versa from 2020. The red outline stayed the same.

In 2019, in 9 of 12 demographic categories all segments spent less on Supplies. In 2021, in 9 categories all segments spent more. Also in 2019, 97% of 96 demographic segments spent less. In 2021, 97% spent more. Quite a turnaround.

Most of the winners and many losers are in their “usual” spot. Quite frankly, there are no surprises. There were 6 flips. 5 were from last to 1st. 5 Segments held their position from 2020.  4 of them were winners. This chart clearly shows that 2021 was an incredibly positive year for Pet Supplies spending. Your Race or ethnicity, where you lived, how you lived, the makeup and size of your household, your occupation or whether you even had a job didn’t matter. All of the segments in these demographic groups had 1 shared behavior. They spent more on Supplies for their Pet Children.

The $8.65B increase in Supplies $ was the biggest in history, beating the $3.1B lift in 2008 but should it have been expected? Supplies is a discretionary segment, so it is more susceptible to market factors, especially inflation changes, than the more needed segments. Prices deflated from 2016 to 2018, resulting in a $5B increase. Then came Tarifflation and the Pandemic and Spending fell -$4.6B. What if these 2 outside events had never happened? Where would we be  in Supplies Spending? The annual growth rate for Supplies from 2015 to 2018 was +9.9%. From 2018 to 2021 it was +6.6%. A 10% growth rate would be difficult to maintain so it is not surprising that despite the big lift, the Supplies growth rate has fallen. We shouldn’t be surprised by the massive spending lift. Supplies are discretionary, primarily in purchase frequency. Most are still needed. In 2021, Pet Parents just bought the Supplies that they have needed for the past 2 years. The current big, unanswered question is how will the high inflation rates in 2022 affect Supplies spending?

Retail Channel Monthly $ Update – August Final & September Advance

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By 2021, the market had generally recovered from the impact of the pandemic. Now we are being hit by extreme inflation, with rates higher than we have seen in 40 years. Obviously, this can affect retail sales, so we’ll continue to track the retail market with data from two reports provided by the Census Bureau and factor in the CPI from US BLS.

The Census Bureau Reports are the Monthly and the Advance Retail Sales Reports. 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 begin with the Final Report for August and then move to the Advance Report for September. Our focus is comparing 2022 to 2021 but also YTD 2019. We’ll show both actual and the “real” change in $ as we factor inflation into the data.

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 2021
    • Current Month Real change – % vs same month in 2021 factoring in inflation
  • Current YTD change – % & $ vs 2021
    • Current YTD Real change – % vs 2021 factoring in inflation
  • Current YTD change vs 2019 – % & $
    • Current Real change YTD vs 2019 – % factoring in inflation
  • Monthly & YTD $ & CPIs which are targeted by channel will also be shown. (CPI details are at the end of the report)

First, the August Final. Total Sales turned up after 2 down months and the $ for all were up for August and YTD vs 2021. However, factoring inflation into the data, only Relevant Retail was down for the month but in YTD $, only Restaurants were up. Here is the August data for the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The August Final is $2.3B more than the Advance Report. Relevant Retail had the biggest change: +$1.6B; Restaurants: +0.9B; Auto: +$0.5B; Gas Stations: -$0.7B. Sales are up from last month in all but Restaurants & Gas Stations and consumers continue to spend more vs 2021. However, the “real” numbers tell a slightly different story. Only Relevant Retail is really down for the month but again only Restaurants are really up in YTD $. Restaurants had a late pandemic recovery and it is still growing. The inflation impact on Relevant Retail is significant. Their Real YTD $ales vs 2021 have been negative for 5 months. They do have the best performance since 2019 as 63% of their 31.6% growth is “Real”.

Now, let’s see how some Key Pet Relevant channels did in August

Overall – 8 of 11 were up vs July. Vs August 2021, all reported more $ but only 6 were really up. In YTD vs 2021, all reported increases but only 4 were real. Vs 2019, only Office/Gift/Souvenir & Discount Dept Stores were “really” down.

