Retail Channel Monthly $ Update – February Final & March Advance

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By 2021, the market had generally recovered from the impact of the pandemic. In 2022 & 2023, we were hit by extreme inflation, with some 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 February and then go to the Advance Report for March. Our focus is comparing to last year but also 2021 and 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 data will be presented in detailed charts to facilitate visual comparison between groups/channels. The charts will show 11 separate measurements. To save space they will be displayed in a stacked bar format for the channel charts.

  • Current Month change – % & $ vs previous month
  • Current Month change – % & $ vs same month in 2022 and 2021.
    • Current Month Real change for 2023 vs 2022 and vs 2021 – % factoring in inflation
  • Current Ytd change – % & $ for 2023 vs 2022, 2021 and 2019.
    • Current Ytd Real change % for 2023 vs 2022, 2021 and 2019
  • Monthly & Ytd $ & CPIs for 22>23 and 21>23 which are targeted by channel will also be shown. (CPI Details are at the end of the report)

First, the February Final. All but Auto were down from last month, but all but Gas Stations were up vs February of 22 & 21. Considering inflation, all were really up for the month & Ytd vs 2022. Vs 2021 & 2019 only Auto & Gas Stations had any “real” negatives. Here are the specifics for the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The February Final is $2.9B more than the Advance. All were up. Restaurants: +$0.6B; Gas Stations: +$0.4B; Auto: +1.4B; Relevant Retail: +$0.6B. Except for Auto, sales were down from January as expected, but consumers continue to spend more vs last year in all but Gas Stations. In fact, Total Retail, Restaurants & Relevant Retail were positive in all measurements vs 22, 21 & 19. Auto was “really” down vs 21 and Gas Stations are really down Ytd vs 21 & 19. The most significant change is that the real sales for Relevant Retail vs the previous year are now positive for the first time in 10 months. They are now tied with Restaurants for 1st place in performance since 2019 but only 50% of their growth is real.

Now, let’s see how some Key Pet Relevant channels did in February in the Stacked Bar Graph Format

Overall– 8 of 11 were down from Jan but vs 22, 10 were up vs Feb and all Ytd. 4 were really down monthly & Ytd. Vs 2021, all had increases. 8 monthly were real and 7 Ytd. Vs 2019, Office/Gift/Souvenir was the only real negative.

  • Building Material Stores – The pandemic caused consumers to focus on their homes which has produced sales growth of 35.4% since 2019. Home Ctr/Hdwe has the most Ytd growth vs 2021, but Farm stores are the leaders vs 2022 & 2019. Prices for the Bldg/Matl group have inflated 23.7% since 2021 which has produced all negative real numbers vs 2022 & 2021. Importantly, only 24.0% of their 19>23 lift was real. It was only this high because half of the lift came prior to the inflation wave. Avg 19>23 Growth: HomeCtr/Hdwe: 7.6%, Real: 1.8%; Farm: 9.3%, Real: 3.4%
  • 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 rate for Grocery products is over 3 times higher than for Drugs/Med products. Drug Stores are positive in all numbers vs 22, 21 & 19 and 71% of their growth since 2019 is real. While the $ are up for Supermarkets their 2023 real sales are down vs 2022 & 2021 and just barely positive vs 2019. Only 4.5% is real growth. Avg 19>23 Growth: Supermarkets: +6.0%, Real: +0.3%; Drug Stores: +4.1%, Real: +2.9%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are slightly up from January and positive in all other measurements. Their current inflation rate is 1.1% which is down sharply from 5.4% in 21>22. It was even higher in 20>21, +6.5%. However, 63% of their 52.5% lift since 2019 is real. Their Avg 19>23 Growth Rate is: +11.1%; Real: +7.4%.
  • Gen Mdse Stores – Only $/Value Stores are up vs January, but actual sales were up for all channels vs 2022, 2021 & 2019. In real sales, the only negatives were in Ytd sales for Disc. Department Stores vs 22 & 21. They have the worst performance of any channel in all measurements and only 13% real growth since 2019. The other channels average 39%. Avg 19>23 Growth: SupCtr/Club: 6.7%, Real: 2.8%; $/Value Strs: +6.9%, Real: +3.0%; Disc. Dept.: +3.1%, Real: +0.4%
  • Office, Gift & Souvenir Stores – Sales are down from January. However, their sales growth since they started their recovery in the spring of 2021 has been strong enough to make them positive in all measurements vs 2022 & 2021. They are still really down vs 2019 but they are making progress. Avg Growth Rate: +1.7%, Real: -0.9%
  • Internet/Mail Order – Sales are down -6.4% from January but still a monthly record. They are positive for all other measurements, but their growth rate is only 51% of their average since 2019. However, 80% of their 99.2% growth since 2019 is real. Avg Growth Rate: +18.8%, Real: +15.8%. As expected, they are by far the growth leaders since 2019.
  • A/O Miscellaneous – Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level of $100B for the first time in 2021. In 2022 their sales dipped in January, July, Sept>Nov, rose in December then fell in Jan>Feb 2023. In fact, real sales are down vs February 2022, but all other measurements are positive. They are still the $ increase leaders vs 2021 and 75% of their 66.9% growth since 2019 is real. Average 19>23 Growth: +13.7%, Real: +10.8%. They remain 2nd in growth since 2019 to the internet. I’m sure that Pet Stores are contributing.

