2023 – Page 4 – Pet Business Professor

Retail Channel Monthly $ Update – February Final & March Advance

April 24, 2023/in Pet Market Distribution Channels/by John Gibbons

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 1^st 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 2^nd 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 1^st 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 1^st 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 2^nd 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 1^st 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.

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.
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.
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.
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.
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.
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

April 17, 2023/in Pet Market Segments/by John Gibbons

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 3^rd 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 2^nd 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 1^st 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 2^nd 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 2^nd 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 1^st 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 4^th 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

April 3, 2023/in Pet Market Distribution Channels/by John Gibbons

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.

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 1^st 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 2^nd 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 2^nd 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 1^st 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 1^st 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 2^nd 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 2^nd only to NonStore. 79% of their 50.8% growth since 2019 is real, which is also 2^nd 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 1^st 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.

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.
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.
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.
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.
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.
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 – February Update: Price increase grows to +10.9% vs 2022

March 27, 2023/in Pet Market Segments/by John Gibbons

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. February prices grew 0.6% from January and the CPI was still up +6.0% vs 2022, but down from +6.4% last month. The grocery price surge also slowed but they’re still up 10.2% over 2022. That’s 12 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 2022. National inflation has slowed since July, but Petflation has generally increased. It passed the National CPI in July and is +10.9% in February, 81.7% higher than the national rate of 6.0%. 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 (22>21, 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 February 2021 to February 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 February Supplies passed their old November pricing high so all segments are now at their cumulative inflation peak.

The pandemic hit home in 2020. In February 21, the national CPI was only +2.4% and Pet prices were +1.4%. 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>Feb, all inflated and 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>Feb but 40% of the overall 18.6% 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. 91% of the 18.6% 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 January and reached a new record high in February.
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>Feb but again fell behind Food so it is in 3^rd 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 & February.
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. It has been ahead of the cumulative U.S. CPI on our 2019>2023 chart since November.

Next, we’ll turn our attention to the Year over Year inflation rate change for February and compare it to last month, last year and to previous years. We also added a new measurement, showing the total inflation from 2021 to 2023. Although national inflation is slowing, it’s not for Pet. This will allow you to see the cumulative amount of the current pricing surge. You can compare the inflation rates of 22>23 to 21>22 but also see how much of the total inflation since 2019 came from the ongoing trauma. Again, we’ve included some human categories to put the pet numbers into perspective.

Overall, Prices were +0.6% vs January and were up 6.0% vs February 2022. The Grocery increase is down to 10.2% but is still a big negative. Prices often rise early in the year so it’s not surprising that 8 of 9 categories had increased prices from last month. 7 of the increases were 0.5+%. Last month there were 5 but only 1 in December. 3 of the increases were over 1.0%, all from the Pet Industry – Total Pet: 1.5%; Pet Food: 1.2%; Veterinary: an incredible 2.5%. The overall national YOY monthly inflation rate is slightly down from January, but it is significantly down vs the 21>22 rate. 3 categories – Pet Supplies, Medical Services & Haircuts 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. In our new 21>23 measurement you also can see that over 70% of the cumulative inflation since 2019 occurred in the current surge for all categories but Veterinary, Medical Services and Haircuts & Personal Services. The Pet Supplies Segment has a unique situation. The 21>23 inflation surge provided 116% of the overall inflation since 2019. This happened because Pet Supplies prices strongly deflated in 20>21.

U.S. CPI– Prices are +0.6% from January. The YOY increase is down to +6.0%. It peaked at +9.1% back in June. The targeted inflation rate is <2% so we are still over 3 times higher than the target. However, an 8th 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 14.4%, 76% of total inflation since 2019. How many households “broke even” by increasing their income by over 14% in 2 years?
Pet Food– Prices are +1.2% vs January and 15.2% vs February 2022. They are also 49% higher than the Food at Home inflation rate – not good news! The YOY increase is being measured against a time when prices were only 3.0% above the 2019 level, but that increase is still an incredible 8.9 times the pre-pandemic 1.7% increase from 2018 to 2019. The 2021>2023 inflation surge generated 91% of the total 21.3% inflation since 2019.
Food at Home – Prices are up 0.3% from January. The monthly YOY increase is 10.2%, down slightly from 11.3% in January but considerably lower than Jul>Sep 2022 when it exceeded 13%. The 25.0% Inflation for this category since 2019 is 32% more than the national CPI but now 2^nd to Veterinary. 79% of the inflation since 2019 occurred from 2021>2023 but the pattern is different from the national CPI. 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 up +0.5% from January. That’s 3 straight monthly increases after a dip in November. They still have the lowest increase since 2019 and now have fallen to 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. However, 3 straight months of increases has pushed them to a new record high in February.
Veterinary Services – Prices are +2.5% from January. They are +10.3% from 2022 and are in 2^nd place behind Food in the Pet Industry. However, they are now the leader in the increase since 2019 with 26.4% compared to Food at home at 25.0%. For Veterinary Services, relatively high annual inflation is the norm. The rate did increase during the current surge but only 61% 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 February prices fell -0.5% from January and were +2.1% vs 2022, the lowest rate since 2019. 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. February 23 prices were up +0.5% from January and +7.5% vs 2022. The rate has slowed but prices still reached a new all-time high. Their inflation is tied to the current surge as 73% of total since 2019 occurred from 2021>2023.
Haircuts & Other Personal Services – Prices are +0.6% from January and +4.8% from 2022, but this is only the 3^rd highest rate since 2019. Inflation began to grow in 20>21 and just 51% of the inflation from 19>23 happened from 21>23.
Total Pet– Petflation is double the rate of last year, 81.7% ahead of the National CPI and the +10.9% is also the highest February rate in history. Prices increased in all segments vs January so Total Pet was up 0.5%, which was expected. A Jan>Feb increase in Petflation has happened in 25 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 3 categories is essentially tied with 21>22. Only the Total CPI is significantly down from 21>22. The average annual increase since 2019 is 4.4% or more for all but Medical Services (3.3%) and Pet Supplies (2.7%).

U.S. CPI – The current increase is down 19.5% from 21>22 but is still 41% more than the average increase from 2019>2023, and more than 3 times the average annual increase from 2018>2021. 76% of the 18.9% inflation since 2019 occurred from 2021>23. Inflation is a big problem that started recently.
Pet Food – Inflation continues to grow stronger. Deflation in the 1^st half of 2021 kept YTD prices low then prices surged in 2022. 89.5% 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 74%. 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 has stabilized at about 6.2%, prices reached a record high in February. 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 – Passed Food at Home for the top spot in inflation since 2019. They are the only segments on the chart with a 5+% average annual inflation rate since 2019. However, Veterinary is unique. They are the only category in which the inflation rate grew steadily every year until 2023 when it has almost doubled. 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>23 inflation has stabilized at a rate only 8% higher than 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>Feb. The January increase of 8.4% was the largest in history. YTD February is down slightly to 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 51% 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 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, fell in Nov, then rose again Dec>Feb. The Services segments have had ups & downs but are generally inflating. The net is a YTD Petflation rate vs 2022 of 10.8%, 74.2% more than the National rate. In March 22 it was only 72.5% of the CPI.

Petflation is growing stronger. Let’s put the numbers into perspective. The 10.9% February 2023 increase in Total Petflation is below the record 12.0% set in November, but it is still a record for the month. We’ve also now had 7 consecutive months over 10%. The last time that petflation exceeded 10% was 10.3% in 2009. The current rate is more than 7 times the 1.5% 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 personnel 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. There is another fact that just came out that is relevant to our spending question. The US BLS recently decided to update the CPI annually rather than every 2 years based upon each expenditure’s share of total expenditures. I worked with them to update the CPI of my specially created retail aggregates. During our conversations, they noted that Pet expenditures in 2021 had one of the biggest share gains of any group. Apparently, Pet Parents are reallocating their $ to prioritize their “children’s” needs. This is not unexpected. We’ll see if this behavior is impacted by continued high inflation.

Comparing the Spending Demographics of the Pet Industry Segments – SIDE BY SIDE

March 14, 2023/in Pet Market Segments/by John Gibbons

The first 5 reports of our Pet Spending Demographics analysis have been very detailed and intense. We looked at the industry as a whole and each of the individual segments. Recent years have seen some turmoil. We have seen the very real impact of outside influences on the industry. In the 2^nd half of 2018, the FDA warning on grain free dog food caused a $2.3B drop in Food $ and new Tariffs flattened Supplies $, but Services had a record lift. In 2019, Food rebounded but the tariffs really hit the Supplies segment with a $3B drop. Veterinary $ grew slightly while Services $ fell a bit. The net was -0.2% drop in Total Pet. The 2020 pandemic had varied impacts as Pet Parents focused on needs. This caused a lift in Veterinary and a huge increase in Food because some demographics binge bought out of fear of shortages. Services spending plummeted due to outlet closures and restrictions while Supplies $ continued to fall because consumers saw them as more discretionary. 2021 brought a big change, Food $ fell because there was no “binge” repeat. However, Pet Parents focused on their “children” producing a widespread record lift in all other segments and a record $16B increase.

We have often referenced the similarities and differences in spending between Total Pet and the individual industry segments. Total Pet Spending is a sum of the parts and not all parts are equal. In this final report we are going to put the segments side by side to make the parallels, differences and changes from 2020 more readily apparent. We will address:

“The big spenders” – those groups which account for the bulk of pet spending.
The best and worst performing segments in each of twelve demographic categories
The segments with the biggest changes in spending $ – both positive and negative
And of course, the “Ultimate Spending CUs”

The emphasis is on “visual” side by side comparisons to allow you to quickly compare the industry segments. We’ll try to minimalize our comments. You can always reference one of the specific reports for more details. We’ll also break the charts up into smaller pieces that are demographically related to make the comparison more focused and easier.

