Retail Channel Monthly $ Update – April Final & May Advance

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In May 2020  the Retail market began its recovery after hitting bottom in April. The road back has been long and complex and Consumer spending behavior continues to evolve. In this report we will track the changes, migration between channels and the retail recovery with data from two reports provided by the U.S. Census Bureau.

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

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

Both reports include the following:

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

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

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

First, the April Final. Retail hit bottom in April but began recovery, hitting record $ in December. In January & February $ fell but were still records for those months. Sales skyrocketed in March, setting a new all time $ record. In April $ fell a bit but it were still the 2nd best in history. Here are the major retail groups. (All Data is Actual, Not Seasonally Adjusted)

The final total is $9.1B more than the Advance report projected a month ago. Led by Relevant Retail, all groups were up. The specifics were: Relevant Retail: +$5.8B Auto: +$1.9B; Restaurants: +$1.2B; Gas Stations: +$0.2B. Sales vs March were mixed but Total Retail $ were still the 2nd highest of all time. Total $ales broke $600B for the 1st time in December and has now done it 3 times. Auto has the strongest recovery and is in fact prospering – annual YTD growth rate since 2019 is +12.8%. Except for the spending dips by 2 groups vs March, all but Restaurants were positive in all other measurements. Restaurants are still slightly negative vs 2019 but the Retail recovery is strong.

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

  • Overall– 8 of 11 channels were down vs March but 9 of 11 were up vs April 2020 and 10 vs April 2019. In YTD $, 10 were up vs 2020 and 10 vs 2019. 9 were up vs both. April was down vs March, but still strong.
  • Building Material Stores – Their amazing lift continues. The ongoing surge came as a result of pandemic spending patterns developed in 2020. Consumers began focusing on their homes. Now we’re moving into the 2021 Spring lift, with Farm Stores again leading the way. Sporting Goods stores are not in this group but have a similar spending pattern. Sales took off in May, hit a record peak in December and continued strong into 2021, peaking in March. April $ fell slightly but are +124% vs 2020 and +58% vs 2019. YTD they are even +53% vs 2019.
  • Food & Drug – Supermarkets were +$77.7B in 2020. $ are down vs March and YTD 2020 due to last year’s binge buying. They are still up over 13% vs April 2019 and YTD 2019. Drug Stores ended up +$17B (+5.7%) for 2020. Their $ fell in April after a setting a record in March. All other measurements are positive and YTD $ are +5.8%.
  • General Merchandise Stores – $ in all channels fell in Jan & Feb then spiked in March. In April, sales in all but $ stores declined. Discount Store were having problems even before the pandemic, but now even they seem to have largely recovered, +8.7% YTD vs 2019. Clubs/SuperCtrs and $ Stores remain strong. These channels promote value. Their success vs both 2020 and 2019 reinforces its importance in Consumer spending decisions.
  • Office, Gift & Souvenir Stores– $ declined slightly from March but were +159% vs April 2020. The pandemic hit them hard. They are still down vs 2019 – monthly and YTD. Recovery is a long way off, but things are improving.
  • Internet/Mail Order – Although $ dropped in April the pandemic continues to accelerate this channel’s growth. In April of 2020, their YTD growth rate was +17.1%. In April 2021, it is +25.4% – a 48.5% increase.
  • A/O Miscellaneous – This is a group of small to midsized specialty retailers – chains and independents. It includes Florists, Art Stores and Pet Stores (22>24% of total $). Pet Stores were usually essential, but most stores were not. In May 2020 they began their recovery. Their 2020 total sales were up +11.6%. Although April $ were down from March, YTD sales are +31.4% vs 2020 and +46.9% vs 2019. This rivals the Internet. It’s looking good!

The Relevant Retail Segment began recovery in May, reached a record level in December, then $ fell in Jan & Feb. March sales set a record for the month, then the $ fell slightly in April. Almost all channels are showing growth. Currently the key drivers are the Internet, SuperCtrs/Clubs/$ Stores and Hdwe/Farm. Now, here are the Advance numbers for May.

2020 will always be a memorable year for both its traumas and triumphs. In April & May we experienced the 2 biggest retail spending drops in history, but the problems actually began in March. Retail sales began to recover in June and in October, YTD Total Retail turned positive for the 1st time since February. In December, Total Retail broke the $600B barrier – a historic first. While sales fell from their December peak, monthly sales records were set in both January and February. Then they took off again in March, breaking $600B again while setting a new monthly sales record of $633.1B. April sales were down slightly but were the second highest in history. Restaurant $ were down slightly from 2019. This was the only negative vs 2020 or 2019 for any group. In May, Auto had a slight, -0.1% decrease from April. All other groups increased sales. The result was yet another Total Retail spending record, $644.4B. Restaurants were still down slightly YTD vs 2019. Once again, this was the only negative for any big group vs 2020 or 2019. Some other areas of the economy are still suffering, and some spending behavior has changed but the overall Retail marketplace has strongly recovered.