There is no doubt that high inflation is an important factor in Retail. In actual $, 10 channels reported increases in sales vs 2022 but 11 vs 2022. When you factor in inflation, the number with any “real” growth drops to 7 vs 2022 but 8 vs 2021 (in Jan it was only 4) This is a clear indication slowing inflation has lessened its impact at the retail channel level. Recent data indicates that Inflation again slowed a little. Let’s look at the impact on the Advance Retail $ales for March.

Since 2019, we have seen the 2 biggest monthly drops in history but a lot of positives in the Pandemic recovery. Total Retail reached $700B in a month for the first time and broke the $7T barrier in 2021. Relevant Retail was also strong as annual sales reached $4T in 2021 and all big groups set annual $ales records. In 2022 radical inflation was a big factor with the largest increase in 40 years. At first, this reduces the amount of product sold but not $ spent. Total Retail hit $8T and all groups again set new annual records in 2022. In 2023, sales fell for all groups in Jan>Feb then rose in March. Except for a dip by Gas Stations, all actual sales are positive. The biggest change is that real sales vs 21 are negative for all but Restaurants which shows the impact of cumulative inflation. BTW, Restaurants are positive in all measurements.

Overall – Inflation Reality March inflation vs 2022 fell below the $ increase rate for all but Relevant Retail. However, you see the impact of cumulative inflation as real sales are down for all but Restaurants vs 2021. Restaurants have the strongest performance in all measurements vs 2022, 2021 & 2019. The biggest negative is in Relative Retail. Monthly Real sales are down vs 2022 & 2021 and Ytd real sales are again down vs last year. Consumers pay more but buy less.

Total Retail – Every month since June 2020 has set a monthly sales record. December 2022 $ were $748.9B, a new all-time record. As expected, sales dipped in Jan>Feb then rose in March. Inflation is slowing but so is sales growth. Sales are up 3.1% vs last year. That’s the lowest rate since 3.0% in February 2021. Also, only 38% of the 19>23 growth is real but that’s better than 9%, 21>23. March sales are actually really down -4.5% vs 2021. Inflation is slowing but it 1st hit 4% in March 2021. We are starting to see the cumulative impact. Avg 2019>23 Growth: +8.5%, Real: +3.4%.

Restaurants – They were hit hard by the pandemic and didn’t begin recovery until March 2021. However, they have had strong growth since then, setting an all-time monthly record of $91B in December and exceeding $1T in 2022 for the 1st time. They are the best performing big group in all measurements vs 22, 21 & 19. Inflation increased to 8.6% in March from 8.3% last month and is now 16.0% vs 21 and 20.3% vs 19. 47.5% of their growth since 19 is real but that is less than 59.6% of even greater growth since 21. Recovery started late but inflation started early. Avg 2019>23 Growth: +10.4%, Real: +5.4%. They just account for 13.7% of Total Retail $, but their performance improves 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 but much of it was due to skyrocketing inflation. In 2022 sales got on a rollercoaster. Inflation started to drop mid-year, but it caused 4 down months in actual sales which are the only reported sales negatives by any big group in 2021>2022. This is bad but their real 2022 sales numbers were much worse, down -8.2% vs 2021 and -8.9% vs 2019. 2023 started off a little better but got worse in March. $ are up 0.4% vs 22 but are down vs 21. Ytd Real sales vs 2021 are also down. Their Ytd real sales vs 19 are still up but there is little improvement despite continued deflation. Avg 2019>23 Growth: +6.9%, Real: +1.1%.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and need less gas. This group started recovery in March 2021 and inflation began. Sales got on a rollercoaster in 2022 but reached a record $583B. Inflation started to slow in August and prices slightly deflated in Dec & Feb then dropped 17% in Mar. However, prices are still +22.5% vs 21. The deflation actually caused monthly & Ytd sales vs 22 to drop but real sales are up. However, all real sales vs 21 & 19 are still down. Avg 2019>23 Growth: +8.0%, Real: -1.0%. The numbers show the cumulative impact of inflation and demonstrate how strong deflation can be both a positive and a negative.

Relevant Retail – Less Auto, Gas and Restaurants – They account for 60+% of Total Retail $ in a variety of channels, so they took many different paths through the pandemic. However, their only down month was April 2020. They led the way in Total Retail’s recovery, which became widespread across the channels. Sales got on a roller coaster in 2022. However, all months in 2022 set new records with December reaching a new all-time high, $481B, and an annual record of $4.81T. In 2023, Jan>Feb had normal drops, but sales in March turned up. However, the increase was small so that real monthly sales & Ytd vs 22, along with monthly vs 21 were down. That means that real sales vs last year have been negative in 11 of the last 12 months. In fact, 50% of their 19>23 $ are real compared to only 4% for 21>23. Inflation is a cumulative problem that began in 2022. Their Avg 2019>23 Growth is: +8.6%, Real: +4.5%. The performance of this huge group is critically important. This is where America shops. The fact that real sales are down again is bad news.