  • Building Material Stores – A Fall lift has started early. YTD Home Ctr/Hdwe is up 7.7% vs 21 but Farm stores are only +3.4%. The Bldg/Matl group has a YTD inflation rate of 10.9% which has produced negative real numbers. The pandemic caused consumers to focus on their homes which produced sales growth over 36% since 2019 in both channels. Importantly, 60% of this lift was real, primarily because the bulk of the lift came from 20>21, prior to the inflation wave. Avg Growth Rate: HomeCtr/Hdwe: 10.9%, Real: 6.7%; Farm: 11.7, Real: 7.6%
  • Food & Drug – Both channels are truly essential. Except for the pandemic food binge buying, they tend to have smaller fluctuations in $. However, they are radically different in inflation. The YTD rate for Grocery products is 4 times higher than for Drugs/Med products. Drug Store $ are up from July and vs 2021. Real sales are down vs August 2021 but 88% of their growth since 2019 is real. The Real Sales for Supermarkets are down for the month & YTD. Also, only 16% of their growth since 2019 is real. Avg Growth Rate: Supermarkets: +6.4%, Real: +1.1%; Drug Stores: +4.6%, Real: +4.0%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Their sales increased in August and 2022 YTD sales are now 1.2% above 2021. Their current inflation rate is 3.8% which is down from 7.5% in April but YTD it is still 6.3%. It was also high in 20>21, +4.8%. However, 71% of their 47% lift since 2019 is real. Their Avg Growth Rate was: +13.8%; Real: +10.1%.
  • Gen Mdse Stores – Only Discount Dept store sales were up from July. However, all are now up for the month and YTD vs 2021. All real measurements vs 2021 are negative for all channels. Disc. Dept Stores were hurting before COVID and now their YTD sales are again “really” down from 2019. The other channels have 38% real growth. Avg Growth Rate: SupCtr/Club: 5.5%, Real: 2.0%; $/Value Strs: +7.5%, Real: +4.1%; Disc. Dept.: +2.4%, Real: -0.2%
  • Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are up across the board vs July & 2021. The growth vs 2021 has been strong enough that it turned real YTD sales positive vs 2021. However, their real sales vs 2019 are still down -1.7%. Their true recovery is still a ways off. Avg Growth Rate: +2.1%, Real: -0.6%
  • Internet/Mail Order – The growth of the “hero” of the Pandemic is slowing. August Sales are up vs July and 2021 but their YTD growth rate is only half of their average since 2019. However, 90% of their 78.9% growth since 2019 is real. Their Avg Growth Rates is: +21.4%, Real: +19.5%. As expected, they are by far the growth leaders since 2019.
  • A/O Miscellaneous – This is a group of specialty retailers. Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level by December 2021 as annual sales reached $100B for the first time. In 2022, they are by far the Sales increase leaders over 2021. Their sales dipped in January from December and again in July, but all measurements have been positive for every other month. Plus, 86% of their 59.1% growth since 2019 is real. Average Growth Rate is: +16.7%, Real: +14.7%.They are 2nd in growth since 2019 to the internet. I’m sure Pet Stores are helping.

There is no doubt that high inflation is an important factor in Retail. In actual $, all channels reported increases in monthly  and YTD sales over 2021. When you factor in inflation, the number with any “real” growth falls to 6 for monthly & 4 for YTD. This is a clear indication of the ongoing strong impact of inflation at the retail channel level. Recent data indicates that Inflation again slowed a little. Let’s look at the impact on the Advance Retail $ numbers for September.

We have had memorable times since 2019. Some big negatives, including the 2 biggest monthly drops in history but a lot of positives in the Pandemic recovery. Total Retail reached $600B in a month for the first time and broke the $7 Trillion barrier in 2021.  Relevant Retail was also strong as annual sales reached $4T and all big groups set annual $ales records in 2021. Now, radical inflation is a big factor with the largest increase in 40 years. At first this reduces the amount of product sold but not $ spent. We saw this again in September. Sales fell from August but all groups were up vs September & YTD 2021. However, in the actual amount of product sold YTD vs 2021, all groups but Restaurants were down.

Overall – Inflation Reality is still here. The monthly increase vs 2021 continues to be lower than the inflation rate. The spending for all groups fell from August but all are up for the month and YTD vs 2021. However, the real YTD sales vs 2021 for all but restaurants are down for the 6th straight month.

Total Retail – Every month in 2022 has set a monthly sales record. September $ are $661B, the 8th highest of all time. 2022 has become somewhat normal as sales were stable for 4 months then dipped slightly in September. September $ are -5.7% vs August but are up 8.6% vs September 2021 and 10.1% vs YTD 2021. However, when you factor in inflation, monthly sales are down -0.9% and YTD sales are down for the 7th consecutive month. Plus, only 40% of the 32% growth since 2019 is real. The Avg Growth Rate is: +9.7%, Real: +4.1%. The impact of Inflation continues.

Restaurants – They were hit hard by the pandemic and didn’t truly start to recover until March 2021. Sales in the last 9 months of 2021 exceeded $70B and 2021 was the biggest year in history, $876B. January sales fell from December but then turned up, setting new all-time monthly records in March>May. $ fell in June, set a new record in July and then fell again in Aug>Sep. They are the only big group that is positive in all measurements vs 2021 & 2019. Inflation is high at 8.3% for August and 7.2% YTD but it is still the lowest of any big group. 58.0% of their 31.7% growth since 2019 is real. Their Avg Growth Rate: +9.6%, Real: +5.8%. They only account for 12.7% of Total Retail $ales, but their strong performance helps to improve the overall retail numbers.