Before we get started, let’s take a look at the current market share of the industry segments. The following 2 charts show the 2021 share of spending for each segment and the evolution over the past 29 years. 1992 was the last year that the Food Segment accounted for 50% of Total Pet Spending. By the way, Total Pet Spending was $16.2B in 1992. We have come a long way – +517%; annual growth rate of 6.48%. This will help put our comparisons into better perspective.

Food: 34.4%; Down from 44.0% Veterinary: 32.7%; Up from 29.7%

Supplies: 23.8%; Up from 18.1% Services: 9.1%; Up from 8.2%

In 2021, Food lost almost 10% of share in Total Pet $ which was gained by all other segments. The most notable trend from 1992 to 2012 was the decline in Food share while Supplies gained in importance. In the 90’s Pet Owners became Pet Parents. At the same time, Pet Chains and Super Stores came to the forefront and there was a big Pet Product expansion into the Mass Market. In recent years, the Product Segments have been on a rollercoaster. Food reached 44% in 2020, the highest level since 44.8% in 1998. Supplies have been trending down since 2012, hitting bottom at 18.1% in 2020. The Services segments have been more stable. They have generally trended up since 2012. Non-Vet Services peaked at 11+% in 2018>19 then fell to 8.2% in 2020. They turned sharply up in 2021. Veterinary has been in the 25>27% range since 2012 but with a big lift in 2021, they broke the 30% mark and now trail Food by only 1.7%. Big Trends in Food and Petflation in Supplies tend to make the Product Segments more volatile than the Services Segments.

Now let’s get started with a look at the “Big Spenders”. The following 2 charts will compare the market share and performance in all Pet Industry segments by the groups responsible for the bulk of the spending in 10 demographic categories. These are the groups that we identified in our Total Pet analysis to generate at least a 60% market share of spending. As you recall, to better target the spending we altered 2 groups in Services and 1 in Food. However, to have a true side by side comparison we need to use the same groups for all. The market share dips below 60% twice, both in Food spending. One is because Food spending by Age is more balanced but skewed a little older than other segments. The other is in # of Earners, where the number of Earners in a CU mattered less. Even the low point of 55.1% is within 5% of our target and 96% of all measurements meet or exceed the 60% requirement, so the comparison is very valid.

The chart makes it especially easy to compare performance across categories. Remember, performance levels above 120% show a very high level of importance for this category in terms of increased spending. Unfortunately, it also indicates a high spending disparity among the segments within the category. There are 2 charts, each with 5 categories.

White, Non-Hispanic – This group has an 83+% market share in every Segment. Minorities account for 32.8% of CUs but only 15>17% of spending in any segment. Factors: Lower income for Hispanics and African Americans and lower Pet ownership in Asians and African Americans. Whites lost 2>4% in share in all segments but Supplies which fell 0.1%. Hispanics made the biggest gains. Asians also had increases but African Americans generally lost ground.
2+ People in CU – 2+ is still the key in pet ownership. However, the results were mixed by size. Singles lost ground in all but Food so 2+ CUs had the opposite pattern. 2 People had big gains in all but Supplies. 3 People had big drops in all but Food. 4 People gained in Supplies and Veterinary but fell in Services and plummeted -18.7% in Food which produced the biggest drop in Total Pet. 5 People were up in all but Food. Truly, a mixed bag by CU size.
Homeowners – Homeownership is very important in Pet Ownership and subsequently in all Pet Spending. It also increases with age. This group’s share of Total Pet fell below 80% for the first time in 2018. It bounced back in 2019>20 but fell 3 points in 2021. All but Services lost share with Food having the biggest drop, -5.7%. Services gained 2% and is again above 80%. Supplies remains at the bottom. Those w/o Mtge drove the big decrease.
Suburban & Rural – They gained 0.2% in Total Pet. Both the Suburbs 2500> and Areas <2500 had strong gains in Veterinary but the other segments were divided. The Big Suburbs had strong gains in Food, Supplies & Total but lost ground in Services. The less populated areas increased share of Services but their share fell in Food, Supplies & Total.
Over $70K Income – INCOME MATTERS MOST IN PET SPENDING! Income has grown in importance in recent years and all Industry segments performed at 140+%. Food lost 2% in share and replaced Supplies at the bottom in share and performance. It was the only segment with decreased share and performance. The other segments gained at least 5.6% in share, led by an 8.3% gain by Veterinary. Food spending became slightly more balanced while the income spending disparity gap significantly widened for the other segments. Services is still the least balanced.

Everyone Works – Income is important, and the importance of # of Earners grew for the discretionary segments, Supplies & Services. Veterinary held its ground but Food performance fell 22%, driving Total Pet below 120%. The drop in Food was due to no binge buying while the big discretionary lifts came from the record pandemic recovery.
College Grads – Higher education often correlates with higher income and a College degree is 2^nd in spending importance for all but Food. The group grew in share and performance in all segments, but Veterinary. Veterinary lost 4.1% in share and 6.9% in performance while the product segments, led by Food, gained 18.4% in share and 37.2% in performance. Total Pet gained 13.0% in share and 26.0% in performance. College is now a key factor.
All Wage & Salary Earners– Incomes vary widely in this group, so performance is often lower. Supplies fell sharply in share and performance. Veterinary lost share due to fewer CUs but gained in performance. Services had slight gains in both. Food gained 12% in share and 22% in performance which pushed performance again above 100% – also for Total Pet. The group spent more in all segments, including Food but the bulk of the lifts came from White Collar.
Married Couples – Marriage has been important to spending in all segments. In 2021 all segments but Food & Total Pet gained in share and performance. The lift was widespread in Married segments with 1 big negative exception, Married Couples with an oldest child 18 or older.
35 to 64 yrs – Includes the 3 highest income segments. This group had the same pattern of gains/losses as CU Composition – Food & Total down, all other segments up. The “bad guys” were 55>64 yr-olds. However, Food is a little more balanced by Age and in fact skews a little older. 35>64 only has a 55% share of the $.

Now we’ll drill a little deeper to look at the Best and Worst performing segments in each category. Color Highlighted cells are different from Total Pet; * = New Winner/Loser; ↑↓ = 5+% Performance Change from 2020. We will divide the categories into related groups. First, those related to Income.

Income – Income matters, and its importance is growing in the Industry. The Food winner was up $150>199K from $100>149K in 2020 but the disparity between first and last place fell by 80%. The disparity in Services and Veterinary was 40+% more but Supplies was up 100+%. This pushed Total Pet up +50%. Income Matters the Most.
# Earners – More earners = more income. 2+ Earners is the usual winner and reflects the importance of Gen X and Millennial CUs. The turmoil in Food is reflected by the No Earner, 2+ CU win. In all segments but Food & Total Pet the disparity and importance of the number of Earners grew. The biggest gain occurred in Veterinary.
Occupation– Mgrs & Professionals and Self-Employed are #1 and #2 in CU income and expenditures. Self-Employed binge bought food in 2020 so they were replaced by Mgrs/Professionals in 2021. The bottom spots are again occupied by either Retirees or Blue-Collar workers. No Binge in 2021 caused the disparity to drop by 100+% in Food and Total Pet. It also decreased in all but Services. Income is important in Pet Spending but how you earn it is less so.

Next are demographics of which we have no control – Age, Generation and Racial/Ethnicity

Racial/Ethnic– As expected, White Non-Hispanics are the top performer in all segments and African Americans replaced Asians in Food so they occupy all the bottom slots. They have the lowest income and only 25% own Pets. The disparity grew sharply in Supplies so now it is basically a 100% performance difference in Total & all segments.
Age – The winners are all new. 35>44 had a strong year, but the winners are mixed. At the bottom in all but Supplies are <25 yr-olds. Food and Veterinary spending skew a little older. There are still big disparities in all segments but Food, which has more balanced spending at least by age, as all age groups over 35 have at least 95% performance.
Generation – Gen X now rules. Gen Z is at the bottom in all but Supplies, which skews younger. The disparity gap closed significantly in Food but increased by 20% in Services & Supplies. It grew by 4% in Veterinary and Total Pet.

Education – Winning and losing is closely tied to more and less Education which generally correlates with income. The disparities are huge. The biggest change is in Food which skewed towards lower education in the 2020 binge.
CU Composition – In 2021 Pet Spending was all about CUs with kids, except for Food. The oldest kid 6>17 aligns with the middle age groups. Single Parents remain at the bottom in all but Supplies and the disparities are huge, 100+%.
CU Size– The top CU number in Pet is now 4+ but “1” remains solidly on the bottom. 2 people CUs are still important as they replaced 4 people CUs at the top in Food & Services. The disparity is also smaller in all but Supplies.

Housing – We’re back to normal as Homeowners w/Mortgage and Renters are the perennial winner and loser.
Area– Areas <2500 population performed the best. This is surprising in Services as that usually skews towards higher population. Another surprise is Suburbs 2500> replaced Center City at the bottom in Food with a huge disparity.
Region – 3 new winners, but no surprises. The South is again at the bottom in all but Food.

Here are two summary charts. The first compares the averages.

The big changes in Food & Supplies are immediately apparent. The 2021 difference in Food is less than half of 2020 while it increased by 40+% in Supplies. Pre-pandemic, the performance difference grew as you moved from Products to Services, peaking in the most discretionary, Non-Vet Services. In 2021, Food flipped from highest to lowest disparity, while Supplies moved to the top. However, both Veterinary and Supplies now have a difference of 100+%. Spending became significantly less balanced in every segment but Food. While the Total Pet disparity fell, it is still high at 94%.

Food – After the 2020 binge, the disparity gap returned to a more normal, pre-pandemic level.
Supplies – The record increase produced a record disparity between best and worst.
Veterinary – The Winners performance grew while the losers fell pushing the difference over 100%.
Services – The performance gap widened but essentially returned to a normal level for this segment.

This chart shows the number of new winners/losers.

Total Pet had many changes, especially in winners. Total Pet is a sum of the segments. However, you see how influential the Pet Food segment is with the turmoil from the drop in 2021 $ after the binge buying by specific segments in 2020.