Inflation is slowing slightly but the impact is still there. Sales increases are also slowing, and the fact that some real sales for Total & Relevant Retail have again turned negative is not a good sign. Restaurants are doing great while Auto & Gas Stations are still struggling despite ongoing deflation. However, the biggest concern is Relevant Retail. They may be moving back to Inflation Phase II, where Consumers spend more but the amount bought decreases. The sales increase rate is slowing even faster than inflation. This can lead to Phase III when sales actually drop. Let’s hope for a turnaround.

Here’s a more detailed look at March by Key Channels in the Stacked Bar Graph Format

  • Relevant Retail: Avg Growth Rate: +8.6%, Real: +4.5%. All 11 channels were up from February but only 7 were up vs 22 & 6 vs 21. Only 3 had a “real” increase vs 22 and/or 21. The negative impact of inflation is very visible in this real data.
  • All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Their $ are up from February and for all comparisons but vs March 21. However, their real sales are down in all measurements, even vs 2019. Avg 2019>23 Growth: +0.5%, Real: -2.1%.
  • Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. $ales are up from February and in all other measurements. Their real sales are down vs March 22 & 21 and Ytd vs 21. 34% of their 27.1% 19>23 lift is real. This shows the impact of inflation. Avg 19>23 Growth: +6.2%, Real: +2.2%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. $ are up from February and in all measurements vs 22, 21 & 19. However, inflation hit them hard. $ Real sales are down for all but Ytd vs 2019 and only 4.6% of the growth since 2019 is real. Avg Growth: +6.0%, Real: +0.3%.
  • Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. Sales are up from February and in all other measurements vs 22, 21 & 19. Their inflation rate is low so 74% of their 21.7% growth from 2019 is real. Avg 2019>23 Growth: +5.0%, Real: +3.8%.
  • Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Sales are up vs February but down vs 22. After 3 months of all positive measurements, real sales are down vs March 21 & Ytd vs 22. 66% of their 2019>23 growth is real. Avg 2019>23 Growth: +3.9%, Real:+2.6%
  • Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Inflation has slowed but was very high in 2022. Sales are up from February & Ytd vs 22, 21 & 19 but down vs March 22 & 21. Their real sales are all down vs 22 & 21 and only 18% of their 19>23 growth is real. Avg 2019>23 Growth: +5.5%, Real: +1.1%.
  • Electronic & Appliances – This channel has many problems. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. $ales are up vs February but down in all other measurements. However, real sales are up Ytd vs 22, 21 & 19. This only happened because of strong deflation, -6.3>-7.9%. Avg 2019>23 Growth: -1.7%, Real: +0.08%.
  • Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. In 2022 the lift slowed as inflation grew to double digits. After 4 drops, Sales are up 25.5% from February. They are also up Ytd vs 21 & 19 but down in all other measurements. They have the highest Inflation of any channel so real sales are negative in all but Ytd vs 2019. Also, just 26% of their % sales growth since 2019 is real. Avg 2019>23 Growth is: +8.3%, Real: +2.4%.
  • 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. $ales are up from February and in all other measurements but vs Mar 21. Real sales are up except vs 21. This is not bad, but it comes after 2 months of all positives. Their inflation is lower than most groups so 71% of their 42% growth since 2019 is real. Avg 2019>23 Growth: +9.2%, Real: +6.8%.
  • All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 at +0.9% but sales took off in March 21 and have continued to grow. Sales are up from February and for all but real March 23 vs 22. They still have the biggest increase vs 2021 and vs 2019 they are 2nd only to NonStore. 70% of their 52% 19>23 growth and 59% of their 21>23 growth is real – amazing! Their Avg 19>23 Growth is: 11.0%, Real: 8.1%.
  • 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 as sales exceeded $100B for the 1st time and they broke the $1 Trillion barrier. Their growth slowed significantly in 2022 and now 2023. $ are up from February and all measurements are positive. 78% of their 91.8% growth since 2019 is real. Their Avg Growth: +17.7%, Real: +14.5%.

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, there was a new challenge, the worst inflation in 40 years. Overall, and in most product categories it has slowed in Jul>Mar which should improve the Retail Situation. Sales were up from February for all channels but Gas Stations. Inflation continues to slow in most channels, which increases Real Sales – the amount of products sold. Some channels like Auto, Gas Stations, Grocery and Bldg Material stores still have high cumulative inflation rates so they are still struggling but a few channels are doing well. The new problem is that the sales increase rate vs 2022 for many channels has slowed and is now below the lower inflation rate. This has produced negative real sales for most channels. This is evident in the Relevant Retail group as Real sales vs last year have again turned negative. However, it is also true for 8 of 11 smaller channels. After a brief respite, we may be moving back to Inflation, Phase II, increased $ales but a decrease in the amount sold. Hopefully, we can avoid Phase III, when $ales also decrease.

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. The data also includes the CPI changes from 2021 to 2023 to show cumulative inflation.

