Retail Channel $ Update – February Monthly & March Advance

In March, Commodities inflation vs last year rose from 0.3% in February to 0.6%. Although down from its peak, cumulative inflation still impacts consumer spending. The YOY sales increase for March is 36% below average for Relevant Retail and for all but 2 channels. Prices are now deflating in a number of channels but still high vs 21 which slows growth in the amount of product sold. There is still a long road to recovery, so we’ll continue to track the retail market with data from 2 reports provided by the Census Bureau and factor in a targeted CPI from US BLS data.

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 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 Monthly reports. The biggest difference is that the full sample in the Monthly report allows us to “drill” a little deeper into the retail channels.

We will begin with the February Monthly Report and then go to the March Advance Report. Our focus is comparing to last year but also 2021 & 2019. We’ll show both actual and the “real” change in sales 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 is more detailed in the Monthly reports, and we’ll 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 last year and vs 2021.
    • Current Month Real change vs last year and vs 2021 – % factoring in inflation
  • Current Ytd change – % & $ for this year vs last year, 2021 & 2019.
    • Current Ytd Real change % for this year vs last year and vs 2021 and 2019
  • Monthly & Ytd $ & CPIs for this year vs last year and vs 2021 which are targeted by channel will also be shown. (CPI Details are at the end of the report)

First the February Monthly. All but Relevant Retail were up from January and all but Gas Stations were up vs 23, 21 & 19. Considering inflation, Gas Stations had the only drop vs 23 or 21. There were 4 in Dec & Jan. Gas Stations are still really down vs 2019 but for the 4th straight month, Relevant Retail is “really” up vs all years. ($ are Not Seasonally Adjusted)

The February Monthly is $4.1B more than the Advance report. Restaurants: +$0.1B; Auto: +$1.9B; Gas Stations: +$0.4B; Relevant Retail: +$1.6B. Surprisingly, $ were up vs January for all but Relevant Retail. Actual sales for all but Gas Stations were positive in all measurements vs 23, 21 & 19. Gas prices fell but Gas Stations sales were down vs 23. There were only 2 “real” sales drops – both from Gas Stations. All measurements (actual & real) vs 23, 21 & 19 were positive for Auto, Restaurants, Total & Relevant Retail. Restaurants have the biggest increases vs 21 & 19 but Relevant Retail is still the top “real” performer vs 2019. However, only 54% 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 up from January. vs Feb 23, 8 were actually and 9 “really” up. Vs Feb 21, All were up and 8 were real increases. Vs 2019, Off/Gift/Souv were actually & really down. All others were up in both measurements.

  • Building Material Stores – The pandemic focus on home has produced sales growth of 32.3% since 2019. Prices for the Bldg/Matl group have inflated 19.7% since 2021 which is having an impact. Both HomeCtr/Hdwe and Farm stores are only actually up vs 21 & 19. Deflation pushed Home Ctr/Hdwe really positive vs Feb 23 and they are again really up vs 19. Other real measurements vs 23 & 21 are negative for both and only 25% of the overall Building Materials group’s 19>24 lift was real. Avg 19>24 Growth: HomeCtr/Hdwe: 5.5%, Real: 1.3%; Farm: 7.2%, Real: 3.0%
  • Food & Drug – Both are truly essential. Except for the pandemic food binge buying, they tend to have smaller changes in $. The inflation situation has flipped as the Grocery rate is now 66% lower than Drug/Med products. Both are down from January in $. Drug Stores are positive in all other measurements and 67% of their 2019>24 growth is real. All actual $ are up for Supermarkets and inflation is slowing but their 24 real sales are still down vs 21. Only 14% of their 19>24 increase is real growth. Avg 19>24 Growth: Supermarkets: +5.7%, Real: +0.9%; Drug Stores: +4.9%, Real: +3.4%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up 1.5% from January and their only negative is real Ytd vs 21. Prices are still deflating, -1.8% vs 23. Deflation started in April 23 and is a big change from +1.1% in 22>23 and +7.1% in 21>22. The result is that 65.2% of their 49.4% lift since 2019 is real. Their Avg 19>24 Growth Rate is: +8.4%; Real: +5.7%.
  • Gen Mdse Stores – All were up vs January. Actual sales vs 21 & 19 were up for all. In fact, the only negatives came from Discount Department Stores. They were actually down Ytd vs 23 and really down Ytd vs 23 & 21. They are again really positive vs 19 but only 21% of their growth is real. The other channels average 47% in real growth. Avg 19>24 Growth: SupCtr/Club: 5.9%, Real: 2.7%; $/Value Strs: +6.8%, Real: +3.6%; Disc. Dept. Strs: +2.6%, Real: +0.6%
  • Office, Gift & Souvenir Stores – Actual sales are up slightly, +0.4% from January but they are negative in all actual measurements but vs 21. Their real sales numbers are all negative but vs February 21. This includes negatives vs 2019. Their recovery started late, and their slow progress has been stalled since June 23. Avg Growth Rate: -0.9%, Real: -2.8%
  • Internet/Mail Order – $ are down -4.7% from January but set a new monthly record of $100.3B. All measurements are positive, but their growth is only 68.2% of their average since 2019. However, 82.9% of their 121.9% growth since 2019 is real. Avg Growth: +17.3%, Real: +15.0%. As expected, they are still 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, fell in Jan>Feb 23, grew Mar>May, fell in Jun>Aug, rose in Sep>Nov, fell in Dec>Jan, then grew in Feb. All measurements vs 23, 21 & 19 are positive. They are in 2nd place, behind the Internet, in the % increase vs 19 but the leader vs 21. Also, 78% of their 73.8% growth since 2019 is real. Average 19>24 Growth: +11.7%, Real: +9.5%.