Pet Food spending fell because there was no repeat of the 2020 panic buying. As a result, over 80% of the winners changed and almost half of the losers are new.
Even with a record increase, Supplies is the most stable with very little change in top or bottom performers.
The Veterinary spending increase was also huge but there was also only a small number of changes.
Services had a strong spending recovery and some turmoil mostly on the “losing” side.

Now, let’s look at the Demographic Segments with the Biggest Changes in $. We’ll truly see some differences between the Industry Segments. We have color highlighted differences from Total Pet. Plus: ↔ = Winner/Loser same as 2020 ↕= Flipped from 1^st to Last or vice versa

Income – All winners & losers were new with 3 flips from 1^st to last. The winners returned to high income groups and the losers to low income, with 2 exceptions. In Food & Total, $100>149K lost due to Food binge buying in 2020.
# Earners – All new with 4 flips. In Non-Food Segments, the winner & loser were driven by income. In Food, 2+ CU Retirees finally upgraded which put them on top. They also spent more in other segments which led to a Total win.
Occupation – 2 were repeats while 3 flipped. In a pattern similar to # Earners, the Non-Food winners (Managers & Professionals) were high income while the losers were low income. In Food & Total we saw the winning efforts by Retirees as well as the loss for Self-Employed as they didn’t repeat their 2020 extreme Food binge buy in 2021.

Now the Age and Racial/Ethnic Categories

Racial Ethnic – White, non-Hispanics won in all but Food, where they were the big loser. They have high income & pet ownership and drove the 2020 Food binge so this is no surprise. African Americans have low income and Pet ownership and lost 3 times (2 were small increases). Asians have high income but had the smallest Services increase.
Age – All new with 3 flips. 35>44 had 3 wins while 55>64 won in Veterinary and the 75+ Retirees won in Food. <25 lost in 2 segments and 55>64 paid for their 2020 Food binge, no surprise. 45>54 was an unexpected loser in Services.
Generation – Gen X won Food, Supplies & Total and Millennials won Veterinary. Boomers did have the biggest increase in Services but lost in Food & Total Pet. Those born before 1946 came in last in Veterinary and Services. Gen Z did finish last in Supplies, with the smallest increase. However, winning skewed younger while losing skewed older.

Now, here are more Demographic Categories in which the consumers can make choices.

Education – Higher education, especially a College degree is tied to increased income and pet spending. We had 4 flips which returned this demographic to a more normal pattern of winners & losers.
CU Comp. – While CUs with Children were the best performers in Total Pet and all segments but Food, 2021 was also a strong year for Married Couple Only. They had the biggest increase in Total and all segments but Supplies.
CU Size– Bigger CUs performed best, but with 4 last to 1st flips, 2 person CUs had the biggest increases across the board.

Housing – 6 flips returned Housing to a more normal pattern with Homeowners w/Mtges at the top. Renters are often at the bottom, but in 2021 those w/o Mtges had 3 losses. Food & Total Pet came from their 2020 Food Binge.
Area – The flip winner with 8. Big Suburbs flipped to their normal spot on top in Total and 3 segments. Center City was a surprise winner in Food but the 2020 Binge put <2500 at the bottom in 2021 Food & Total. Center City losses in Supplies & Veterinary are no surprise. The <2500 loss in Services is usual, but a loss with +$0.65B lift is surprising.
Region – 6 flips and a more normal pattern with some exceptions. The South is an unusual Food winner and the 2020 Food binge flipped Midwest to the bottom in Food & Total. However, the strangest situation was that losers in 3 categories spent more, 2 with lifts of a $B or more. The big winner was the West and Midwest was the big loser.

The next chart compares the number of repeats, “flips” and new segments among the 12 winners and 12 losers for each industry segment. The idea is to look for patterns in the data that cross segments. Let’s take a look.

3 Segments were up a lot while Food $ fell. The overriding pattern was turmoil.
In terms of repeats Supplies (5) and Veterinary (8) led the way while Food and Services had NONE!
Due to the 2020 binge, Food led the way in flips (17) with all 2020 winners flipping to last in 2021. Services was 2nd (12). Veterinary had the fewest flips (3) while Supplies had (6) but 5 of the Supplies flips were from last to 1^st.
You can see how the combined segments put Total Pet in turmoil – 17 flips and only 1 repeat
There are a total of 24 winners and losers. The number different from 2020 was: Food: 24; Supplies: 19; Veterinary: 16; Services: 24; Total: 23. It appears that the record recovery caused as much or more turmoil than the pandemic.

Next, there were so many positive contributors that in each individual report we recognized 6 segments that didn’t win but still performed so well that they deserved Honorable Mention. I reviewed that list again and came up with segments that won Honorable Mention at least twice. Here are the 9 “SUPER Honorable Mentions” for 2021…

You can immediately see that it was an unusual year as 9 segments made the list. Supplies had the biggest increase, +57% and led the way with 6 segments on the list. Supplies became more skewed towards higher income but 97% of demographic segments spent more. Except for Millennials, the segments on the list are generally “low profile” but contributed notably to the industry. We should give special kudos to Millennials, Renters and Unmarried 2+ All Adult CUs. These 3 groups won Honorable Mention in 2 Industry segments and Total Pet.

Although the results were mixed, with numerous individual changes, I saw these trends of note:

Youth Movement – Boomers must inevitably fade. The Gen Xers have stepped up, with the Millennials close behind.
Sub-Urbanization – The Suburbs are the key. Areas <2500 are the top performers but the Suburbs 2500> spend the most. With the exception of pandemic 2020, they are the only area that increased $ every year since 2016.
The “Magic” number is 4+ – As spending skews younger the best performers in all but Food tend to be larger CUs. However, 2 person CUs still have the largest share of $ in every segment and Total Pet. They’re not done yet.
Changes in spending balance – The performance gap between the best and worst narrowed in Food but expanded in the other segments, especially in Supplies. This happened despite a demographically widespread increase.
Income is still the most important factor – The gap between best and worst narrowed in Food, but widened in all other segments, again especially in Supplies. The best performer is always $150K+, while the worst is <$30K.

And Finally, What you have all been waiting for…

THE ULTIMATE 2021 PET SPENDING CUs – Side by Side

Color Highlighted cells are different from Total Pet; * = New in 2021

Methodology – The segments are chosen because they have the highest annual CU spending of any segment in the category. They may or may not have the most total dollars. That would depend upon the number of CUs in the group.

Final Comment – These “winners” further reinforce the key factors in increased pet spending:

Marriage– A commitment to another person demonstrates that you can make a commitment to your pet “children”.

CU Size – The “magic” number continues to increase. It’s now 4+ people in a CU

Homeownership – Owning and controlling your own space has long been a key factor in Pet Parenting.

More space – Small suburbs near a big metro area offer the convenience of the city, plus room for more pets.

Income Matters Most – High Income, A High Paying Occupation, A College Degree, At least 2 Earners. These are characteristics present in all of the Ultimate Pet Spending CUs.

Generation– Boomers have passed the torch to Gen X. Age Note: All 45>54, 50% of 35>44 and 20% of 55>64 are Gen X.

I hope that this Visual Comparison helped you to get a “satellite view” of Pet Industry Spending in 2021. Please refer back to the individual segment reports to get more details.

Attending Global Pet Expo 2023? – It has Everything that you need! But, You Definitely Need a Plan!

March 6, 2023/in Pet Trade Shows/by John Gibbons

The first Global Pet Expo (APPMA) occurred 65 years ago with 17 exhibitors in 30 booths. The industry & the show have both come a long way since then. The show is back to a normal size and attendees at GPE 23 will see and experience:

1013 separate exhibitor booths
With over 319,000 square feet of booths (Plus 45,000 sq ft for the New Product Showcase) Global Pet Expo 2022 actually occupies about 17 acres of prime Florida “real estate”.
3000+ new items in the New Product Showcase and on the exhibit floor
Sharing the aisles with an expected 15,000+ attendees, including more than 6000 “buyers”.
The opportunity to choose from 38 different educational seminars – 50 hours of classes
5 miles of aisles – just to walk the exhibit floor

The show floor is open for 24 hours so let’s put this in perspective and… “Do the Math!”

If you don’t attend any seminars, visit the New Product Showcase, stop to chat with anyone in the aisles or for food, a drink or to go to the bathroom and maintain a walking speed of 2.5 mph, you can spend about 1 minutes and 18 seconds with each exhibitor…You definitely need a plan!

Global Pet Expo definitely has it all… and more. Attendees will find the broadest selection of products and services while Exhibitors have the opportunity to reach a wide range of buyers across all retail channels.

First and foremost, Global is about Pet Products – Food, treats and a vast array of Supply categories. A regular flow of New Products is always critical to keep businesses and the whole industry strong and growing. Obviously, you must take the time to visit the New Product Showcase. You should also sign up for any relevant classes, network with other industry professionals and…walk the whole show. There are at least twice as many new products being “launched” on the show floor as there are on display in the New Product Showcase. Plus, over 30% of GPE 23 exhibitors did not exhibit at a GPE from 2019>22 and over 2/3 of these companies did no pet show during that period. Global is about gathering information and making decisions to improve your business – whether they are made on the spot or put on your “must do” list.

Every business can improve in terms of products. If you are a retailer, what sections of your store are not doing as well as you hoped and need a “facelift” or conversely, what areas are growing and need products to fill additional space? Category managers for distributors and retail chains may only be interested in targeted visits to exhibitors relevant to their “categories”. Representatives may be looking for new manufacturers…in specific product categories. Manufacturers could be looking to find distributors to handle their products or just looking to “check out” the competition. In regard to products, there is always something to see…for everyone!

And Global is the place to see it. It’s all there! With so much to see and do, Time is perhaps the most valuable commodity at the show. How do you make the most of your time on the show floor? Here’s an idea.