Monthly 22>23 CPI changes of 0.2% or more are highlighted. (Green = lower; Pink = higher)

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 2023 – March Update: Price increase slows to +9.4% vs 2022

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Inflation continues to be big news. The YOY increases in the monthly Consumer Price Index (CPI) are larger than we have seen in decades but are definitely slowing. March prices grew 0.3% from February and the CPI was still up +5.0% vs 2022, but down from +6.0% last month. The grocery pricing surge has also slowed. After 12 straight months of double-digit YOY monthly percentage increases, grocery inflation is down to +8.4%.  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 Petflation was +4.1% in December 2021 while the overall CPI was +7.0%. The gap narrowed as Petflation accelerated and reached 96.7% of the national rate in June 2022. National inflation has slowed since July, but Petflation has generally increased. It passed the National CPI in July and is still +9.4% in March, 88% higher than the national rate of 5.0%. We will look 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 23 vs 22 which will include Pet Segments and relevant Human spending categories. Plus
    1. CPI change from the previous month.
    2. Inflation changes for recent years (21>22, 20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2023 vs 2019 and now vs 2021 to see the full inflation surge.
    4. Average annual Year Over Year inflation rate from 2019 to 2023
  • 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 March 2021 to March 2023. 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 yearend and those from 12 and 24 months earlier are included. This will give you some key waypoints. In March Supplies prices fell slightly but all other segments are at their cumulative inflation peak.

In March 2021, the national CPI was only +3.1% and Pet prices were +1.5%. 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 Aug>Oct Petflation accelerated, except for a small October dip in Veterinary. In Nov>Dec, Services & Food prices continued to grow while Veterinary & Supplies prices stabilized. In Jan>Mar, prices in all but Supplies grew every month. Total Petflation since Dec 2019 has been above the U.S. CPI since November.

  • 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>Dec 2022. Prices turned up again in Jan>Mar but 39% of the overall 17.5% increase since 2019 happened from January>June 2022.
  • Pet Food – Prices stayed generally below Dec 2019 levels from Apr 2020 > Sept 2021, when they turned up. There was a sharp lift in Dec 2021, and it has continued. 92% of the 20.6% increase occurred since 2022.
  • 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. They turned up in January and hit an all-time high, beating the 2009 record. They plateaued from Feb> May, turned up in June, flattened in July, then turned up in Aug>Oct to a new record high. Prices stabilized in Nov>Dec but turned up again in Jan>Feb, reaching a new record high. In March, they fell -0.3%.
  • 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>Mar but Services remains in 3rd place among Pet Industry Segments.
  • Veterinary – Inflation has been pretty consistent in Veterinary. Prices turned up in March 2020 and grew through 2021. A pricing surge began in December 2021 which put them above the overall CPI. In May 2022 prices fell and stabilized in June causing them to briefly fall below the National CPI. However, prices turned up again and despite Oct & Dec dips they have stayed above the National CPI since July and set new records in January>March.
  • Total Pet – The blending of patterns made Total Pet appear calm. In December 2021 the pricing surge began. In Mar>June 2022 the segments had ups & downs, but Petflation grew again from Jul>Nov. It slowed in December then turned up again in January and February as all segments increased prices. Prices grew again in March as all, but Supplies had increases. It has been ahead of the cumulative U.S. CPI on our 2019>23 chart since November.

Next, we’ll turn our attention to the Year over Year inflation rate change for March and compare it to last month, last year and to previous years. We will also show total inflation from 21>23 & 19>23. Although Petflation slowed in March, it is now 88% higher than the National rate. The chart will allow you to compare the inflation rates of 22>23 to 21>22 and other years but also see how much of the total inflation since 2019 came from the current pricing surge. Again, we’ve included some human categories to put the pet numbers into perspective.

Overall, Prices were +0.3% vs February and were up 5.0% vs March 2022. The Grocery increase is below double digits at 8.4% but is still a big negative. Inflation usually continues in March so it’s not surprising that 6 of 9 categories had increased prices from last month, compared to 8 in February. 4 of the 6 increases were 0.7+%, all from the Pet Industry – Total Pet: 0.7%; Pet Food: 1.6%; Veterinary: 0.9%; Pet Services: 0.8%. The overall national YOY monthly inflation rate for March is down from February, but it is also much lower than the 21>22 rate. 4 categories – Pet Supplies, Veterinary, Medical Services and Food at home have a similar pattern. In all other categories the 22>23 inflation rate is higher than the 21>22 rate and is in fact the highest rate in any year since 2019 for all but Haircuts/Services. In our 2021>2023 measurement you also can see that over 70% of the cumulative inflation since 2019 occurred in the current surge for all categories but Veterinary Services, Pet Services, Medical Services and Haircuts/Personal Services. Of Note: They are all service expenditures, not products. The Pet Supplies Segment has a unique situation. The 21>23 inflation surge provided 114% of the overall inflation since 2019. This happened because Pet Supplies prices strongly deflated in 20>21.