February was a big, positive surprise. It is usually the retail low point of the year but not in 24. Sales in 8 channels were up vs January and vs February 23. Prices are now deflating in a number of channels so 9 channels were really up vs 23. Cumulative inflation is still a factor. Sales increases are lower and 6 of 11 channels were really down Ytd vs 21 but slow improvement continues. The commodities CPI increased slightly in March. Let’s look for any impact on Retail $ales.

March sales vs February grew for all big groups – no surprise. Except for 2020, a Feb>Mar Total Retail lift has happened every year since 1992. However, the 10.1% lift is 27% below the average of 13.7%. All actual $ measurements are positive vs 23, 21 & 19 for all groups but Gas Stations vs 22 and Auto vs Mar 23 & 21. Only Restaurants have an above average lift vs March 23. Auto & Gas $ are down while Total & Relevant Retail are 36+% below average. Inflation is still a big factor. The rate for all commodities, the best pricing measure for Retail, grew from 0.3% to 0.6% and is 16.6% vs 21. There is some “real” bad news. In February only 1 measurement was “really” down vs 23 & 21 and it came from Gas Stations. In March, 7 were really down – 3 from Gas Stations. Relevant Retail’s real monthly sales vs last year have now been positive for 9 straight months, but after 4 straight months of all positives, their real sales vs March 21 are down.

Overall – Inflation Reality – For Total Retail, inflation grew and real sales vs March 21 turned negative. For Restaurants, inflation remains high, +4.1% but they are really positive vs 23 & 21. Gas prices rose and that group is still in turmoil. Auto prices are down but still up 18.6% vs 21 which has slowed actual & real sales. Prices are slightly deflating for Relevant Retail but their real sales are now down vs March 21, after 4 months of all positives. Their progress is slowing.

Total Retail – Since June 20, every month but April 23 has set a monthly sales record. In 2023 Sales were on a roller coaster. Up in Jul>Aug, down in Sept, up in Oct>Dec, down in Jan 24, surprisingly up in Feb and again in March. Inflation grew but is only 0.6%. YOY sales growth is still low. Sales are up 3.3% Ytd vs last year, but this is only 46% of their avg 19>24 growth. Real sales vs Mar 21 turned negative and only 41% of the 19>24 growth is real. YOY inflation in Total Retail has significantly slowed but we see its cumulative impact. Growth: 23>24: 3.3%; Avg 19>24: +7.2%, Real: +3.3%.

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 $96B in December 23 and exceeding $1T for the 1st time. They have the biggest increases vs 23, 21 & 19 and all real sales are positive. Inflation slowed to 4.1% from 4.5% last month but is still +20.8% vs 21 and +25.8% vs 19. 39.5% of their 51.2% growth since 19 is real and they remain 3rd in performance behind Relevant & Total. Recovery started late but inflation started early. Growth: 6.6%; Avg 19>24:+8.6%, Real: +3.7%. They just account for 13.5% of Total Retail $, but their performance improves the overall retail numbers.

Auto (Motor Vehicle & Parts Dealers) – They 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 22 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 21>22. This is bad but their Y/E real 2022 sales numbers were much worse, down -8.2% vs 2021 and -8.9% vs 2019. 2023 was a true rollercoaster but the $ set a new record, $1.595T. $ fell in Jan 24 but grew in Feb>Mar. However, actual & real $ vs Mar 23 & 21 are negative plus real Ytd vs 21. Prices vs 23 are -0.8%. Only 23% of 19>24 growth is real. Growth: 2.1%; Avg 19>24: +6.0%, Real: +1.5%.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and need less gas. They 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 23, then strongly fell in Mar>Jul to -20.2%. In August they rose to -3.7%. In Sep they were +2.7% but began deflating to -4.2% in Feb. In Mar they are +1.0%. Pricing is a big factor in the $ drop vs 23 but real $ vs Mar 21 & Ytd vs 21 & 19 are also negative. Growth: -3.0%; Avg 19>24: +5.4%, Real: -1.0%. They 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, and they led the way in Total Retail’s recovery. Sales got on a roller coaster in 2022 but 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, sales continued on the roller coaster. A December lift set a new monthly record of $494.7B and annual record of $4.997T. Sales fell in Jan>Feb 24 but rose in March, which is normal. However, the 9.5% lift is 24% below the 92>23 avg and the YOY lift of 3.1% is down 36% from avg. Also, real sales vs Mar 21 turned negative after 4 straight months of all positives. However, 54% of their 44.2% 19>24 growth is real – #1 in performance. Growth: 3.8%; Avg 19>24: +7.6%, Real: +4.3%. This is where America shops. They finished 2023 and started up 2024 strong but in March their recovery appears to be slowing. This is concerning.