In 2014 I first designed a tool in Excel, the Super Search Exhibitor Visit Planner to make “working Global & SuperZoo easier and more productive for ALL attendees – retailers, distributors, reps, groomers, vets…even exhibitors. I have updated the data and produced a tool for every GPE and SuperZoo since then…including GPE 2023.

The “update” is not just exhibitor lists but also to the product category offerings for every exhibitor. I reviewed every exhibitor profile on the show site, but I also visited over 1000 websites and conducted separate internet searches to “validate” the product offerings. It is not 100% accurate, but it is close.

What does the SuperSearch do?… It searches for and produces a list of Exhibitors by product categories.

From the simplest – “give me a list that I can look at on my phone or tablet in either Booth # order or alphabetically”
To the most complex…”can do a simultaneous search for multiple specific product categories, allowing you to personally narrow down the initial results and see the “final” alphabetically or by booth number.” The GPE Super Search Exhibitor Visit Planner does both…and more…and does it quickly! Take a look at the Quick Start Guide. You will see that it looks complex but is really quite simple.

GPE 2023 Super Search Exhibitor Visit Planner – Quick Start Guide

First: When you download the Excel file, Remember to Enable Editing & Macros!

The GPE Super Search Exhibitor visit planner is designed to make your time on the show floor more efficient and more productive. With the Super Search you can conduct up to 5 separate and distinct product category searches simultaneously with consolidated results produced in booth # order to facilitate your “journey”. There are detailed instructions for reference and to help you understand the nuances of the tool. However, it is really very simple so let’s get started. (Note: No changes in instructions from 2022) Here is the Dashboard where you set up your searches. ↓

On the dashboard, the first things to note are the numerous category columns. There are 7 different floor sections, 11 different Exhibitor or Animal Types and 33 Dog and/or Cat Product categories. You can search exhibitors for any combination of these.

Let’s take a specific example running 3 simultaneous searches for several Dog/Cat categories:

Toys
Treats
Catnip & Litter (Must sell both)

Now referring to the Dashboard, let’s take it by the numbers:

This column is where you activate each search. Type in a “Y” (Cells C3>C7 will auto-capitalize) This search “line” becomes active.(cell turns green) In our example we are running 3 searches so we have 3 “Y”s.
Now we enter a 1 in the correct column for each search line. Search Line 1: Toys; Search Line 2: Treats.
In Search Line 3 we want exhibitors that sell both Catnip and Litter so we put a 1 in both of these columns.
Now we just “click” the Execute Search Button. The searches are done simultaneously and the results combined into a single list in alphabetical order.
If you would like to view the list in Booth # order, just click the Booth # Sort.
You can switch the list back to an alpha view by clicking the Alpha Sort Button.
To Clear all your search categories and start a new search, Click the Clear Criteria Button. Then click Execute (#4) again and you will be back to the full list

Note: Any Search Line with a Y and no 1’s in any column will always deliver the entire list regardless of what is selected in other lines. Change the Y back to an N in unused search lines. Now a sample of the results:

Company A – Has Toys Only; Company B has Dog Treats Only; Company C is on the list for Treats and also has Catnip, but no Litter. This is not unusual as Catnip is often a Treat; Company D has Treats & Toys. Company E has both Catnip and Litter and in fact, actually has it all!

Note: The Super Search highlights your search categories so you know “why you are there”. However, it also shows all categories that are available. Some might “pique” your interest while you are visiting the booth.

You can review the exhibitors alphabetically then put the list in Booth # order to make it easier to “work”. The Super Search also allows you to “cut down” the list during your review. (Pg 2; Point #11 – “U Pick ‘em” in Detailed Instructions) But First, I suggest that you “play” with the Super Search to get a “feel” for the tool, and then review the Detailed Instructions. With your “play” experience, the detailed instructions will become a “quick read” and a valuable reference. You will soon be “up to speed” on the full capabilities of Super Search. Good Luck and Good “Hunting” at GPE 2023!

Ready to Start Planning?

Use the links below to download the Super Search Tool (Be Sure to Enable Editing/Macros/Content if asked by your computer), the Quick Start Guide and the Detailed Instructions. Then GET STARTED!

Click to download Super Search Quick Start Guide (PDF)

Click to download Super Search Detailed Instructions (PDF)

NOW DOWNLOAD THE SEARCH TOOL

(For the Excel file to work on your computer, be sure to enable saving/macros/editing/content if asked.)

Click to download GPE 2023 Super Search Final (Excel)

NOTE: Global Pet Expo 2023 is now over. There were a few exhibitor changes at the last minute. This file shows the final list for your future reference. Changes from the 3/19 version are highlighted.

Retail Channel Monthly $ Update – December Final & January Advance

February 27, 2023/in Pet Market Distribution Channels/by John Gibbons

We begin with the Final Report for December and then go to the Advance Report for January. Our focus is comparing to last year but also 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 a year ago
- Current Month Real change – % vs same month in a year ago factoring in inflation
Current Annual change – % & $ for 2022 vs 2021. January 2023 will be compared to 2022 & 2021
- Current Annual Real change % for 2022 vs 2021. January 2023 will show real change vs 2022 & 2021
Current Annual change 2022 vs 2019 – % & $. January 2023 will also be compared to January 2019.
- Current Annual Real change 2022 vs 2019 – % factoring in inflation. Real Change also for January 2023 vs 2019.
Monthly & Annual $ & CPIs which are targeted by channel will also be shown. (Details are at the end of the report)

First, the December Final. All but Gas Stations were up from last month and all were up for December & Y/E vs 2021. Considering inflation, only Relevant Retail was down for the month but for year-end numbers, only Restaurants were up. Here is the December data for the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The December Final is $1.2B less than the Advance. Restaurants had the only positive: +$1.2B; : Auto: -1.2B; Gas Stations: -$0.3B; Relevant Retail: -$0.8B. Sales are up from last month and consumers continue to spend more vs 2021. However, the “real” numbers vs 2021 tell a slightly different story. All but Relevant Retail are really up for the month but only Restaurants are really up year-end vs 2021. Auto & Gas Stations also finished 2022 really down vs 2019. The inflation impact on Relevant Retail is concerning. Their Real YTD $ales vs 2021 were negative for 9 straight months and they finished -$1.2%. They do have the best performance since 2019 as 59.7% of their 31.8% growth is “Real”.

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

Overall– 10 of 11 were up from November. Vs Dec 2021, 9 reported more $ but only 2 were really up. In Y/E vs 2021, 10 had increases but only 3 were real. Vs 2019, Disc Dept Stores are again the only real negative. In Sep/Oct all were up.

Building Material Stores – Sales are down vs Nov for Home Ctr/Hdwe, but up 6.6% Y/E vs 21. Farm stores are +5.4% vs Nov but +7.5% vs Dec 2021. Y/E sales are +6.1%. The Bldg/Matl group had a Y/E (annual) inflation rate of 10.9% which has produced negative real numbers. The pandemic caused consumers to focus on their homes which has produced sales growth of 36.5% since 2019. Importantly, 54% 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: 10.8%, Real: 6.0%; Farm: 12.3%, Real: 7.7%
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 Y/E rate for Grocery products is 4 times higher than for Drugs/Med products. Drug Store $ are up from November but really negative vs 2021. However, 88% of their growth since 2019 is real. The Real Sales for Supermarkets are down for the month & Y/E. Also, only 14% of their growth since 2019 is real. Avg Growth Rate: Supermarkets: +7.0%, Real: +1.0%; Drug Stores: +4.9%, Real: +4.4%.
Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up 39.8% from November and up vs 2021. Y/E sales are 1.7% above 2021. Their current inflation rate is 3.5% which is down from 7.5% in April but Y/E it is 5.4%. It was even higher in 20>21, +6.5%. However, 72% of their 48% lift since 2019 is real. Their Avg Growth Rate was: +14.0%; Real: +10.4%.
Gen Mdse Stores – All channels were up from November and only Discount Dept Stores were down for the month and Y/E vs 2021. All real numbers for all channels monthly and Y/E vs 2021 are negative. Disc. Dept Stores were hurting before COVID and their Y/E sales are “really” down vs 2019. The other channels have 36% real growth. Avg Growth Rate: SupCtr/Club: 5.9%, Real: 2.0%; $/Value Strs: +7.9%, Real: +4.2%; Disc. Dept.: +2.3%, Real: -0.5%
Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are up 41% from November and their 2022 sales growth has been strong enough to make them positive in all measurements vs 2021 & 2019. They have made remarkable progress. Avg Growth Rate: +3.5%, Real: +0.8%
Internet/Mail Order – Sales are up 7.2% from November and set a new all-time record. They are positive for all other measurements, but their Y/E growth rate is only 55% of their average since 2019. However, 89% of their 75.8% growth since 2019 is real. Avg Growth Rates: +20.7%, Real: +18.7%. 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. Their sales dipped in January, July, Sept>Nov, then rose in December but were really down vs Dec 21. 2022. Y/E measurements are very positive and they are by far the $ increase leaders over 2021. Plus, 85% of their 55.5% growth since 2019 is real. Average Growth Rate is: +15.8%, Real: +13.7%. They are 2^nd 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 $, 9 channels reported increases in monthly $ and 10 in Y/E $ over 2021. When you factor in inflation, the number with any “real” growth falls to 2 for monthly & 3 for Y/E. 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 $ales for January.

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, all groups were down from December, but all were up vs January 2022. Plus, in the amount of product sold, only Relevant Retail was down vs 2022 but Auto & Gas Stations were down vs 2021. Gas Stations are also still really down vs 2019.

Overall – Inflation Reality January inflation vs 2022 fell below the $ increase rate for all but Relevant Retail. However, you see the impact of 2022 inflation as real sales are down for Gas Stations and Auto vs 2021 and only minimally up for Relevant & Total Retail. Restaurants were down vs Dec, but up strongly in all measurements vs 2022, 2021 & 2019. There is a slight positive. For the 1^st time in 9 months real sales vs 2021 are up vs 2021 for Total & Relevant Retail.