  • U.S. CPI– Prices are +0.3% from February. The YOY increase is down to +5.0%. It peaked at +9.1% back in June. The targeted inflation rate is <2% so we are still over 2.5 times higher than the target. However, a 9th straight slight decline is good news. It is also good that the current inflation rate is below 21>22 but the 21>23 rate is 14.0%, 75% of total inflation since 2019. How many households “broke even” by increasing their income by over 14% in 2 years?
  • Pet Food– Prices are +1.6% vs February and 14.4% vs March 2022. They are also 71% higher than the Food at Home inflation rate – not good news! The YOY increase is being measured against a time when prices were only 5.4% above the 2019 level, but that increase is still an incredible 6.9 times the pre-pandemic 2.1% increase from 2018 to 2019. The 2021>2023 inflation surge generated 93% of the total 21.3% inflation since 2019.
  • Food at Home – Prices are down -0.2% from February. The monthly YOY increase is 8.4%, down from 10.2% in February and considerably lower than Jul>Sep 2022 when it exceeded 13%. The 24.5% Inflation for this category since 2019 is 31% more than the national CPI and remains 2nd to Veterinary. 78% of the inflation since 2019 occurred from 2021>2023. The pattern now mirrors the national CPI but we should note that Grocery prices began inflating in 2020>2021 then the rate accelerated. It appears that the pandemic supply chain issues in Food which contributed to higher prices started early and foreshadowed problems in other categories and the overall CPI tsunami.
  • Pets & Supplies – Prices are down -0.3% from February. That’s the 1st decrease since November. They still have the lowest increase since 2019 and remain in last place in terms of the monthly increase vs last year for Pet Segments. As we noted earlier, prices deflated in 2020>2021 so the 2021>2023 inflation surge accounted for 100+% of the total price increase since 2019. They reached an all-time high in October then prices deflated. 3 straight months of increases pushed them to a new record high in February. but prices fell slightly in March.
  • Veterinary Services – Prices are +0.9% from February. They are +7.7% from 2022 and are now in 3rd place behind Food & Services in the Pet Industry. However, they are the leader in the increase since 2019 with 26.9% compared to Food at home at 24.5%. For Veterinary Services, relatively high annual inflation is the norm. The rate did increase during the current surge so 65% of the 4 years’ worth of inflation occurred in the 2 years from 2021>2023.
  • Medical Services – Prices turned sharply up at the start of the pandemic but then inflation slowed and fell to a low rate in 20>21. In March prices fell -0.5% from February and were +1.0% vs 2022, the lowest rate from 2019>23. Medical Services are not a big part of the current surge as only 34% of the 2019>23 increase happened from 21>23.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021/2022. March 23 prices were up +0.8% from last month and +8.0% vs 2022, the 2nd highest rate next to January’s +8.4%. Initially their inflation was tied to the current surge, but it may be becoming the norm as only 61% of the total since 2019 occurred from 21>23, down from 73%.
  • Haircuts/Other Personal Services – Prices are +0.2% from Feb. and +5.4% from 2022, the 2nd highest rate since 2019. Inflation had its biggest increase in 20>21 so just 50% of the inflation from 19>23 happened from 21>23.
  • Total Pet– Petflation is 25% higher than the 21>22 rate, 88% ahead of the National CPI and the +9.4% is the highest March rate in history. Prices increased in all segments but Supplies vs February so Total Pet was up 0.7%. This was expected as a Feb>Mar increase in Petflation has happened in 23 of the last 26 years. Food is the runaway leader, but the 22>23 inflation rate for all but Supplies exceeds the 21>22 rate. Pet Food has generally been immune as Pet Parents are used to paying a lot. However, inflation can cause reduced purchase frequency in the other Segments.

Now, let’s look at the YTD numbers.

The increase from 2022 to 2023 is the biggest for 5 of 9 categories. The 22>23 rate for Haircuts/Services is essentially tied with 21>22. The Total CPI, Pet Supplies & Medical Services are significantly down from 21>22. The average annual increase since 2019 is 4.4% or more for all but Medical Services (3.2%) and Pet Supplies (2.7%).

  • U.S. CPI – The current increase is down 27.5% from 21>22 but is still 32% more than the average increase from 2019>2023, and more than 3 times the average annual increase from 2018>2021. 75% of the 18.9% inflation since 2019 occurred from 2021>23. Inflation is a big problem that started recently.
  • Pet Food – Strong inflation continues with the highest 22>23 & 21>23 rates on the chart. Deflation in the 1st half of 2021 kept YTD prices low then prices surged in 2022. 90.7% of the inflation since 2019 occurred from 2021>23.
  • Food at Home – The 2023 YTD inflation rate has slowed slightly but still beat the U.S. CPI by 71%. You can see the impact of supply chain issues on the Grocery category as 79% of the inflation since 2019 occurred from 2021>23.
  • Pets & Pet Supplies – While the inflation rate is down slightly at about 5.6%, prices remain near February’s record high. Prices deflated significantly in 2021 which helped to create a very unique situation. Prices are up 11.3% from 2019 but 114% of this increase happened from 2021>23. Prices are up 12.9% from their 2021 “bottom”.
  • Veterinary Services – They held onto the top spot in inflation since 2019 but they are only the 4th highest since 2021. At +5.9%, they have the highest average annual inflation rate since 2019 but Veterinary is unique. They are the only category in which the inflation rate grew steadily every year from 2019>2023. 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 2023 prices have deflated monthly to reach a rate actually 12.5% below the pre-pandemic 2018>19 rate.
  • Pet Services – May 22 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>Mar. The January increase of 8.4% was the largest in history. YTD March remained stable at 8.0%. Growing demand with decreased availability is 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 22, prices turned up again. The YTD rate is 11% below the 2020>21 peak but is 59% more than 2018>19. Consumers are paying 20% 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 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, fell in Nov, rose in Dec>Feb, then fell in Mar. The Services segments have had ups & downs but are generally inflating. The net is a YTD Petflation rate vs 2022 of 10.3%, 77.6% more than the National rate. In March 22 it was 27.5% less than the CPI.