Inflation is still low, but the cumulative impact is still there. Sales increases are still small, which is very evident in March. It is also significant that the number of real drops vs 23 & 21 increased to 7 from 1 in February. Restaurants are still doing well, but the Auto group has now joined Gas Stations in turmoil. Although not as visible, the biggest concern is with Relevant Retail. Sales increases are markedly lower and real sales vs Mar 21 turned negative after 4 months of all positives. Consumers are still spending more $ and generally buying more product, but progress has definitely slowed.

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

  • Relevant Retail: Growth: 3.8%; Avg: +7.6%, Real: +4.3%. All were up from Feb. Vs Mar 23: 5 were up, Real: 7. Vs Mar 21: 6 were up, Real: 4. Vs 19: All were actually up. Only Dept Stores & Furnishing stores were really down.
  • All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Sales are up 11.8% from February. Their actual $ are only up Ytd vs 21 & 19. Their real numbers are only up vs Mar 23, +0.8%. They are even really down vs 2019. Growth: -1.4%; Avg 19>24: +0.4%, Real: -1.6%.
  • Club/SuprCtr/$- They fueled a big part of the recovery because they focus on value which has broad consumer appeal. $ales are +13.2% from February. In fact, both actual and real sales are positive in all measurements. However, only 44% of their 33.9% 19>24 lift is real – inflation’s impact. Note: Growth exceeds Avg. Growth: 6.1%; Avg: +6.0%, Real: +2.8%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Actual $ are +8.3% from February and up monthly and Ytd vs 22, 21 & 19. However, inflation hit them hard. Real $ are down vs 21 and only 14% of the growth since 2019 is real. Growth: 2.8%; Avg 19>24: +5.7%, Real: +0.9%.
  • Health/Drug Stores – Many stores are essential, but consumers visit less frequently than Grocery stores. $ are +5.4% from Feb. Actual $ are down vs Mar 23 and real $ are down vs Mar 23 & 21. Inflation has been low so 66% of their 27% growth from 2019 is real. Note: Their growth is now below the 19>24 avg. Growth: 3.6%; Avg 19>24: +4.9%, Real: +3.3%
  • Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Sales are up 15.4% from February and positive in all comparisons, actual & real vs 22, 21 & 19 except real sales vs Mar 21. Plus, 70% of their 19>24 growth is real. Growth: 3.4%; Avg 19>24: +3.8%, Real:+2.7%
  • Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices are now deflating but they were high in 2022. Sales are +10.2% from January but negative in all other measurements but actual Ytd sales vs 2019. They have sold less product in 2024 than 2019. Growth: -8.4%; Avg 19>24: +2.3%, Real: -0.5%
  • Electronic & Appliances – This channel has many problems. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 21. $ are up only 3.2% from February. This small lift caused actual $ vs Mar 23 & 21 to turn negative. Other measurements are positive. Note: Their growth again exceeds the average. Growth: 1.3%; Avg 19>24: +0.6%, Real: +3.3%.
  • 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. Prices are still deflating, and sales are up 14.6% from February but they are only positive vs 2019. Prices may be deflating but they are still high, 18.8% above 21. Real sales are negative for all but Ytd vs 21 & 19. Also, just 24% of their 19>24 sales growth is real. Growth: -5.1%; Avg 19>24: +5.6%, Real: +1.5%.
  • 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. Actual sales are +14.4% from February but down for all but Ytd vs 2019. The only positive real sales measurements are Ytd vs 23 & 19. Their inflation rate has been lower than most groups so 73% of their 29.3% growth since 2019 is real. Growth: -1.5%; Avg 19>24: +5.3%, Real: +3.9%.
  • 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 +10.9% vs February and are again positive in all measurements – both actual & real. They are still 2nd to NonStore outlets in the percentage increase vs 19 and vs 21. 73% of their 53.6% 19>24 growth is real. Growth: 4.6%; Avg 19>24: +9.0%, Real: 6.8%.
  • NonStore Retailers – 90% of their $ comes from Internet/Mail Order/TV. The pandemic accelerated online spending. They ended 2020 +21.4%. The growth continued in 2021 as sales exceeded $100B for the 1st time and they broke the $1 Trillion barrier. $ales are +6.4% from February. Their YOY growth fell to +5.6% in Mar 24, 44% below average, but they are positive in all measurements. 81% of their 106.5% 2019>24 growth is real. Growth: 8.7%; Avg: +15.6%, Real: +13.3%

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, inflation has slowed considerably from its June 22 peak, which has helped the Retail Situation. As expected, Sales grew from February. However, the lift was below average for most channels. The YOY monthly increase is also slowing. The Relevant Retail lift vs Mar 23 was 36% below its average 4.9% increase and 6 of 11 channels actually had a decrease. Among the 5 with increases, only SupCtr/$ Stores had a double-digit lift over 23. Inflation is low and now slightly deflating in most channels. However, we are still seeing the impact of high cumulative inflation. Only a few channels are doing well. The slowing of the  YOY sales increase has become the biggest problem. In March, only SupCtr/Club/$ & Electronics had a Ytd lift above their 19>24 Avg, down from 3 in February, which was still bad. Relevant Retail is now really down Ytd vs 21, after 4 straight months of all positives. The recovery has definitely slowed.

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 since 2021 to show cumulative inflation.