Total Retail – In March, Total Retail hit $633.1B, a record for the most spending in any month in any year. In April, $ales dipped to $616.7B but were still $218.4B more than April 2020 – a record increase, which was more than double the size of last year’s record drop. That brings us to May. As we said, sales set another new record, $644.4B. Moreover, the current YTD average annual sales growth rate since 2019 is 8.7%, the strongest ever in records going back to 1992. Total Retail has not just recovered. It is stronger than ever.

Restaurants – This is the only big group with any negative measurements vs 2020 or 2019 . Last February YTD sales were up 8.1% vs 2019. The Pandemic changed that. Restaurants started to close or cease in person dining in March and sales fell -$33.3B (-52.5%) compared to March 2019. Sales bottomed out in April at $30.1, the lowest April sales since 2003. Sales started to slowly increase in May but never reached a level higher than 88% compared to the previous year. 2021 started off slowly. Through February,  YTD sales were down -16.7% from pre-pandemic 2020 and -10.0% from 2019. In March sales took off and grew steadily in April and May. Sales in both months exceeded 2019. YTD their $ are ahead of 2020 but still $6.3B (-2.0%) behind 2019. They are not “there yet” but their recovery is gaining strength.

Auto (Motor Vehicle & Parts Dealers)   – Staying home causes your car to be less of a focus in your life. Sales began to fall in March and hit bottom in April. Auto Dealers began combating this “stay at home” attitude with fantastic deals and a lot of advertising. It worked. They finished 2020 up 1% vs 2019 and have returned to a strong positive pattern in 2021. The “attitude” grew amazingly positive in March and slowed only slightly in April & May as sales exceeded $143B in all 3 months, by far the 3 biggest months in history. To show how well consumers responded to their campaign you just need to look at the data. This group has exceeded $110B in monthly sales only 11 times in history. 9 of those occurred after the onset of the pandemic.  YTD Avg Annual Growth Since 2019 = +13.0% – the best performance of any big group.

Gas Stations – Gas Station $ales have been a mixed bag. If you drive less, you visit the gas station less often. Sales turned down in March 2020 and reached their low point in April. They moved up but generally stayed about 15% below 2019 levels for the rest of 2020. In February they were still behind 2020 in monthly and YTD $ but ahead of 2019 in both measurements. In March, sales skyrocketed. They increased slightly in April and May and were 56.7% above May 2020. They have been positive in all measurements vs both 2019 and 2020 since March. Their comeback continues but there is another factor that must be considered – inflation. Gas prices can be pretty volatile. They dipped in the first 2 months of the pandemic but then returned to more normal levels for the balance of 2020. They began strongly inflating in 2021. In fact, the May 2021 prices were 56.9% above May 2020. That means that 100% of the 56.7% year over year lift in May came from higher prices. Analyzing retail can be complicated. YTD Annual Avg Growth Rate Since 2019 = +2.9%

Relevant Retail – Less Auto, Gas and Restaurants – This is what we consider the “core” of U.S. retail and has traditionally accounted for about 60% of Total Retail Spending. When you look at the individual channels in this group, you see a variety of results due to many factors – non-essential closures, binge buying, online shopping and a consumer focus on “home”. However, overall, April 2020 was the only month in which spending in this group was down vs 2019. Monthly $ales exceeded $400B for the first time ever in December ($407B). They finished 2020 up $260B, +7.1%. Their performance was the only reason that Total Retail was able to finish 2020 with positive numbers, +0.5%. Sales fell in January and February but set monthly records. In March they turned sharply up again, then dipped slightly in April but May brought the 2nd highest $ of all time. Currently, they are up $56.0B, +17.4% vs May 2020 and  +$260.2B, +17.5% YTD. We should note that that while December 2020 is still #1, March ($374.7B), April ($366.8B) and May ($378.9B) of 2021 are three of the five highest monthly totals of all time. It is also important that the Relevant Retail group has posted positive numbers versus last year and YTD for every month since April 2020 and their average YTD growth rate since 2019 now stands at +10.0%. Through May virtually all channels have now turned positive vs both 2020 and 2019. However, the primary drivers throughout the pandemic were and continue to be Nonstore, Grocery, SuperCenters/Clubs/$ Stores plus a never ending “spring lift” from Hardware/Farm and Sporting Goods.