Petflation is still very strong. Let’s put the numbers into perspective. Petflation fell from 10.9% in February to 9.4% in March. This is below the record 12.0% set in November, but it is a record for the month. Some good news is that after 7 straight months over 10%, we are finally out of the double digits. However, the current rate is 6 times more than the 1.6% average rate from 2010>2021. There is no doubt that the current pricing tsunami is a significant event in the history of the Pet Industry, but will it affect Pet Parents’ spending. In our demographic analysis of the annual Consumer Expenditure Survey which is conducted by the US BLS with help from the Census Bureau we have seen that Pet spending continues to move to higher income groups. However, the impact of inflation varies by segment. Supplies is the most affected as since 2009 many categories have become commoditized which makes them more 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 decrease in visit frequency. Spending in the Services segment is driven by higher incomes, so inflation is less impactful. This recognized spending behavior of Pet Parents suggests that we should look a little deeper. Inflation is not just a singular event. It is cumulative. Total Pet Prices are up 9.4% from 2022 but they are up 17.6% from 2021 and 22.0% from 2019. That is a huge increase in a very short period. It puts tremendous monetary pressure on Pet Parents to prioritize their expenditures. We know that the needs of their pet children are always a high priority but let’s hope for a little relief – stabilized prices and even deflation. This is not likely in the Service segments but is definitely possible in products. It’s happened before. Let’s hope for a repeat.

Retail Channel Monthly $ Update – January Final & February Advance

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By 2021, the market had generally recovered from the impact of the pandemic. In 2022, we were 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 January and then go to the Advance Report for February. Our focus is comparing to last year but also 2021 and 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 data will be presented in detailed charts to facilitate visual comparison between groups/channels. Starting with February, the charts will show 11 separate measurements so we switched to a stacked bar format for the channel chart.

  • Current Month change – % & $ vs previous month
  • Current Month change – % & $ vs same month in 2022 and 2021.
    • Current Month Real change for 2023 vs 2022 and vs 2021 – % factoring in inflation
  • Current Ytd change – % & $ for 2023 vs 2022, 2021 and 2019. Note: January Monthly & Ytd are obviously the same. We will include actual and Real data for Jan 2023 vs 2019 for this report.
    • Current Ytd Real change % for 2023 vs 2022, 2021 and 2019
  • Monthly & Ytd $ & CPIs which are targeted by channel will also be shown. (CPI Details are at the end of the report)

First, the January Final. All were down from last month, but all were up vs January of 22, 21 & 19. Considering inflation, only Relevant Retail was really down for the month vs 2022. Vs 2021 & 2019 the real data for the big groups associated with cars was not good. Here are the specifics for the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The January Final is $8.2B more than the Advance. Restaurants had the only negative: -$0.5B; Gas Stations: N/C; Auto: +1.3B; Relevant Retail: +$7.3B. Sales are down from December as expected but consumers continue to spend more vs last year. At least for the 1st month, the Real numbers vs 2022 are positive except for a slight dip by Relevant Retail. Auto & Gas Stations are still really down vs 2021 and Gas Stations sold less product than they did in 2019. The inflation impact on Relevant Retail is concerning. Their Real $ales vs the prior year have now been negative for 10 straight months. They have also fallen behind Restaurants to 2nd place in performance since 2019 but 58.6% of their growth is Real.

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

Overall– All were down from December but up vs 2022. Only 3 were really down. Vs 2021, all had increases but only 4 were real – the impact of cumulative inflation. Vs 2019, Office/Gift/Souvenir & Supermarkets were only real negatives.

  • Building Material Stores – The pandemic caused consumers to focus on their homes which has produced sales growth of 31.1% since 2019. Home Ctr/Hdwe has the most growth since 2021 but Farm stores are the leaders vs 2022 & 2019. Prices for the Bldg/Matl group have inflated 21.4% since 2021 which has produced a lot of negative real numbers. Importantly, only 22.8% of their 19>23 lift was real. It was only this high because half of the lift came from 20>21, prior to the inflation wave. Avg 19>23 Growth: HomeCtr/Hdwe: 6.8%, Real: 1.5%; Farm: 8.2%, Real: 3.2%
  • 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 rate for Grocery products is 4 times higher than for Drugs/Med products. Drug Stores are positive in all numbers vs 22, 21 & 19 and 75% of their growth since 2019 is real. While the $ are up for Supermarkets their 2023 real sales are down vs 2022, 2021 and now 2019. Avg 19>23 Growth: Supermarkets: +5.5%, Real: -0.2%; Drug Stores: +4.0%, Real: +3.0%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are down 44.9% from December but up vs 2022, 2021 & 2019. Their current inflation rate is 1.5% which is down sharply from 5.4% in 21>22. It was even higher in 20>21, +6.5%. However, 75% of their 55.2% lift since 2019 is real. Their Avg 19>23 Growth Rate is: +11.6%; Real: +9.0%.
  • Gen Mdse Stores – All channels were down from December but up vs 2022, 2021 & 2019. $/Value store are the only channel really up vs 2022. Vs 2021 all channels are really down. As expected, Disc. Dept Stores have the worst performance of any channel in all measurements. The other channels have 47% real growth since 2019. Avg 19>23 Growth Rate: SupCtr/Club: 6.8%, Real: 3.4%; $/Value Strs: +6.2%, Real: +2.8%; Disc. Dept.: +3.7%, Real: +1.3%
  • Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are down 37.2% from December but their sales growth has been strong enough to make them positive in all measurements vs 2022 & 2021. They are still really down vs 2019 but they are making progress. Avg Growth Rate: +1.3%, Real: -1.2%
  • Internet/Mail Order – Sales are down 21.2% from December but still a monthly record. They are positive for all other measurements, but their growth rate is only 53% of their average since 2019. However, 90% of their 99.7% growth since 2019 is real. Avg Growth Rates: +18.9%, Real: +17.3%. 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 in 2021 as annual sales reached $100B for the first time. In 2022 their sales dipped in January, July, Sept>Nov, rose in December and then fell 21% in January. All other measurements are very positive, and they are still the $ increase leaders vs 2021. Plus, 85% of their 68.1% growth since 2019 is real. Average 19>23 Growth: +13.9%, Real: +12.1%. 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 11 channels reported increases in sales vs 2022 & 2021. When you factor in inflation, the number with any “real” growth falls to 8 vs 2022 but only 4 vs 2021. This is a clear indication of the ongoing strong impact of cumulative 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 $ales for February.