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

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

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

Petflation 2024 – March Update: Turns up to +3.8% vs 2023

The monthly Consumer Price Index peaked back in June 2022 at 9.1% then began to slow until turning up in Jul/Aug 2023. Prices fell in Oct>Dec 23, but turned up again in Jan>Mar 24. The CPI increased in March to +3.5% from +3.2% in February. Grocery prices fell -0.01% from February, but inflation rose to 1.2% from 1.0% due to a -0.2% price drop in 23. However, after 12 straight months of double-digit YOY monthly increases, grocery inflation has now had 13 consecutive months below 10%. As we have learned, 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.

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 considerably since June 2022, but Petflation generally increased until June 2023. It passed the National CPI in July 2022. At 3.8% in March, it is still 9% above the national rate, but down from +52% in January. We will look deeper into the numbers. The 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 24 vs 23 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>23, 21>22, 20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2024 vs 2019 and vs 2021 to see the full inflation surge.
    4. Average annual Year Over Year inflation rate from 2019 to 2024
  • 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 22 to March 24. We will use December 2019 as a base number so we can track the progress from pre-pandemic times through an eventual recovery. This chart is designed to give you a visual image of the flow of pricing. You can see the similarities and differences in segment patterns and compare them to the overall U.S. CPI. The year-end numbers and those from 12 and 24 months earlier are included. We also included and highlighted (pink) the cumulative price peak for each segment. In March, Pet prices were up 1.0% from February. All but Supplies were up, with Veterinary leading the way, +2.5%.

In Mar 22, the CPI was +11.9% and Pet prices were +9.2%. Like the CPI, prices in the Services segments generally inflated after mid-2020, while Product inflation stayed low until late 21. In 22 Petflation surged. Food prices grew consistently but the other segments had mixed patterns until July 22, when all increased. In Aug>Oct Petflation took off. In Nov>Dec, Services & Food prices continued to grow while Vet & Supplies prices stabilized. In Jan>Apr 23, prices grew every month except for 1 dip by Supplies. In May Products prices grew while Services slowed. In June/July this was reversed. In August all but Services fell. In Sep/Oct this was reversed. In Nov, all but Food & Vet fell. In Dec, Supplies & Vet  drove prices up. In Jan>Mar 24 Pet prices grew despite a few drops by all but Services. Total Pet, Vet & Services are at their pricing peak.

  • U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 21 and continued to grow until flattening out in Jul>Dec 22. Prices turned up Jan>Sep, dipped in Oct>Dec, then rose Jan>Mar 24, but 32% of the 21.5% increase in the 51 months since Dec 2019 happened in the 6 months from Jan>Jun 2022 – 12% of the time.
  • Pet Food – Prices were at or below Dec 19 levels from Apr 20>Sep 21. They turned up and grew, peaking in May 23. In Jun>Aug they dipped, grew Sep>Nov, fell Dec>Feb, then rose in Mar. 94% of the 22.7% lift came in 22 & 23.
  • Pet Supplies – Supplies prices were high in Dec 19 due to tariffs. They then had a “deflated” roller coaster ride until mid-21 when they returned to Dec 19 prices and essentially stayed there until 22. They turned up in Jan and hit an all-time high, beating the 2009 record. They plateaued Feb>May, grew in June, flattened in July, then turned up in Aug>Oct setting a new record. Prices stabilized in Nov>Dec but grew in Jan>Feb 23. They fell in Mar, but set a new record in May, then continued the rollercoaster ride with a drop in March, after Dec>Jan lifts.
  • 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 prices got on a rollercoaster in Mar>Jun. They turned up Jul 22>Mar 23 but the increase slowed in April and prices fell in May. They rose again Jun>Aug, fell in Sep>Dec, then spiked in Jan>Mar.
  • Veterinary – Inflation has been consistent. Prices turned up in Mar 20 and grew through 21. A surge began in Dec 21 which put them above the overall CPI. In May 22 prices fell and stabilized in June causing them to fall below the National CPI. However, prices rose again and despite some dips they have stayed above the CPI since July 22. In 23 prices grew Jan>May, stabilized Jun/Jul, fell in Aug, grew Sep>Dec, fell in Jan 24, but set records in Feb/Mar.
  • Total Pet – Petflation is a sum of the segments. In Dec 21 the price surge began. In Mar>Jun 22 the segments had ups & downs, but Petflation grew again from Jul>Nov. It slowed in Dec, grew Jan>May 23 (peak), fell Jun>Aug, grew in Sep/Oct, then fell in Nov. In December prices turned up and grew through March to a new record high. Prices are at record highs for Total Pet and the Service segments and Petflation has been above the National CPI since Nov 22.

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>24 & 19>24. Petflation grew to 3.8%, up from 3.5% in February. It is still only 9% higher than the National rate. In January, it was +52%. The chart will allow you to compare the inflation rates of 23>24 to 22>23 and other years but also see how much of the total inflation since 2019 came from the current pricing surge. We’ve included some human categories to put the pet numbers into perspective.

Overall, Prices were +0.6% from February but were +3.5% vs March 23, up from +3.2% last month. Grocery inflation also grew slightly to +1.2% from +1.0%. 2 of 9 categories had a price decrease from last month – Pet Supplies & Groceries. There were also 2 in January & February, but none were repeats. The national YOY monthly CPI rate of 3.5% is up but still just 70% of the 22>23 rate and 41% of 21>22. The 23>24 inflation rate is below 22>23 for all categories but Veterinary & Medical Services. In our 2021>2024 measurement you also can see that over 65% of the cumulative inflation since 2019 occurred in all but 2 segments – Medical Services & Haircuts – both Services categories. Service Segments have generally had higher inflation rates so there was a smaller pricing lift in the recent surge. Pet Products have a very different pattern. The 21>24 inflation surge provided 99% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were just starting to recover from a deflationary period. Services expenditures now account for 64.1% of the National CPI so they are very influential. Their current CPI is +5.3% while the CPI for Commodities is +0.6%. This clearly shows that Services are driving most of the current 3.5% inflation.