Total Retail – Every month since June 2020 has set a monthly sales record. December 2022 $ were $748.2B, a new all-time record. 2022 was somewhat normal as sales dipped in September then grew in Oct>Dec before falling in January. January $ are -16.2% vs December, +6.2%% vs Jan 2022, +21.0% vs 2021 & +37.6% vs 2019. However, when you factor in inflation, only 43% of 19>23 sales growth is real but that’s better than 22>23: 33% and 21>23: 17%. Avg 2019>23 Growth: +8.3%, Real: +3.8%. Even as inflation slows, it 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 reached a record $876B in 2021. Sales continued to grow in 2022, setting an all-time monthly record of $90.8B in October and exceeding $1T in 2022 for the 1^st time. They are the only big group that is positive in all measurements vs 2022, 2021 & 2019. Inflation slowed to 8.1% for January from 8.2% last month. However, it is still 14.9% vs 2021 and 19.6% vs 2019. 62.8% of their 52.8% growth since 2019 is real. Avg 2019>23 Growth: +11.2%, Real: +7.4%. They only account for 13.8% 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 January being down. They had 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 Y/E sales numbers were much worse, down -8.2% vs 2021, the worst of any group. 2023 has started off a little better. Sales are up vs 2022, 2021 & 2019. Plus, real sales are only down vs 2021. Avg 2019>23 Growth: +7.3%, Real: +1.7%. Prices have deflated for 2 straight months. Real Sales vs 2019 are positive for the 1^st time since April 2022.

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 reached a record $584B in 2022. Sales got on a rollercoaster in 2022 but have trended down Nov>Jan. They have fallen to 2^nd place behind restaurants with the biggest increases vs 2022, 2021 and 2019 but it is still not reality. Gasoline inflation has slowed. However, it is still 42.7% vs 2021. Monthly real sales are again positive, but sales are still really down -3.2% vs 2021 and -5.4% vs 2019. Avg 2019>23 Growth: +9.0%, Real: -1.4%. The numbers show the cumulative impact of inflation. Consumers spend more but buy less, even less than they bought 4 years ago.

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 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 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. January had its normal drop, but real sales were also down vs 2022 and only 7% of the 21>23 growth is real. From 2019>23 sales grew 35.6% and 55% was real. This shows that inflation is a cumulative problem that began in 2022. Their Avg 2019>23 Growth: +7.9%, Real: +4.6%. The performance of this huge group is critically important. This is where America shops. Real sales are down 2.1% so consumers bought less than in 2022. They just paid more. That’s not good.

Inflation is slowing slightly but the cumulative impact is still there. Relevant Retail is now really down vs last year for 11 straight months. All other groups are up. However, when you check the real growth vs 2021, Auto & Gas Stations are still “really down” and Total & Relevant Retail have negligible real growth. Restaurants are by far the best performers. For Relevant Retail, we are still in Inflation Phase II. Consumer spending grows but the amount bought declines. Let’s hope that we can continue to avoid Phase III, when consumer spending drops.

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

Relevant Retail: Avg Growth Rate: +7.9%, Real: +4.6%. All 11 channels were down from December but 10 were up vs 2022 & 2021. 7 were really up vs 2022 & 6 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 down 47% from December but up vs January 2022 & 2021 & 2019. However, they are really down vs 2022 & 2019. Avg 2019>23 Growth: +1.1%, Real: -1.4%.
Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. Inflation is still a big factor in their numbers. Sales are down from December but up vs 22 & 21. Their real sales are all down vs 22 & 21 and only 38% of their 25.4% lift from 2019 is real. Avg 19>23 Growth: +5.8%, Real: +2.3%.
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 December. The increases vs 22 & 21 are strong, but inflation is stronger. Real sales are down for both and only 2.4% of the growth since 2019 is real. Avg Growth: +5.8%, 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 December but are up in all other measurements vs 22, 21 & 19. Their inflation rate is low so 76% of their 17.7% growth from 2019 is real. Avg 2019>23 Growth: +4.2%, Real: +3.2%.
Clothing and Accessories – They were nonessential, and clothes mattered less when you stayed home. That changed in March 21 with strong growth through 22, especially December. January sales fell -52.5% but for the 2^nd straight month all other all measurements are positive. 76% of their 2019>23 growth is real. Avg 2019>23 Growth: +4.4%, Real:+3.4%
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 December but up vs 22, 21 & 19. However, their real numbers are still down vs 2021 and only 18% of their growth since 2019 is real. Avg 2019>23 Growth: +5.3%, Real: +1.0%.
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 down in all measurements but real sales vs 2022. This only happened because of an 8.0% deflation rate from 22>23. Avg 2019>23 Growth: -3.3%, Real: -1.6%.
Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. The 2022 spring lift ended in May. Sales fell in Nov>Jan after a slight lift in October. Sales are up vs 22, 21 & 19, but when you factor in double-digit inflation, the real amount sold is down vs 22 & 21. Also, only 22% of their strong 30.5% sales growth since 2019 is real. In December 2022, it was 54%. Their Avg 2019>23 Growth is: +6.9%, Real: +1.6%.
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. January $ fell -42.4% from December but are now positive in all other measurements. Inflation in this group is lower than most groups and most comes from Sporting Goods. 77% of their 39.0% growth since 2019 is real. Avg 2019>23 Growth: +8.6%, 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 +0.9% but sales took off in March 21 and have continued to grow. Sales are -18.6% from December but up for all other measurements. In 2022 they had the biggest increase vs 2021 and vs 2019 they were 2^nd only to NonStore. In 2023 they are 3^rd vs 2022 but 77% of their 45.2% growth since 2019 is real. Their Avg Growth is: +9.8%, Real: +7.8%.
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 1^st time and they broke the $1 Trillion barrier for the year. Their growth slowed significantly in 2022 and now 2023 but all measurements vs 22, 21 & 19 are positive. 87% of their 81.2% increase since 2019 is real. Their Avg Growth: +16.0%, Real: +14.3%.

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>Jan. On the surface, the Retail impact is almost invisible. Sales in the total market and in the Relevant Retail group set new records in 2022 but the growth rate slowed and the amount purchased fell, Phase II of strong inflation. December was again the peak of the Holiday Shopping season and monthly sales. As expected, sales fell across the board in January. Except for Relevant Retail the amount of product sold by the big groups in January was more than in 2022. This was not widespread among the individual retail channels. It was largely due to the biggest channels – Grocery, General Merchandise and Bldg/Hdwe/Farm. While inflation has slowed in most product categories, it is still very high for Food at Home and Tools/Hdwe. This had a big impact on real sales in specific channels and Relevant Retail, which has now been “really” negative vs last year for 11 straight months. Will this continue?

Monthly 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.

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.
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.
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.
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.
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.
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.

GLOBAL PET EXPO 2023…It Has Everything You Need!

February 22, 2023/in Pet Trade Shows/by John Gibbons

Global Pet Expo, the Pet Industry’s premiere event, is back to near “normal”. The exhibitor count is up over 35% from 2022 and should reach 1000 by showtime. This is lower than the 1173 peak in 2019 but it is still more than enough.

The world is rapidly becoming more virtual so how important is a live event? In the Pet Industry it is critical because of our attitude towards Pets and Pet Products. Pets became an integral part of our families in the 90’s as Pet Owners became Pet Parents. This relationship has grown even stronger in recent years as we now increasingly personify our pets. This is why a live show is important. Pet shows are primarily focused on Pet Products. Studies have shown that over 60% of consumers prefer to make initial buying decisions on Pet Products in person. This makes Pet Products second only to fresh groceries in this consumer behavior. This preference applies to all Pet Products buyers, not just consumers. The retailers and distributors attending GPE and SuperZoo want to see and touch a new product before they buy. Live shows are not just important, they are critical to the continued growth and strength of the Pet Industry.

The Pandemic crisis is basically over but it has raised our awareness so we are more conscious of health concerns and responsible personal interactions. These personal interactions at industry trade shows have been a key factor in the long term growth of the industry. In 2023 they will be back at full strength. Now, let’s take a brief look at what awaits attendees of GPE 2023.

As we said, the show is smaller than the 2019 peak, both in square footage (-13%) and number of exhibitors (-16%) but there is still more than enough to satisfy the needs and wants of every buyer that attends. Here are some relevant facts.

984+ Booths – as of 2/17 but more are still being added daily
314,000+ sq ft of exhibit booth space (Not counting the 45,000 sq ft new product area)
20 x 10 is again the most popular size – 253 (35.9%), demonstrating the need for a little more space.
Booths are smaller – the average size is 320 sq ft, -16% from 2022, reflecting the 35+% increase in exhibitors.
Size matters – Booths 300 to 800 sq ft (29%) occupy 45% of the space. Those over 1000 sq ft (4%) cover 23%.

Will you see any new exhibitors or is it the usual group? There have been 6 live pet trade shows from 2019>22 – 3 GPEs and 3 SZs. There are 984 exhibitors at GPE 23 but It took 2725 companies to fill all 7 shows. Of the GPE 2023 exhibitors:

179 (18%) – Did all 6 other shows
531 (54%) – Did GPE 2022
298 (30%) – Are new to GPE (at least from 2019>22)
222 (23%) – Did NO other shows from 2019>2022

The percentage of exhibitors new to GPE this year is about the same as “normal”. There is again plenty of “New” to see.

Special “Floor Sections” at GPE account for 33% of Booths, about the same as 2019>20. Due to the big change in booth count, the best way to compare GPE 2023 to previous years in this and other areas may be by share of booths.