Now let’s look at what is happening in the individual retail channels to see where the $ are coming from. May beat both April and March, and you will see that one of the increases vs 2020 was again literally “off the charts”. The groups are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets.

Sales in 10 of 13 channels were up vs April and 11 were up vs May 2020 $. Only 1 was down vs 2020 YTD while a different channel was down vs 2019 numbers. (Relevant Retail YTD Avg Annual Growth Rate since 2019 = +10.0%)

After hitting bottom in April 2020, Relevant Retail has now beaten the previous year’s $ for 13 consecutive months. The group set an all-time record of $407B in December and finished  2020 +$260B vs 2019. 2021 started strong, with record sales in every month. March > May ranked #2, #4 & #5 of all time. Essential channels are still the primary drivers:

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

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

General Merchandise Stores – Sales bounced back in May and all numbers are positive. Department Stores $ remain up vs 2020 but down vs 2019. They were having problems before the Pandemic. After dipping to +7.5% in February, the growth rate by Club/SuperCtr/$ stores has remained near the current 8.7%. These stores are still the key to this channel.

  • YTD Avg Annual Growth: All GM = +6.9%; Dept Stores = -1.8%; Club/SuprCtr/$ = +8.7%

Food and Beverage, plus Health & Personal Care Stores – Sales in Grocery were down in March>May from 2020 – No surprise, as these were 2020 binge months – especially March. The Health, Personal Care group finished 2020 at +1.8%. 2021 has started even better. With strong March > May sales, YTD they are +11.2% vs 2020 and +9.3% vs 2019.

  • YTD Avg Annual Growth: Grocery = +6.7%; Health/Drug Stores = +4.5%

Clothing and Accessories; Electronic & Appliances; Home Furnishings – March, April and May have been spectacular for all these channels. The increase vs May 2020 was again literally off the chart for Clothing. All of these groups were up vs April and remain positive in all measurements vs 2020 or 2019 for the 3rd consecutive month.

  • YTD Avg Annual Growth: Clothing = +2.7%; Electronic/Appliance = +2.3%; Furniture = +10.2%

Building Material, Farm & Garden & Hardware – Their Spring lift began on time in 2020 and has never stopped. They have greatly benefited from consumers focusing on their home needs. They finished 2020 +53B (+13.8%). Sales took off in March, set a record in April then dipped slightly in May. They are +21.1% YTD vs 2020. Avg Annual Growth = +15.0%

Sporting Goods, Hobby and Book Stores – Book & Hobby stores are open but Sporting Goods stores have driven the lift in this group. Consumers turned their attention to personal recreation and sales in Sporting Goods outlets took off. The group ended 2020 +5.5% vs 2019. The growth accelerated in 2021. January > May set monthly records and March had the most $ of any non-December month in history. May YTD they are +55.2% vs 2020. YTD Avg Annual Growth = +17.3%

All Miscellaneous Stores – Pet Stores were deemed essential but most other stores were not, so closures hit this group particularly hard. Sales hit bottom at -$3.8B in April then began to rebound. They finished with a strong December and ended 2020 down $1.0B, -0.7%. In March sales took off and the channel set a new all-time monthly record of $14.3B in May. Their YTD sales are now 33.2% above 2020 and 24.0% more than 2019. It appears that their recovery has become very real. YTD Avg Annual Growth = +11.4%

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV. The pandemic accelerated the movement to online retail. In February 2020 NonStore $ were 8.6% YTD. In December monthly sales exceeded $100B for the 1st time. They ended 2020 at +21.4%, +$162.9B. This was 63% of the total $ increase for Relevant Retail Channels. Their 2020 performance far exceeded their 12.9% increase in 2019 and every month in 2021 has produced record $. May was -0.2% vs April but still +8.2% vs 2020 and YTD $ are +21.0%. YTD Avg Annual Growth = +18.2%

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

Recap – 2020 was quite a year. April & May had the 2 biggest year over year sales decreases in history while December sales broke $600B for the first time. 2021 may become even more memorable. March>May became the 3 biggest $ales months in history with the 3 largest year over year monthly sales increases ever. The total increase was +$513B, almost triple (2.93 times) the -$175B decrease from March>May 2020. At yearend 2020, Restaurants, Auto and Gas Stations were still struggling but Auto had largely recovered. Relevant retail had segments that also struggled but overall, they led the way for Total Spending to finish the year +0.5% vs 2019. 2021 has started out even more positive. The Auto Segment is setting sales records. Gas Stations $, with help from inflation, are now all positive and YTD Restaurant $ are only slightly below 2019. As documented in the report, the recovery in Relevant retail has become real for virtually all channels and monthly sales continue to set records. Retail has recovered. The new question is, “How high can the $ go?”