  • U.S. CPI– Prices are +0.6% from January. The YOY increase is 3.5%, up from 3.2%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 75% higher than the target. After 12 straight declines, we had 2 lifts, a stable month, 2 consecutive drops, now 3 of 4 with lifts – not good news! The current rate is 30% below 22>23 but the 21>24 rate is still 17.9%. That is 78.2% of the total inflation since 2019. Inflation was low in early 2021.
  • Pet Food– Prices are +0.8% vs February and +1.8% vs March 23, down from 2.6%. However, they are still 1.5 times the Food at Home inflation rate. The YOY increase of 1.8% is being measured against a time when prices were 20.3% above the 2019 level and the current increase is now below the pre-pandemic 2.1% increase from 2018 to 2019. The 2021>2024 inflation surge has generated 93.6% of the total 24.9% inflation since 2019.
  • Food at Home – Prices are down -0.01% from February, but the monthly YOY increase is 1.2%, up from 1.0% last month. It is still radically lower than Jul>Sep 2022 when it exceeded 13%. The 25.9% Inflation for this category since 2019 is 13% more than the national CPI and is in 3rd place behind Vet & Pet Services. 79.5% of the inflation since 2019 occurred from 2021>24. This mirrors the national CPI, but we should note that Grocery prices began inflating in 2020>21 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 were down -0.4% from February but up 0.9% vs March 2023. They have the lowest increase since 2019. As we noted, prices were deflated for much of 2021. As a result, the 2021>24 inflation surge accounted for 100+% of the total price increase since 2019. They reached an all-time high in October 2022 then prices deflated. 3 months of increases pushed them to a new record high in Feb 23. Prices fell in March, bounced back in Apr/May to a new record high, fell in Jun>Aug, grew in Sep>Oct, fell in Nov, grew again in Dec>Feb, then fell in March.
  • Veterinary Services– Prices are +2.5% from February and are +9.6% from 2023, a March record and the highest rate in the Pet Industry. Plus, they are the leader in the increase since 2019 with +39.0% and since 2021, +28.7%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 23 & now 24, so 73.6% of the cumulative inflation since 2019 occurred from 2021>24.
  • 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. Prices grew 6% from February, and they are +2.1% vs last year. Medical Services are not a big part of the current surge as only 41% of the 15.1% 2019>24 increase happened from 21>24.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021. In 2024 prices have surged, +0.3% from February and +4.8% vs last year. However, inflation is still well below the +8.0% back in March 23. Now, 68% of their total 19>24 inflation has occurred since 2021. In December, it was only 49%. BTW: They have the 2nd highest 19>24 rate.
  • Haircuts/Other Personal Services – Prices are +0.1% from February and +3.8% from 23. 4 of the last 5 months have been <4.0%. Inflation has been rather consistent as 57% of the inflation from 19>24 happened in 60% of the time.
  • Total Pet– Petflation is 60% lower than the 22>23 rate and again only 9% higher than the U.S. CPI. For March, 3.8% is still the 5th highest rate since 1997. Vs February, prices grew +1.0% as all but Supplies had lifts, especially Vet at +2.5%. A Feb>Mar price increase has happened in 23 of the last 27 years, with an average lift of 0.3%. So, it was no surprise but 3 times stronger than average. In terms of Petflation, 2024 has returned to a more normal pattern with the 2 Service segments leading the way.

Now, let’s look at the YTD numbers.

The inflation rate for 22>23 was the highest for 4 of 9 categories – 3 Pet – Pet Food, Services & Total Pet, plus Groceries. The 23>24 rate is much lower for all but Veterinary, where it actually has the highest rate of any year. 21>22 still has the highest rate for the National CPI & Pet Supplies. The average annual national inflation in the 5 years since 2019  is 4.2%. Only 2 of the categories are below that rate – Medical Services (2.8%) and Pet Supplies (2.3%). It comes as no surprise that Veterinary Services has the highest average rate (6.5%), but all 5 other categories are +4.6% or higher.