Natural – 193 Booths. The number of booths in this section is at an all-time high. The share has grown to 1/5 of all booths from 1/7 in 2019, reflecting the growing strength of the natural trend in our whole society.
Boutique – 25 Booths. After a brief resurgence in 2020, the booth share of this area continues to fall. Boutique is essentially the opposite of Natural and more discretionary in a country that is increasingly focused on “needs”.
Aquatic – 16 Booths. Popularity of this category continues to trend down.
1st Time Exhibitors – 95 Booths. The share is now about the same as pre-pandemic 2019 but most of the 287 exhibitors who didn’t exhibit at GPE (at least from 2019>2022) chose the regular floor or another special section. GPE is a “must do” for new companies and New – products and companies are a major focus of GPE.
International – Although not listed as floor sections, international pavilions are back this year with China, Taiwan, Canada and Brazil participating. There are 230+ exhibitors from 25 countries outside the U.S at GPE 23.

There are large numbers of exhibitors in the “regular” floor space who would qualify for inclusion in these sections. You need to “work” the whole show to ensure that you get a full view of the product categories of interest to you. I will again be creating a GPE Exhibitor Visit Planner that allows attendees to plan their floor time by targeting the exhibitors with products of interest. The GPE 2023 SuperSearch will be made available by March 6th and be regularly updated with last minute changes. Now, let’s take a look at the results from this year’s research on exhibitors’ product offerings.

First, we’ll Compare Exhibitor Types – By function: By Animal type (Numbers are based on assigned booths as of 2/17/23)

Results were mixed. 5 categories gained share while 6 lost ground.

Dogs Still Rule – They are still in about 83% of all booths. 5 out of every 6 booths are selling dog products.
Cats gained ground. Cat Products are offered by 59% of exhibitors. Up from 40% back in 2014.
Fish/Aquatic – This category continues to lose share and is down 47% since 2017.
Other Animals – Only Birds gained share, with the biggest drop coming in Equine.
Business Services – Inflation has driven the popularity of private label/OEM products. The huge lift in count and share reflects the changing needs in the industry. BTW, there were only 8 exhibitors in 2014.
Distributors – The share is about the same as “normal” 2019. Only 8 exhibited in 2014.
Gift/Gen Mdse – The share had a slight lift but has been generally declining since peaking at 7.8% in 2016.

Dogs and Cats are the undisputed royalty of Pet. Because of their huge impact on the industry. I have divided the products designed for them into 33 subcategories. Let’s see how this year’s GPE Top Ten (by booth count) are doing.

The top 4 are the same as 2022 but the top 2 had the biggest losses in share. There was a slight shuffling in the rankings from 5>10 – 2 moved up in rank while Food fell. Carriers/Crates returned to the Top 10 as Apparel fell to #11.

Treats are still #1 although their share fell by over 7%. The high share in 2022 reflects their priority. 1 in 3 booths offers treats. Many supplements are in treat form and the share of this category is still up 5+% from 2019.
OTC Meds/Supplements/Devices has a similar pattern to Treats and also continues to grow in importance. In 2014, their share was only 11%.
Toys – With a big gain in share, Toys held onto #3. This relates to the return of many Far East exhibitors.
Collars, Leads & Harnesses – They held the #4 spot and their share has been stable since 2019 after falling from 22.1% in 2018. In 2016, they also had a 22.1% share but that earned them the #2 ranking.
Feeding Acc. had the biggest share gain and moved to 5^th which again reflects the increase in foreign exhibitors.
Beds/Mats – Their share declined in 20>22 but rebounded in 2023 with the influx of Far East exhibitors.
Food remains a priority as Pet Parents focus on nutrition, health and wellness. However, almost all is USA made.
Waste Pickup – They have been growing in popularity. They broke into the Top 10 in 2020 and now rank 8^th.
Carriers/Crates – They dropped out of the top 10 in 2022. Once again the lack of foreign manufacturers was a big factor. In 2023 they returned to their normal #9 with a record high share.
Grooming Tools– After years at 9/10, they fell to #12 in 2020 but have returned to their normal #10 spot.

Pet Parents’ concern for the overall health and wellness of their “pet children” remains a big priority but the impact of strong Petflation has pushed the “value” of Private Label products to the forefront in many categories.

The last chart details the specifics for all 33 of the Dog/Cat product categories that I defined. Of note: All the data inputs for this report and the SuperSearch tool come from a review of the GPE online exhibitor product listings AND visits to over 1000 websites. They’re not 100% accurate, but pretty close. Which categories are of interest to your business?

GPE 2023 is the place to literally find “Everything you need!” There are products, services and education to fulfill every need and…want. There is also an abundance of “new” – both in products and the 200+ exhibitors who are new to Pet Industry shows. However, to reap the benefits, you need a plan. Exhibitors must showcase the “right” items. Attendees need to strategically analyze their data, determine what they need to improve their business and develop a plan to find the products to fulfill their needs. Then…execute the plan. If they do nothing else at GPE, attendees will have 1 minute and 28 seconds to spend at each booth. With a 35+% increase in the number of exhibitors, you definitely need a plan! The GPE 2023 SuperSearch will be available the week of March 6th. It can help. Try it out. Good luck in Orlando!

Since no Exhibitor list is available on line, you can download one by clicking the link below. It is in an excel format and is based upon data from 6 pm EST on 2/17.

Download GPE 2023 Exhibitor List 2-17

Petflation 2023 – January Update: Price increase slows to +10.6% vs 2022

February 20, 2023/in Pet Market Segments/by John Gibbons

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. January prices grew 0.8% from December and the CPI was still up +6.4% vs 2022, but down from +6.5% last month. The grocery price surge also slowed but they’re still up 11.3% over 2022. That’s 11 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 2022. National inflation has slowed since July, but Petflation has generally increased. It passed the National CPI in July and is +10.6% in January, 65.6% higher than the national rate of 6.4%. 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 (22>21, 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
Since January data is YTD, we won’t have separate YTD data until next month. It will include:
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 January 2021 to January 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. For all but Supplies, cumulative inflation peaked in January. I have added and highlighted the month that Supplies peaked. This will give you some key waypoints.

The pandemic hit home in 2020. In January 21, the national CPI was only +1.8% and Pet prices were +1.2%. 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 small October dip in Veterinary. In Nov>Dec, Services & Food prices continued to grow while Veterinary & Supplies prices stabilized. In January, all inflated and 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 January but 41% of the overall 16.4% increase since 2019 happened from January>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 2021 but 89% of the 17.3% increase occurred in 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 January.
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>Jan and passed Food for 2^nd 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 hit a new record in January.
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 as all segments increased prices. It has been ahead of the cumulative U.S. CPI on our 2019>2023 chart since November.

Next, we’ll turn our attention to the Year over Year inflation rate change for January and compare it to last month, last year and to previous years. We also added a new measurement, showing the total inflation from 2021 to 2023. Although inflation is slowing, it’s not over. This will allow you to see the cumulative amount of the current pricing surge. You can compare the annual inflation rates of 22>23 to 21>22 but also see how much of the total inflation since 2019 came from the ongoing trauma. Again, we’ve included some human categories to put the pet numbers into perspective.

Overall, Prices were +0.8% vs December and were up 6.4% vs January 2022. The Grocery increase is down to 11.3% but is still a big negative. January prices generally rise from December so it’s not surprising that 8 of 9 categories had increased prices from last month. 5 of the increases were over 0.5%. Last month there was only 1. 2 of the increases were over 1.0% and the Pet Industry again led the way – Pet Services +1.5% and Veterinary Services +1.0%. The overall national YOY monthly inflation rate is slightly down from December but it is significantly down vs the 21>22 rate. No other category has that pattern. The 22>23 inflation rate is higher than the 21>22 rate in all other categories. In all but 2 – Medical Services and Haircuts/Personal Services, it is the highest rate in any year since 2019. In our new 21>23 measurement you also can see that over 75% of the cumulative inflation since 2019 occurred in the current surge for all categories but Veterinary, Medical Services and Haircuts & Personal Services. The Pet Supplies Segment has a very interesting situation. The 21>23 inflation surge provided 113% of the overall inflation since 2019. This happened because Pet Supplies prices strongly deflated in 20>21.

Now Some Specific Observations

U.S. CPI– Prices are +0.8% from December. The YOY increase is down to +6.4%. It peaked at +9.1% back in June. The targeted inflation rate is <2% so we are still over 3 times higher than the target. However, a 7th 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 14.4%, 76% of total inflation since 2019. How many households “broke even” by increasing their income by over 14% in 2 years?
Pet Food– Prices are +0.2% vs December and 15.1% vs January 2022. They are also 34% higher than the Food at Home inflation rate – not good news! The YOY increase is being measured against a time when prices were only 1.9% above the 2019 level, but that increase is still an incredible 12.5 times the pre-pandemic 1.2% increase from 2018 to 2019. The 2021>2023 inflation surge generated 88% of the total 20.7% inflation since 2019.
Food at Home – Prices are up 8% from December. The monthly YOY increase is 11.3%, down slightly from 11.8% in December but considerably lower than Jul>Sep 2022 when it exceeded 13%. The 24.9% Inflation for this category since 2019 is the highest on the chart and is 32% more than the national CPI. 79% of their inflation since 2019 occurred from 2021>2023 but their pattern is different from the national CPI. 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 up +0.4% from December. That’s 2 straight monthly increases after a dip in November. They still have the lowest increase since 2019 and now have fallen to 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. However, 2 straight months of increases has put them within 0.4% of the record high.
Veterinary Services – January prices are +1.0% from They are +8.4% from 2022 and are tied with Services for 2^nd place behind Food in the Pet Industry. They also remain 2^nd in the increase since 2019 with 24.5% compared to Food at home at 24.9%. For Veterinary Services, relatively high annual inflation is the norm. The rate did increase during the current surge but only 57% 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 January prices fell -0.1% from December but were +3.0% vs 2022, the 2^nd highest rate since 2019. Medical Prices are not a big part of the current surge as only 40% of the 2019>23 increase happened from 21>23.
Pet Services – Inflation slowed in 2020 but began to grow in 2021/2022. January prices were up +1.5% from December, the biggest increase on the chart, and +8.4% vs 2021, a new rate record and an all-time pricing high. Their inflation is tied to the current surge as 72% of total since 2019 occurred from 2021>2023.
Haircuts & Other Personal Services – Prices are +0.2% from December and +5.2% from 2022, but this is only 2^nd to +5.7% in 20>21. Inflation began to grow in 20>21 and 50% of the inflation from 19>23 happened from 21>23.
Total Pet– Petflation is strong, 2.4 times the rate of last year, 65.6% ahead of the National CPI and the +10.6% is also the highest January rate in history. Prices increased in all segments vs December so Total Pet was up 0.8%, which is actually the norm. A Dec>Jan increase in Petflation has happened in 25 of the last 26 years. Food is the runaway leader, but inflation is becoming more balanced as all other segments have aa YOY rate of 7.2>8.4%. 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.