We have had memorable times since 2019, including the 2 biggest monthly drops in history but a lot of positives in the Pandemic recovery. Total Retail reached $700B in a month for the first time and broke the $7T barrier in 2021. Relevant Retail was also strong as annual sales reached $4T in 2021 and all big groups set annual $ales records. In 2022 radical inflation was a big factor with the largest increase in 40 years. At first, this reduces the amount of product sold but not $ spent. Total Retail hit $8T and all groups again set new annual records in 2022. As expected, sales fell for all groups in January and now February. The only other February negatives are from Auto or Gas Stations. This comes despite actual price deflation in both. The other big groups and Total Retail are positive in all measurements vs 2022, 2021 & 2019.

Overall – Inflation Reality February inflation vs 2022 fell below the $ increase rate for all but Gas stations. However, you see the impact of cumulative inflation as real sales are down for Gas Stations and Auto vs 2021. Restaurants have the strongest performance in all measurements vs 2022, 2021 & 2019. There is another positive. Although the increase was small, real Ytd sales vs last year are finally up for both Total & Relevant Retail.

Total Retail – Every month since June 2020 has set a monthly sales record. December 2022 $ were $748.9B, a new all-time record. As expected, sales dipped in January & February. February is usually the low point for retail sales, but all measurements are positive vs 2022, 2021 & 2019. Inflation is slowing but so is sales growth. Sales are up 5.6% vs last year. That’s the lowest rate since 3.0% in February 2021. Also, only 46% of the 19>23 growth is real but that’s better than 26%, 21>23. Avg 2019>23 Growth: +8.6%, Real: +4.2%. Inflation slows but continues to have a cumulative impact.

Restaurants – They were hit hard by the pandemic and didn’t truly start to recover until March 2021. However, they have had strong growth since then, setting an all-time monthly record of $91B in December and exceeding $1T in 2022 for the 1st time. They have the best performance of any big group in all measurements vs 2022, 2021 & 2019. Inflation increased to 8.3% for February from 8.1% last month and is now 15.5% vs 2021 and 20.0% vs 2019 but 59.8% of their 49.7% growth since 2019 is real. Avg 2019>23 Growth: +10.6%, Real: +6.7%. They only account for 13.6% 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 but much of it was due to skyrocketing inflation. In 2022 sales got on a rollercoaster. Inflation started to drop mid-year, but it caused 4 down months in actual sales which are the only reported sales negatives by any big group in 2021>2022. This is bad but their real 2022 sales numbers were much worse, down -8.2% vs 2021 and -8.9% vs 2019. 2023 has started off a little better. Sales are up vs 2022, 2021 & 2019. Plus, real sales are only down vs 2021. After 8 negative months, Jan>Feb real Ytd Sales vs 2019 are positive. Prices have now deflated for 3 straight months. Avg 2019>23 Growth: +7.2%, Real: +1.7%.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and need less gas. This group started recovery in March 2021 and inflation began. Sales got on a rollercoaster in 2022 but reached a record $583B. Inflation started to slow in August and prices deflated in December & February. However, it is still +35.7% vs 2021. Monthly sales vs the previous year actually decreased in February for the 1st time in 2 years. Real sales are even worse. Monthly, they are down vs 2022 & 2021 and Ytd they are down vs 2021 & 2019. Avg 2019>23 Growth: +8.6%, Real: -1.8%. The numbers show the cumulative impact of inflation. In 2023 consumers paid 39% more to buy 7% less gas than in 2019.

Relevant Retail – Less Auto, Gas and Restaurants – This group accounts for 60+% of Total Retail $. It has a variety of channels, so they took many different paths through the pandemic. However, their only down month was April 2020. They have led the way in Total Retail’s recovery, which became widespread across the channels. Sales went on an up/down roller coaster in 2022. However, all months in 2022 set new records with December reaching a new all-time high, $481B, and an annual record of $4.81T. In 2023 Jan>Feb had normal drops, but sales in February set a record and were up in all measurements vs 2022, 2021 & 2019. After 10 straight negative months, real sales vs last year have now turned positive. In fact, 58% of their 19>23 $ are real compared to only 23% for 21>23. This shows that inflation is a cumulative problem that began in 2022. Their Avg 2019>23 Growth: +8.6%, Real: +5.2%. The performance of this huge group is critically important. This is where America shops. The fact that real sales are now positive is great news.