  • U.S. CPI – The 23>24 rate is 3.2%, up from 3.1% February, but down 45% from 22>23 and 60% less than 21>22. It is also 24% below the average YOY increase from 2019>2024, but it’s still 71% more than the average annual increase from 2018>2021. 79% of the 22.7% inflation since 2019 occurred from 2021>24. Inflation is a big problem that started recently.
  • Pet Food – Ytd inflation is 3.0%, down from 3.7% in February and 80% less than the 22>23 rate. Now, it is also 27% lower than 21>22 but 50% above the average rate from 2018>2020. Pet Food has the highest 22>23 rate on the chart and remains in 2nd place in the 21>24 rates. Deflation in the 1st half of 2021 kept YTD prices low then prices surged in 2022 and especially in 2023. 92% of the inflation since 2019 occurred from 2021>24.
  • Food at Home – The inflation rate has slowed remarkably. At 1.1%, it is down 89% from 22>23, 87% from 21>22 and even 69% from 20>21. However, it is still 10% higher than the average rate from 2018>20. It is also down to a tie for 3rd for the highest inflation since 2019 but still beat the U.S. CPI by 15%. You can see the impact of supply chain issues on the Grocery category as 79% of the inflation since 2019 occurred from 2021>24.
  • Pets & Pet Supplies – Prices increased in Jan & Feb, then fell in March but the 2024 inflation rate of 0.7% is only higher than the -3.2% deflation in 20>21. Supplies have the lowest inflation since 2019. The only significant increases were ≈6.2% in 22 & 23. The 2021 deflation created a unique situation. Prices are up 12.1% from 2019 but 114% of this increase happened from 2021>24. Prices are up 13.8% from their 2021 “bottom”.
  • Veterinary Services – Inflation was high in 2019 and steadily grew until it took off in late 2022. It seemed to peak in 2023, but has now grown even stronger at the start of 2024. On the chart they are #1 in inflation since 2019 and since 2021. At +6.5%, they have the highest average annual inflation rate since 2019. It is 1.5 times higher than the National Average but 2.3 times higher than the Inflation average for Medical Services. Strong Inflation is the norm in Veterinary Services.
  • Medical Services – Prices went up significantly at the beginning of the pandemic, but inflation slowed in 2021. Ytd it is 1.3%. Except for 19>20, it has been between 2.1>2.9%. We are still seeing the impact of 2023 when prices actually deflated (-0.3%). This was the only deflationary year since the US BLS began tracking this category in 1935.
  • Pet Services – After falling in late 2023, prices have surged in 2024. The Ytd 23>24 inflation rate of 4.9% is 2nd to Veterinary in the Pet Industry. It is 39% less than 22>23 and 14% below 21>22. However, it is still 1.6 times higher than the 2018>21 average rate. Pet Services is 2nd in 19>24 inflation but only 5th in inflation since 2021.
  • Haircuts & Personal Services – The services segments, essential & non-essential, were hit hardest by the pandemic. The industry responded by raising prices. Ytd inflation is 3.9%, which is 32% below the 20>21 peak but still 20% above the 18>20 average. Consumers are paying 25% more than in 2019, which usually reduces the frequency.
  • Total Pet – Ytd Petflation is 4.0%, down from 4.1%. It is 61% less than 22>23 but 76% higher than the 2018>21 average rate. It is also still 1.25 times the national CPI. Petflation is slowing in 2024. This is primarily being driven by drops in Pet Food inflation rates. Supplies inflation was stable monthly & YTD. Services inflation fell slightly despite prices reaching a new record high. Veterinary hit record monthly & YTD rates but it was not enough to overcome the drops.

Petflation is slowing, but it is still strong, with the 5th highest rate for March in history. It is also still higher than the National CPI. Back In 2021 it was only half of that rate. One fact is often ignored in the headlines – Inflation is cumulative. Pet prices are 22.1% above 2021 and 26.6% higher than 2019. Those are big lifts. In fact, in March prices for Total Pet & the Service segments are the highest in history. Food prices are only 0.5% below their peak and Supplies prices are only down 0.4%. Only Supplies prices (+12.2%) are less than 24.9% higher than 2019. Since price/value is the biggest driver in consumer spending, inflation will affect the Pet Industry. Non-Vet Services will be the least impacted as it is driven by high income CUs. Veterinary will likely see a reduction in visit frequency. The product segments will see a more complex reaction. Supplies will likely see a reduction in purchase frequency and some Pet Parents may even downgrade their Pet Food. Products will see a strong movement to online purchasing and private label. We saw direct evidence of this impact at GPE 24 where a record number of exhibitors offered OEM services. Strong inflation has a widespread impact.

Retail Sales – The Path from 2019 to 2023

In this report we fill take a closer look at the Retail journey from 2019 to 2023. It was a traumatic time for America and the retail marketplace. We experienced a massive pandemic followed by the worst inflation in 40 years. Granted, much of the pricing surge was started by supply chain issues due to the pandemic. However, they were different problems with different solutions for recovery.

Our analysis will include an overview of annual retail sales from 2019 to 2023 followed by a more in depth look in which we factor inflation into the numbers. This gives us a “real” view of the situation as it shows the change in the amount of product sold. We will look at the Big Retail groups then drill deeper into the pet relevant channels. First, here is an overview of the Big 4 Groups and Total Retail.

You immediately see the impact of the 2020 pandemic as sales dropped in Restaurants, Auto and Gas Stations. The drops were especially large in Restaurants and Gas Stations due to closures and the “stay at home” attitude. Total Retail had an increase every year, even 2020. The 2020 lift was solely due to Relevant Retail. They are the only member of the Big 4 to have consistent annual growth. The only drop outside of 2020 was by Gas Stations. They had ridiculously high inflation. In 2023, it’s cumulative impact was very visible as their total $ dropped. Now, let’s look a little deeper. The next chart tracks the actual and real (inflation factored in) annual $ changes. We have included 2018>19 so that you can compare 19>23 to a pre-pandemic year.