Auto (Motor Vehicle & Parts Dealers) – This group actively worked to overcome the stay-at-home attitude with great deals and a lot of advertising. They finished 2020 up 1% vs 2019 and hit a record $1.48T in 2021. In 2022 sales got on a rollercoaster – Jan down, Feb/Mar up, Apr>May down, June up, July down, August up, September down. They have 4 down months in actual sales which are the only reported sales negatives by any big group vs 2021. This is bad but their real YTD sales numbers are much worse. Extremely high inflation has pushed their real YTD sales down -11.3% vs 2021, the worst of any group. Plus, their 24.6% growth since 2019 is really down -3.1%. Their Avg Growth: +7.6%, Real: -1.1%. Inflation has slowed in the last 4 months. It is likely that the 4 drops in $ales vs 2021 were tied to high inflation.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and obviously need less gas. This group started recovery in March 2021 and reached a record $584B for the year. Sales fell in Jan>Feb turned up in Mar>Jun then fell in Jul>Sep. They have the biggest increases vs 2021 and 2019 but it is not reality. Gasoline inflation has slowed so September $ are really up vs 2021. Inflation is still 18.8% and 40.8% YTD, the highest of any expenditure category. It has even caused consumers to buy 4.3% less than they did in 2019. Avg Growth Rate: +14.5%, Real: -1.4%. The YTD numbers show a big impact of inflation. Consumers spend more but buy less, even less than they bought 3 years ago.

Relevant Retail – Less Auto, Gas and Restaurants – This the “core” of U.S. retail and accounts for 60+% of Total Retail Spending. There are a variety of channels in this group, so they took a number of different paths through the pandemic. However, their only down month was April 2020. They finished 2020, up +7.1% and 2021 got even better as they reached a record $4.50T. They have led the way in Total Retail’s recovery which became widespread across the channels. Sales fell in Jan>Feb, then went on an up/down roller coaster from Mar>Sep with September down 5.2%. All months in 2022 set new records but their YTD increase is 14% below their 9.7% avg growth since 2019. Now, we’ll look at the impact of inflation. 62.2% of their 32.0% growth since 2019 is real. However real sales vs 2021 are down -1.7% for the month and -0.8% YTD. This shows that inflation is only a 2022 problem. Their Avg Growth Rate: +9.7%, Real: +6.2%. The performance of this huge group is critically important. This is where America shops. Real YTD sales are down almost 1% so the amount of products that consumers bought in 2022 is less than in 2021. They just paid more. That’s not good.

Inflation is slowing slightly but the impact is still there. All groups but Restaurants have no YTD real growth vs 2021 and Auto & Gas Stations are still “really down” vs YTD 2019. We’ve now had 7 straight months of real YTD drops for Total Retail and 6 straight for Relevant Retail so we are still in Phase II of inflation. Consumer spending grows but the amount bought declines. With actual sales in 4 of the last 7 months down vs 2021, the Auto Group is close to Phase III, when consumers actually cut back on spending. If inflation continues, Phase III could become a reality.