Inflation is slowing slightly but the impact is still there. Sales increases are also slowing, but the fact that real sales for Total & Relevant Retail are finally both slightly positive is a good sign. The biggest concern is with Auto & Gas Stations. Their extreme inflation is now deflating but they are struggling. Restaurants were hit hard by the pandemic, but they are now by far the best performers. For Relevant Retail, we may be moving back to Inflation Phase I, where Consumer spending grows but the amount bought still increases – just at a lower rate. Let’s hope that inflation continues to slow.

Here’s a more detailed look at February by Key Channels in the Stacked Bar Graph Format

  • Relevant Retail: Avg Growth Rate: +8.6%, Real: +5.2%. 9 of 11 channels were down from January but 10 were up vs 2022 & 2021. 7 were really up vs 2022 & 8 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. Their $ are up from January and for the month & Ytd vs 2022 & 2021 & 2019. However, their real sales are down vs February 2022 & Ytd vs 2022 & 2019. Avg 2019>23 Growth: +0.9%, Real: -1.9%.
  • Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. Sales are down from January but up in all other measurements. 45% of their 29.3% 19>23 lift is real, but that’s much better than the 6% from 21>23. This shows the impact of inflation. Avg 19>23 Growth: +6.6%, Real: +3.2%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. $ are down from January but up vs 22, 21 & 19. However, inflation hit them hard. $ Real sales are down for all but Ytd vs 2019 and only 4% of the growth since 2019 is real. Avg Growth: +5.9%, Real: +0.2%.
  • Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. Sales are down from January but are up in all other measurements vs 22, 21 & 19. Their inflation rate is low so 77% of their 19.8% growth from 2019 is real. Avg 2019>23 Growth: +4.6%, Real: +3.6%.
  • Clothing and Accessories – They were nonessential, and clothes mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Sales grew after the big drop in January and for the 3rd straight month all other all measurements are positive. 75% of their 2019>23 growth is real. Avg 2019>23 Growth: +4.5%, Real:+3.5%
  • Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Inflation has slowed but was very high in 2022. Sales are down from January but up vs 22, 21 & 19. However, their monthly real sales are down vs 22 & 21 and Ytd vs 21. Only 25% of their 19>23 growth is real. Avg 2019>23 Growth: +5.7%, Real: +1.5%.
  • Electronic & Appliances – This channel has many problems. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. $ales are down in all measurements except vs February 2021. However, all real sales are up. This only happened because of strong deflation, -6>8%. Avg 2019>23 Growth: -1.6%, Real: +0.06%.
  • Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. In 2022 the lift slowed as inflation grew to double digits. Sales fell Nov>Feb but are still up vs 22, 21 & 19. Inflation actually increased to 11.8% from 9.6% in January. Real sales are negative in all measurements but Ytd vs 2019. Also, only 30% of their Ytd 35.2% sales growth since 2019 is real. In December 2022, it was 54%. Their Avg 2019>23 Growth is: +7.8%, Real: +2.5%.
  • 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. February $ are down from January but they are positive in all other measurements for the 2nd straight month. Inflation in this group is lower than most groups and most comes from Sporting Goods. 78% of their 41.4% growth since 2019 is real. Avg 2019>23 Growth: +9.0%, Real: +7.2%.
  • All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 at +0.9% but sales took off in March 21 and have continued to grow. Sales are down from January but up for all other measurements. They still have the biggest increase vs 2021 and vs 2019 they are 2nd only to NonStore. 79% of their 50.8% growth since 2019 is real, which is also 2nd to Nonstore. Their Avg 19>23 Growth is: 10.8%, Real: 8.8%.
  • 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 as sales exceeded $100B for the 1st time and they broke the $1 Trillion barrier. Their growth slowed significantly in 2022 and now 2023. $ are down from January but all other measurements are up. 87% of their 88.5% increase since 2019 is real. Their Avg Growth: +17.2%, Real: +15.4%.

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, there was a new challenge, the worst inflation in 40 years. Overall, and in most product categories it has slowed in Jul>Feb which brought a significant improvement to the Retail Situation. Sales were down from January for almost all channels, but this is no surprise as February is often the sales low point of the year.  Inflation continues to slow in most channels, which increased Real Sales – the amount of products sold. Some channels like Auto, Gas Stations, Grocery and Bldg Material stores still have high cumulative inflation rates so they are still struggling but most other channels are showing a marked improvement. This is evident in the Relevant Retail group as Ytd Real sales vs last year turned positive after 10 straight negative months. In fact, all their measurements vs 2022, 2021 & 2019 were up. This pattern was duplicated by 6 of 11 major retail channels. Inflation is still high and the rate of sales increase is lower but we may be turning the corner in our struggle against the pricing tsunami that has hit the U.S. Retail Market.

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. We have expanded the data to include the CPI changes from 2021 to 2023 to show cumulative inflation.

Monthly 22>23 CPI changes of 0.2% or more are highlighted. (Green = lower; Pink = higher)

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.