The first thing that you notice is that there are a lot more negatives. There were 9 “real” annual sales drops added to the 4 actual drops. 36% of all real annual measurements were negative. Plus, the average real growth in Gas Stations is negative. Only 16% of actual annual sales measurements were negative. This clearly demonstrates the impact of inflation. Another result of inflation is very evident. All groups and Total Retail had a strong COVID recovery with their biggest lift occurring in 2021. Inflation peaked in 2022. You will note that the annual actual increases were progressively smaller in 2022 & 2023 – another immediate and cumulative impact of inflation.

Now let’s take a more detailed look at each of the big groups.

Total Retail – Thanks to Relevant Retail, they eked out a +0.9% increase in 2020. Commodity prices actually deflated -0.3% in 2020. Things changed in 2021. They had a strong 18.4% recovery as sales grew by $1.1T. However, strong inflation began, +7.8% so only 53% of the growth was real. The 21>22 increase slowed to 9.6% but Inflation grew to 10.9%. (Peak: June, 13.6%) The result was a -1.2% drop in real sales. Inflation slowed to 1.2% in 23 but the $ increase dropped to 3.2%, about the same as 18>19 but 59% below average. However, 60% was real.

Restaurants – They were hit hard by the pandemic as sales fell -15.7%. Inflation also slowed from 3% to 2%. Consumers returned to eating out in 2021. Sales increased 29.5%, despite the fact that inflation more than doubled to 4.4%. The increase slowed to 15.7% in 2022 as inflation peaked at 7.5%. In 2023, sales growth was still in double digits at 11.3% and inflation fell slightly to 7.0%. But you see clear evidence of its cumulative impact. In 21, 81% of their growth was real. In 23, it was down to 35%. Overall, 36% of their 40.6% 19>23 growth is real.

Auto – In 2019, prior to the pandemic, they had a small, 2.6% increase and inflation was only 0.7%. The pandemic brought a small, -2.3% drop in sales and inflation inched up to 1.6%. In 2021, sales took off, +22.8%, but so did inflation, 13.9% (the peak). Only 35% of the growth was real. In 22, inflation was 11.4%. Sales were only up 3.1% so real sales were down -7.5%. In 23, prices deflated -1.4% and sales grew by 4.2%. However, just 5% of their 28.9% growth since 2019 is real. Essentially, they are selling the same amount as 2019, but charging 27.1% more.

Gas Stations – Amazingly, prices deflated in 2019, -3.6%, but sales still fell -1.9% because consumers only bought 1.8% more gas. Sales plummeted -16.4% in 2020, despite a -16.3% drop in prices. People bought -0.2% less gas. Prices exploded in 21 & 22, with 30+% increases in both years. Sales also increased over 30% in both years, but consumers bought 1>2% less. In 23, prices fell -10.6%, but it didn’t help as sales fell -11.4%. People bought 1.0% less. In 2020, consumers began driving a lot less, but they radically increased the amount of home deliveries. We bought -4.7% less gas in 23 than in 19 but in every year, we bought 98>99% of the amount bought the previous year.

Relevant Retail (Total less Restaurants, Auto & Gas Stations) – 2018>19 growth was 3.5%, 97% was real because inflation was only 0.1%. In 2020 they had the only growth, +7.9%, which kept Total Retail positive. Inflation was 1.4% so 81% of the lift was real. In 21, they had a strong increase, but inflation doubled to 2.9%. However, 76% of the growth was still real. In 22, prices exploded to +8.1%. Sales still increased but the lift slowed to 7.9% and real sales turned slightly negative, -0.1%. In 23, inflation plunged to 3.2% but prices were still 16.4% above 2019. The sales increase  fell to 3.5%. This was the same as 18>19 but only 6% was real – cumulative inflation.

Recap– The situation is obviously complex. In 23, all groups had a 28+% increase from 2019 but when you consider inflation, the percentage of their increase that was real peaked at 48% for Relevant Retail. Gas Stations were even really down -4.7%. Relevant Retail has a number of channels, which took many different paths. Let’s look deeper.

Here is an overview of the most Pet Relevant Retail Channels

There is a lot of consistency. 7 of 11 channels had consistent annual growth so they peaked in 2023. Of the other 4 channels, Discount Department Stores & Office, Gift & Souvenir Stores had the same pattern – drops in 2020 & 2023 with sales peaking in 2022. Home Center/Hardware stores had consistent growth until sales dropped in 2023. Sporting Goods Stores peaked in 2021 then fell in 2022. They have essentially plateaued at their 2021 peak. All channels sold more in 2023 than in 2019. The biggest increases came from the Internet, +90.6%, A/O Misc. (includes Pet),+53.7%, and Farm Stores, +53.0%. Now, let’s look at the details.

Relevant Retail, 11 Channels – 19: 8 were actually & really up. 20: Inflation was still low, at 1.4% so the number really & actually up grew to 9; 21: The CPI grew by 2.9% but actual & real sales increased for all 11. 22: Prices grew by 8.1%. 10 had sales increases but only 4 were real and Relevant Retail sales were really down -0.1%. 23: 8 were up and 5 were real. However, the lifts were smaller. The lift, 3.5%, was equal to 2019 but the percentage of real growth fell from 97% to 6%.

Home Ctr/Hardware – 19: The CPI was low at 1.5% but sales fell -2.6%. 20 & 21: Sales took off, by about +13% in both years, even as the CPI grew from 1.8% to 3.5%. 22: Prices jumped up by 10.9%. $ still increased by 6.7% but real sales were -3.7%. 23: Prices grew 7.4% and sales fell -4.2%. Now, only 14% of their 31.1% 19>23 growth is real.