YOY Petflation slowed slightly in January from December but still set a new record for the month. Will it impact spending? Let’s put it into perspective. The 10.6% January 2023 increase in Total Pet beat the 10.3% record set in 2009 and is 6+ times more than the 1.5% average rate from 2010>2021. 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. The Services segment is the most driven by higher incomes, so inflation is less impactful. The US BLS recently decided to update the CPI annually rather than every 2 years based upon each expenditure’s share of total expenditures. I worked with them to update the CPI of my specially created aggregates. During our conversations, they noted that Pet expenditures had one of the biggest share gains of any group. Apparently, Pet Parents are just reallocating their $ to prioritize their “children’s” needs. This is not unexpected. We’ll see if it is impacted by continued high inflation.

2021 Veterinary Spending was $32.67B – Where did it come from…?

February 13, 2023/in Pet Market Segments/by John Gibbons

Now we will turn our attention to the final Industry Segment – Veterinary Services. For years, Veterinary Services prices have had high inflation. This has resulted in CU income becoming the most dominant factor in spending behavior and a reduction in visit frequency. Consumers paid more, just used Veterinary Services less often.

In 2017 low inflation spurred an unusual 7.2% increase in visit frequency and a $2.5B increase in spending. In 2018 inflation returned to more normal levels. Consumers spent $0.56B more (+2.7%), but inflation was 2.6% so virtually all of the lift was from increased prices. In 2019 the situation got worse. Consumers spent $0.58B (+2.7%) more but inflation was 4.14%. This means that there was an actual decrease in the amount of Veterinary Services purchased. In 2020 the pandemic hit, and Pet Parents focused on needs – Food & Veterinary. Veterinary spending grew $3.05B, (+14.0%). In 2021, this behavior grew even stronger and produced a record $7.82B (+31.5%) increase.

We’ll start our analysis with the groups who were responsible for the bulk of Veterinary spending in 2021 and the $7.82B increase. The first chart details the biggest pet Veterinary spenders for each of 10 demographic categories. It shows their share of CU’s, share of Veterinary spending and their spending performance (Share of spending/share of CU’s). In terms of performance – 6 of 10 groups perform above 120%, the same as 2018>2020. This is equal to Supplies and more than Food (5) but less than Services (7). This means that these big spenders are performing well but it also signals that there is still a large disparity between the best and worst performing demographics in this “needed” segment. The groups are the same as those for Total Pet and categories are listed in the order that reflects their share of Total Pet $pending. As with all Industry Segments, High Income is the most important factor in Spending.

Race/Ethnic – White, not Hispanic (84.7%) down from 87.2%. This group accounts for the vast majority of spending in every segment, but they lost significant share in 2021. Their 126.0% performance is also down from 127.5% and they fell from 3rd to 4th in importance in Veterinary Spending but it still reflects the disparity in spending. Minorities did narrow the gap in 2021 primarily due to a $1.5B, 91% lift by Hispanics. However, all groups spent more.
# in CU – 2+ people (79.7%) up from 77.9% This group, which is 69.5% of U.S. CUs, gained share and their performance grew from 111.0% to 114.7%. Their rank in terms of importance in Veterinary Spending stayed at #8. All sizes spent more. The biggest $ lift, +$3.43B, came from 2 person CUs. 4 people had the biggest % gain, +75.8%.
Housing – Homeowners (81.0%) down from 83.1% Homeownership is a major factor in pet ownership and spending in all industry segments. In terms of importance to Veterinary spending, their 125.2% performance rating is down from 126.3%, and they fell from to 4th to 5th place. All segments increased spending by over $2B. This is impressive. However, the percentage increase for Renters was +47.7%, while Homeowners’ spending grew only 28.2%. This difference is what drove the drop in share and performance. We should note that Homeownership is not nearly as important to Veterinary Spending as it once was. In 2015 their share was 88.4% with performance of 141.8%.
Area – Suburban & Rural (73.0%) up from 67.1% Suburban CU’s are the biggest spenders in every segment. All areas spent more but those <2500 had a great year, +53.9%. This drove the big increase in share and their performance grew substantially to 113.2%, from 106.4%.
Income – Over $70K (71.7%) up from 63.4% Their performance also grew significantly from 145.8% to 160.0%. Higher income became even more important in increased Veterinary spending. Only the $30>49K group spent less. The <$30K group had a slight lift, +$0.2B (+7.2%) but the other groups, over $50K all had 40+% increases. $150K> led the way with a $4.3B (+61.8%) spending increase.
# Earners – “Everyone Works” (68.6%) down from 69.7% However, their Performance grew from 120.3% to 121.0% and they stayed at #6. In this group, all adults in the CU are employed. All segments spent more. Their share fell but performance increased because of a big $ lift from No Earners combined with a drop in the number of Earner CUs.
Education – College Grads (65.4%) up from 61.3%. Income generally increases with education. It is also important in understanding the need for regular Veterinary care. Performance also grew from 131.2% to 138.1% and they stayed 2nd in importance. Once again, all segments in the category spent more. However, College Grads spent $6.13B more. That means that 47.4% of all CUs generated 78.4% of the increase. The BA/BS group led the way with +$3.8B. BTW, Associate Degrees also spent $0.8B more, emphasizing the importance of formal, after HS education.
Occupation – All Wage & Salaried (66.4%) down from 68.1% but their performance increased from 110.7% to 111.9% due to 1.4M fewer CUs. All segments spent more. They lost share but gained in performance because of fewer CUs and a strong year by Retirees and non wage/salaried workers. The top 3 lifts were certainly a mixed bag: Mgrs/Professionals, +$2.27B; Retirees, +$1.59B; Service Workers, +$1.55B.
CU Composition – Married Couples (60.9%) up from 58.6% Their performance also grew to 128.4% from 120.8% and they moved up to #3 from #6 in importance. After 2 years, Married Couples market share returned to 60+% while their # of CUs fell by 1%. Only Single Parents spent less, -$0.1B. Married Couples with Children were +$2.57B but all Married Couple CUs with no children were +$2.75B. Singles & All Adult, Unmarried CUs were +$2.59B.
Age – 35>64 (62.1%) up from 60.1% Their performance also grew from 112.7% to 118.7% but they stayed in 7^th place. For the 8^th time all groups spent more and all had double digit % increases. The 55>64 yr olds led the way, +$2.20B but 35>44 was a close second, +$2.08B. Both of these segments had increases of 40+%.

Spending disparity grew in 8 categories and higher income became even more important in Veterinary spending. The most notable change was that Married Couples again reached a 60% share and moved from 6^th to 3^rd in importance. There was also a strong showing by 35>44 (Mostly young Gen Xers) and 55>64 (Mostly young Boomers).

Now, we’ll look at 2021’s best and worst performing Veterinary spending segments in each category.

Almost all of the best and worst performers are those that we would expect and there are only 5 that are different from 2020. This is 1 more than Supplies but far fewer than the 10 in Services and the 15 in Food. This suggests considerably less spending turmoil. The changes from 2020 are “boxed”. We should note:

Income– The winner is up from $150>199K. Winner & Loser are not surprises but the gap is 40% more than 2020.
Earners – An expected repeat winner and loser. They have the highest and lowest incomes.
Occupation – Retirees replaced Blue Collar at the bottom but once again, it’s all about income
Age – The 55>64 yr-olds edged out 35>44 and replaced the highest income group, 45>54 yr-olds at the top. These 3 groups have the highest income and are the only segments performing above 100% in Veterinary Spending.
Race/Ethnic; Education; Housing– The expected winners & losers but the performance gap grew for all but Renters.
Area – Another set of repeats but the difference in performance (disparity) increased by over 35% from 2020.
Region –Northeast replaced West at the top and has now won for 6 of the past 7 years. The South has finished last for 6 years in a row. The win/lose gap increased by 20%, but 2 regions performed at 100+% – the 1^st time since 2019.
CU Composition – No change here but again the performance gap widened, by 20%.
# in CU – 4 Person CUs edged out 2 People for the win but now 2, 3 and 4 person CU’s all perform above 100%.
Generation – No change again and the performance gap only widened by 4%.

It’s time to “Show you the money”. Here are segments with the biggest $ changes in Veterinary Spending.