  • Relevant Retail: Avg Growth Rate: +9.7%, Real: +6.2%. All 11 channels were down vs August but 10 were up vs September & YTD 2021. The negative impact of inflation is less but still there in the “real” data.
  • All Dept Stores – This group was struggling before COVID, and the pandemic hit them hard. They began to recover in March 2020 and have continued to grow in 2022. Their YTD numbers have been positive vs 2019 since April but they are still down in “real” terms in all measurements vs both 2019 & 2021. Avg Growth: +0.3%, Real: -2.5%.
  • Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. Inflation is a big factor in their current numbers. Sales are down from August but up vs 2021. Their real numbers are all down vs 2021 and only 37.9% of their 19.0% lift from 2019 is real. Avg Growth: +6.0%, Real: +2.4%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Inflation has hit them hard. $ are down from August. The increases vs 2021 are strong but inflation is stronger. Real sales are down and only 14.3% of the growth since 2019 is real. Avg Growth: +6.5%, Real = +1.0%.
  • Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. Sales dipped in August but are ahead in all measurements vs 2021 – actual & “real”. Their inflation rate is low so 89% of their 15.8% growth from 2019 is real. Their Avg Growth is: +5.0%, Real: +4.5%.
  • Clothing and Accessories – They were nonessential, and clothes mattered less when you stayed home. That changed in March 2021 and resulted in explosive growth through May 2022. September sales are +4.5% from 21 but real sales are -0.9%. YTD $ are up 7.8%% and 87% of their growth from 2019 is real. Avg Growth: 5.0%, Real: +4.4%.
  • Home Furnishings – They were also less impacted by COVID. Sales dipped Mar>May in 2020. Then as consumers’ focus turned to their homes, furniture became a priority. Inflation is high. Sales are up slightly vs 2021 but all of their real numbers vs 2021 are very negative. Only 19.3% of their growth since 2019 is real. Avg Growth: +6.5%, Real: +1.3%.
  • Electronic & Appliances – This channel has problems beyond the pandemic. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. Sales are down from August and in all measurements vs 2021. Actual sales are even down vs 2019. However, deflation did keep their “real” YTD sales up +0.6% vs 2019. Avg Growth: -0.2%, Real: +0.2%.
  • Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. This year’s spring lift ended in May. Sales dropped in September after an unexpected sharp increase in August. Monthly & YTD sales are up vs 2021, but when you factor in double-digit inflation, the real amount sold is down for both measurements. However, 58.8% of their strong 37.1% sales growth since 2019 is real. Their Avg Growth is: +11.1%, Real: +6.8%.
  • Sporting Goods, Hobby and Book Stores – Consumers turned their attention to recreation and Sporting Goods stores sales took off. Book & Hobby Stores recovered more slowly. September $ fell 11.7% from August but are still ahead of 2021, monthly & YTD. However, real YTD $ are still down vs 2021. Inflation in this group is lower than most groups and most comes from Sporting Goods. 78.6% of their 38.3% growth since 2019 is real. Avg Growth is: +11.4%, Real: +9.2%.
  • All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 +0.9% but sales took off in March 21. They set a new monthly $ales record in December. Sales are down 7.5% from August but since April they have held the top spot in YTD increase vs 2021. Their YTD growth since 2019 is 2nd only to NonStore. Plus, 81.8% of the 45.1% growth since 2019 is real. Their Avg Growth is: +13.2%, Real: +11.0%.
  • NonStore Retailers – 90% of their volume comes from Internet/Mail Order/TV. The pandemic accelerated online spending. They ended 2020 +21.4%. The growth continued in 2021. In December monthly sales exceeded $100B for the 1st time and they broke the $1 Trillion barrier for the year. Their YTD Growth has slowed significantly in 2022 but all measurements are positive. 88.1% of their 73.3% increase since 2019 is real. Their Avg Growth is: +20.1%, Real: +18.1%.

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

Recap – The Retail recovery from the pandemic was largely driven by Relevant Retail. While the timing varied between channels, by the end of 2021 it had become very widespread. In late 2021 and now in 2022, a new challenge came to the forefront – extreme inflation. It isn’t the worst in history, but it is the biggest increase in prices in 40 years. Overall, and in most product categories it has slowed in Jul>Sep. However. it continues to grow in Services. On the surface, the Retail impact is almost invisible. Sales in the total market and in the Relevant Retail group continue to grow but the growth rate has markedly slowed compared to last year. Overall, the retail market is generally in phase II of strong inflation – spending grows but the amount purchased falls. The channels in the graph illustrate this perfectly and show how widespread that it has become. 10 of 11 channels are up vs September & YTD 2021. However, if you factor in inflation, only 4 are up for either measurement. Inflation is real and there are real and even worse consequences if it continues.

Finally, here are the details and updated inflation rates for the CPIs used to calculate the impact of inflation on retail groups and channels. This includes special aggregate CPIs created with the instruction and guidance of personnel from the US BLS. I also researched data from the last Economic Census to review the share of sales by product category for the various channels to help in selecting what expenditures to include in specific aggregates. Of course, none these specially created aggregates are 100% accurate but they are much closer than the overall CPI or available aggregates.

Monthly CPI changes of 0.2% or more are highlighted.

I’m sure that this list raises some questions. Here are some answers to some of the more obvious ones.

  1. Why is the group for Non-store different from the Internet?
    1. Non-store is not all internet. It also includes Fuel Oil Dealers, the non-motor fuel Energy Commodity.
  2. Why is there no Food at home included in Non-store or Internet?
    1. Online Grocery purchasing is becoming popular but almost all is from companies whose major business is brick ‘n mortar. These online sales are recorded under their primary channel.
  3. 6 Channels have the same CPI aggregate but represent a variety of business types.
    1. They also have a wide range of product types. Rather than try to build aggregates of a multitude of small expenditure categories, it seemed better to eliminate the biggest, influential groups that they don’t sell. This method is not perfect, but it is certainly closer than any existing aggregate.
  4. Why are Grocery and Supermarkets only tied to the Grocery CPI?
    1. According to the Economic Census, 76% of their sales comes from Grocery products. Grocery Products are the driver. The balance of their sales comes from a collection of a multitude of categories.
  5. What about Drug/Health Stores only being tied to Medical Commodities.
    1. An answer similar to the one for Grocery/Supermarkets. However, in this case Medical Commodities account for over 80% of these stores’ total sales.
  6. Why do SuperCtrs/Clubs and $ Stores have the same CPI?
    1. While the Big Stores sell much more fresh groceries, Groceries account for ¼ of $ Store sales. Both Channels generally offer most of the same product categories, but the actual product mix is different.