Farm/Garden – 19: Unlike Home Ctrs, they had a small lift, +2.6%. 20>23: The same pattern as Home Ctrs/Hdwe but their 20 & 21 lifts were 33+% larger. Their 22 & 23 lifts were not enough to overcome inflation so real sales fell -3.1% in 22 and -4.5% in 23. However, 42% of their 53% 19>23 growth was real – 3 times better than Home Ctrs.

Supermarkets – 19: Inflation was 0.9% and sales grew 3.4%. 20: The CPI was 3.5% but the $ took off, +10.1%. 21: Inflation stayed at 3.5% but the increase slowed to 3.8%, with only 0.3% real growth. 22: The CPI jumped by 11.4%. Sales were up 8.9% but really down -2.3%. 23: Inflation slowed to 5.0% but the $ increase was only 2.8% and real sales were down -2.2%. Only 8% of their 27.9% 19>23 growth is real.

Drug Stores – 19: The CPI was 0.0% and $ grew 1.7%. 20: The increase quadrupled to 7.0% and prices only grew by 0.5%. 21: Prices deflated -1.5% and sales were +6.6%. 22: The CPI grew to 2.9% and the $ increase slowed to 2.5% so real sales were -0.4%. 23: Inflation grew to 4.2% but $ had their biggest lift, +8.3%. Despite rising inflation, 73% of their 26.5% 19>23 growth is real.

Sporting Goods – 19: The CPI was 1.2% and sales grew 2.2%. 20: Inflation stayed at 1.2% but sales took off, +17.2%. 21: inflation increased over 5 times to 6.7% but the lift increased to 22.3% reaching their 19>23 sales peak. 22: Prices grew 5.2% and sales dropped -1.2%. 23: Prices fell -0.5% but sales only grew 0.1%. They have basically plateaued near the 2021 level but 61% of their 41.8% 19>23 growth is real.

Discount Dept Strs: 19: Prices deflated -0.1% but $ still fell -2.5%. 20: The CPI was only 0.3% but sales still dropped -4.3%. 21: Prices were up 2.4% but their sales recovered, +12.3%. 22: Inflation more than doubled to 5.7% and the $ lift slowed to 1.4%. Real sales were -4.1%. 23: The CPI fell to 2.2% but sales decreased by -1.4%. Their sales are up 7.6% from 2019 but their real sales are down -3.1%.

Clubs & SuperCenters: 19: The CPI was 0.1% and sales grew 2.9%. 20: CPI was 1.6%. Sales grew 5%. 21: CPI increased to 2.8% but sales increased by 8.4%, 5.5% real. 22: Inflation peaked at 7.8%. $ again grew by 8.4% but real growth fell to 0.5%. 23: The CPI slowed to 3.4% but the cumulative impact caused growth to slow to 3.0% and real growth turned negative at -0.4%. Only 34% of their 27.1% 19>23 growth was real.

$/Value Stores: 19: CPI = 0.1%. Also, a 2.9% sales increase. 20: CPI = 1.6%. Sales spiked at +13.0%. 21: CPI = 2.8%. $ growth slowed to 3.7%. Real growth only 0.9%. 22: CPI jumped up to 7.8%. Sales growth increased to 4.3% but real growth was negative, -3.2%. 23: CPI slowed to 3.4% and sales increased by 6.9% so real growth turned positive again at 3.4%. 40% of their 30.6% 19>23 growth was real, a little better than Clubs/SupCtrs.

Office/Gift/Souvenir – 19: CPI = -0.1%. Sales fell -2.1%. 20: CPI = 0.3%. Sales plummeted, -19.2%. 21: CPI = 2.4%, Sales had a strong recovery, +23.6%. 22: CPI jumped to 5.7% and growth slowed to 6.1%. 23: The CPI moved down to 2.2% but sales fell -3.6%. Although their actual sales are up 2.2% from 2019, they are really down -7.9%.

A/O Mscellaneous (22% Pet) – 19: CPI = -0.1% and sales grew 3.4%. 20: CPI = 0.3% and sales increased by 4.8%. 21: CPI increased to 2.4% but sales took off, +22.5%. 22: The CPI jumped to 5.7% and the lift slowed a little to 14.7% so now only 58% was real. 23: The CPI dropped to 2.2% but sales growth slowed to 4.4% and only 48% was real. Their overall 19>23 growth was 53.7% (2nd best) and 72% was real.

Internet/Mail Order – 19: CPI = -0.1%. Sales were +12.7%. 20: CPI = 0.3%. Sales skyrocketed, +35.2%. 21: CPI = 2.4%. Growth slowed but was still +15.4%. 22: CPI increased to 5.7% and sales were +12.2%. Now only 51% of the growth was real. 23: CPI dropped to 2.2% but sales growth slowed to 8.9%, 30% below 2019. They are by far the 19>23 growth leader, +90.6% and 79% of their increase was real.

Recap: The retail journey from 2019>23 was complex, so you have to look deeper than the overall sales to better understand what was happening. The Pandemic and the worst inflation in 40 years were major traumas. Factoring inflation into the data to get the real changes was especially important. You see that different channels took different paths. Retail has largely recovered from the Pandemic, but the price surge recovery is still ongoing.