We saw little turmoil in performance. That’s also true here. There were 8 repeats and 3 segments flipped from 1^st to last or vice versa. Last year they had 4 repeats and 10 flips. There were no surprise losers and 1 surprise winner – Millennials. In fact, in 9 categories all segments spent more, up from 4 in 2020. You should note that like 2020, the increases were significantly larger than the decreases. Plus, 94% of 96 demographic segments spent more. Here are the specifics:

Race/Ethnic – Both groups held their spots as White, non-Hispanics maintained their dominance in this segment.
- Winner – White, Not Hispanic – Veterinary: $27.65B; Up $5.98B (+27.6%) 2020: White, Not Hispanic
- Loser – African American – Veterinary: $1.00B; Up $0.13B (+14.9%) 2020: African Americans
- Comment– In 2019 only African Americans spent less. In 2020 & 2021 all spent more. This shows that Pet Parents commitment to the health & wellbeing of their Pet Children is widespread across all racial/ethnic groups.
Area Type – Center City, last year’s surprise winner flipped from 1^st to last and big Suburbs returned to the top.
- Winner – Suburbs 2500> – Veterinary Spending: $15.97B; Up $4.40B (+38.1%) 2020: Center City
- Loser – Center City – Veterinary Spending: $8.83B; Up $0.66B (+8.1%) 2020: Suburbs 2500>
- Comment – All groups also spent more. The Suburbs 2500> went from a 3% increase in 2020 to a 38%, $4.4B increase in 2021. However, the Areas <2500 had the biggest % increase, +56.1%, up $2.2B.
Education – BA/BS Degree replaced Advanced College Degree at the top while <HS Grads stayed on the bottom.
- Winner – BA/BS Degree – Veterinary Spending: $11.62B; Up $3.79B (+48.4%) 2020: Adv. College Degree
- Loser – <High School Grads – Veterinary Spending: $0.37B; Up $0.03B (+8.3%) 2020: <HS Grads
- Comment – All Education levels spent more but the lift was very much skewed towards higher Education. College grads generated 78.4% of the lift but those with at least an Associate’s Degree were responsible for 88.9%.
Housing – Homeowners w/Mtges held their usual position at the top.
- Winner – Homeowner w/Mtge – Veterinary: $17.56B; Up $3.49B (+24.8%) 2020: Homeowner w/Mtge
- Loser – Renter – Veterinary: $6.19B; Up $2.00B (+47.7%) 2020: Renter
- Comment – Every segment spent more and had an increase of at least $2B. You know that it was a great year when the “loser” spent 47.7% more.
# in CU – 2 Person CUs held on to the top spot.
- Winner – 2 People – Veterinary Spending: $13.16B; Up $3.43B (+35.2%) 2020: 2 People
- Loser – 3 People – Veterinary Spending: $5.02B; Up $0.22B (+4.7%) 2020: 1 Person
- Comment: For the second consecutive year all groups spent more. 4 Person CUs went from a $0.04B (+1.5%) increase in 2020 to up $2.22 (+75.8%) in 2021.
Region – The Northeast flipped from last to 1st. This is 4 consecutive years of flips for this Region.
- Winner – Northeast – Veterinary Spending: $7.52B; Up $3.42B (+83.5%) 2020: West
- Loser – Midwest – Veterinary Spending: $6.45B; Up $1.19B (+22.5%) 2020: Northeast
- Comment – All Regions had double digit percentage increases of at least $1.19B. The Midwest replaced the Northeast at the bottom and the South fell to 3^rd place after 4 consecutive years at #2.
Generation – No flips and the winner and loser were both new.
- Winner – Millennials – Veterinary: $9.23B; Up $3.18B (+52.5%) 2020: Baby Boomers
- Loser – Born <1946 – Veterinary: $1.83B; Down $0.19B (-9.2%) 2020: Gen Z
- Comments – In a bit of a surprise, Millennials replaced Boomers at the top. The oldest Generation had the only decrease as the Silent/Greatest replaced Gen Z at the bottom. In 2021, Millennials, younger Gen Xers and younger Boomers all had a strong year in Veterinary spending.
# Earners – Both the winner and loser are new, but not surprising.
- Winner – 2 Earners – Veterinary Spending: $13.19B; Up $3.17B (+31.6%) 2020: 3+ Earners
- Loser – 1 Earner, Single – Veterinary Spending: $4.22B; Up $0.19B (+4.7%) 2020: No Earner, Single
- Comment – The winner and loser reflect their income levels. Income is of primary importance to increased Veterinary Spending & # of earners is tied to income. In 2021 all CUs, with or without earners, spent more. 1 Earner, Singles had the only single digit % increase.
Income – Both the winner and loser are new.
- Winner – $200K> – Veterinary Spending: $6.32B; Up $2.58B (+69.0%) 2020: $100>149K
- Loser – $30>39K – Veterinary Spending: $1.24B; Down $0.61B (-33.1%) 2020: $70>99K
- Comment – Only the $30>39K group spent less. We got off last year’s spending rollercoaster as the size of the increase in Veterinary spending generally grew with income, peaking at $200K> in both $ and percentage.
CU Composition – Married Couple Only held their spot at the top.
- Winner – Married, Couple Only – Veterinary: $9.31B; Up $2.28B (+32.4%) 2020: Married, Couple Only
- Loser – Single Parents – Veterinary: $0.61B; Down $0.09B (-12.6%) 2020: Married, Oldest Child <6
- Comment – After a 68% increase in 2020, Single Parents were the only group to spend less in 2021. Overall, Marriage became more important as 47.4% of CUs generated 60.9% of Veterinary $ and 68% of the increase.
Occupation – The winner held on while the loser changed from White Collar to Blue Collar.
- Winner – Mgrs & Professionals – Veterinary Spending: $12.14B; Up $2.27B (+23.0%) 2020: Mgrs & Profess.
- Loser – Construction Workers – Veterinary Spending: $0.65B; Up $0.06B (+9.9%) 2020: Tech/Sales/Clerical
- Comment – Retirees finished in 2^nd place, +$1.59B and not all Blue Collar workers had small increases. Service Workers were +$1.55B (+64.5%), the highest % increase of any segment.
Age – A new winner and loser.
- Winner – 55>64 yrs – Veterinary Spending: $7.65B; Up $2.20B (+40.4%) 2020: 25>34 yrs
- Loser – <25 yrs – Veterinary Spending: $0.42B; Up $0.09B (+28.2%) 2020: 35>44 yrs
- Comment: Last year 2 groups spent less. In 2021 all segments increased Veterinary spending. 55>64 replaced 25>34 at the top while <25 replaced 35>44 on the bottom. This seemed to indicate that the $ were skewing a little older. In fact, the 25>55 age group generated 56% of the spending increase while 55 and over accounted for 42%. The younger groups are still strongly growing.

We’ve now seen the winners and losers in terms of increase/decrease in Veterinary Spending $ for 12 Demographic Categories. The 2020 pandemic brought strong growth in Veterinary spending which grew even stronger in 2021. However, the lift came with little turmoil as most segments held their spots in performance and there were no significant surprises in $ changes. The surprise was in just how widespread the spending lift was. In 2020, 4 categories, had no segments that spent less and 85% of all demographic segments spent more. In 2021 these increased to 9 categories and 94%. This means that there were even more “hidden” segments that didn’t win but made a significant contribution to the $7.82B increase. These groups don’t win an award, but they certainly deserve….

Honorable Mention

Racial/Ethnic spending became a little more balanced thanks to a 91% increase by Hispanics. Veterinary spending is driven by income but the lowest income group, No Earner, Singles had the biggest % increase. Low income Service Workers also had a huge, 64.5% lift. Although they are the 2^nd highest income segment, they are rarely the winner. In 2020 their increase in Veterinary $ was only 1%. In 2021 they exploded with a $1.72B (53.5%) lift, but this was only good enough for 3^rd place in the income category. The 35>44 yr-olds had a great year, finishing 1^st a number of times in other industry segments. In Veterinary they had to settle for 2^nd place behind the 55>64 yr-olds. They are a perennial 2^nd place finisher. In 2021, even a $2.1B increase was not enough to move them up. It was also a strong year for all Homeowners.

Summary

2016 & 2017 produced a combined increase of $3.6B in Veterinary Spending as inflation moved to record low levels. In 2018 & 2019 a Baby Boomer Spending “Bust” impacted Food & Veterinary. Fortunately, Gen X and Millennials stepped up to produce a 2.7% increase in both years. In 2020 the pandemic focused Pet Parents on the needed segments. This drove a $3B increase in Veterinary $. Boomers & Millennials led the way, but the lift was widespread as 85% of demographic segments spent more. In 2021 the lift grew to a record $7.82B with 94% of all segments spending more.

There was also less turmoil in the segment, but spending became a little less balanced in most demographic categories. The size of the increases far exceeded the size of the decreases. However, in 9 categories all segments increased spending. Income and Education remain of primary importance in terms of increased spending.

Income: Performance generally increases with income and reaches its highest level, 225+% at $200K>. The “halfway” point (50%) in $ fell below $100K for the 1^st time in 2020. It turned up sharply in 2021 to $113K. Spending is less balanced in most categories in 2021 due to income.

Higher Education: Performance increases with Education but now reaches 100% when you have an Associates degree. Those with a BA/BS or higher perform at 138%. The performance of those with no “formal” College Degree is 57%. The disparity is not quite as bad as Income but still big. Equality in both categories is a long way off.

The performance of other big spending groups is also very important in the Veterinary segment. We again identified six demographic categories with high performing large groups. There were 6 for Supplies, 7 for Services but only 5 for Food. Consumers have no control over Race/Ethnicity but in addition to Income and Education, Homeownership, # Earners & Marriage are also important factors in Veterinary spending. All groups but Marriage are tied to income and their high performance demonstrates that there are still big spending disparities among segments within these categories.

There was really only 1 change of note. Marriage returned to prominence moving up from 6^th to 3^rd in importance.

In 2019 Veterinary spending increased +2.7% while prices rose 4.14% – a net decrease in the amount of Services. In 2020 spending grew +14.0% while inflation was 3.7%. That’s over 10% in real growth, a very positive situation. In 2021 inflation rose to 4.9% but spending skyrocketed, +31.5%. That means 26.6% in “real” growth, 84% of the total record increase – truly spectacular. Although the lift was demographically widespread, Veterinary spending became a little less balanced. We’ll see if Pet Parents continue to spend heavily on Veterinary Services with the high inflation rates in 2022.

Finally – The “Ultimate” Veterinary Services Spending Consumer Unit consists of 4 people – a married couple with an oldest child over 18. They are 55>56 years old. They are White, but not of Hispanic origin. At least one of them has an Adv. College Degree and works as a Mgr/Professional. Their oldest child also works. Their total income is $200K>. They live in a small suburb, adjacent to a big city in the Northeast U.S. and are still paying off the mortgage on their home.

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