Retail Channel Monthly $ Update – November Final & December Advance

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The Retail market hit bottom in April 2020 then began its recovery. The journey has been long and complex and Consumer spending behavior continues to evolve. Amazingly, we have not beaten the virus yet so we will continue to track any impact on the retail marketplace 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 begin Final Retail Report for November and then move to the Advance Report for December, giving us a first look at year-end 2021. 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 of the retail market to 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 November Final. Retail hit bottom in April 2020 but began recovery, hitting record $ in December. $ fell in January/February but set a new $ records in March and then again in May. Sales declined through September but turned up again in October & November. Here are the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The final total is $0.6B more than the Advance report projected a month ago. 2 groups were up and 2 were down. The specifics were: Auto: +$0.8B; Gas Stations: +$0.2B; Restaurants: -$0.2B; Relevant Retail: -$0.1B. Sales vs October were down for all groups but Relevant Retail. Total Retail $ales broke $600B for the 1st time in December. November $ales beat that number and in fact, set a new all time record. Auto continues to have the strongest recovery with an annual YTD growth rate since 2019 of +11.4%. A $ dip in November is normal for all but Relevant Retail as we start the holiday season. Importantly, for the 6th consecutive month, all groups were positive in all measurements vs 2020 or 2019.

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

  • Overall – 4 were down vs last month. Drug & Supermarket drops were minor while the Farm dip was normal. Office/Gift/Souvenir $ were down vs October & YTD vs 2019. November set a new $ record for Relevant Retail.
  • Building Material Stores – Their amazing lift has slowed as we move into winter. The surge came from pandemic spending patterns developed in 2020. Consumers began focusing on their homes. Their Spring lift has slowed in 2021 but Building and Farm stores are still going strong. Sporting Goods stores have a similar pattern. Sales took off in May 2020, hit a record peak in December and continued strong into 2021, peaking in March. $ slowed a little through October but set a new record in November. YTD they are +47.6% vs 2019, a Growth Rate of 21.5%!
  • Food & Drug – Supermarkets were +$77.7B in 2020. $ are down vs October but +7.3% vs November 2020. YTD $ are on par with the 2020 binge and +15.5% vs 2019. Drug Stores were +$17B (+5.7%) for 2020. They had a record March. Sales have been relatively stable since then. Their YTD $ are +7.4%.
  • General Merchandise Stores – $ in all channels fell in Jan & Feb then spiked in March. Monthly sales by channel have been up or down since then but GM set a new non-December sales record in November. Clubs/SuprCtrs & $ Stores are leading the way with a combined annual growth rate of +8.9%. These channels promote value. Their success reinforces its consumer importance. Disc. Dept. Strs again show all positive numbers, growing at 4.9%.
  • Office, Gift & Souvenir Stores– $ are down sharply from October (normal) but were +24.3% vs November 2020. COVID hit them hard. They are still down YTD vs 2019 but getting a little better. Recovery will take more time.
  • Internet/Mail Order – Their sales were +19.3% from October as we move into the holidays. Their COVID fueled growth continues. In November 2019, their avg annual growth rate was +12.9%. Now, it is +19.6% – up 51.9%
  • A/O Miscellaneous – This is a group of specialty retailers – chains and indies. 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 sales were up +12.1%. November 2021 was their 7th consecutive month over $10B and set a new record, $11.0B. YTD $ are +27.5% vs 2020 and +41.0% vs 2019. Avg Growth: 18.7% – 3rd Best

Relevant Retail began recovery in May and hit record $ in December. $ fell in Jan & Feb, turned up again in March and began a monthly up/down rollercoaster. November $ set a record and all channels but 1 are ahead of all 2020 & 2019 $. The big drivers are the Internet, SuperCtrs/Clubs/$ Stores and Hdwe/Farm. Now, the Advance numbers for December.

2020 was a memorable year. 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. Sales fell in both January and February but still set monthly sales records. Then they took off again in March, setting a new monthly sales record. April sales were down slightly but they spiked again in May to set yet another spending record. June>Sept $ fell but then came back in October>December. November & December set new records with December reaching $715B. Only Gas Stations were down vs November, but all were positive in all other measurements for the 7th straight month. 2021 is also memorable. All big groups set $ records. Total Retail broke the $7T barrier and Relevant Retail passed $4T. Other areas of the economy are still suffering and inflation has become a bigger factor in increases. However, consumers continue to spend “big bucks”, especially in Relevant Retail, and the overall Retail market continues its strong recovery.

Total Retail – In March and May Total Retail set new sales records. From June>Sept sales dipped slightly. October through year-end saw a resurgence with November & December setting all time records. December $ reached $715B and 2021 numbers totaled $7.4T, both barrier breakers. Sales finished +19.3% vs 2020 with an average annual sales growth rate since 2019 of 9.5%. The previous highest growth rate ever in records going back to 1992 was 8.23% in 1993>1994. More History: Sales fell in both 2008 & 2009. Total drop: -8.4%. Recovery took 2 years. 2010 & 2011. Total increase was +13.1%. Net increase 2007>2011: +3.6%. Avg Growth: +0.9%. Inflation Note: Retail $ were +16.9% vs December 2020. Inflation was +7.0% so up to 41% of the lift came from higher prices. The “Real” increase was +9.9%. In December 2019 (pre-pandemic), Retail $ were +5.5% over 2018. Inflation was 2.3%, 42% of the lift. The “Real” increase was +3.2%. Long term, strong inflation can slow spending but right now, Retail is far outperforming pre-COVID 2019.

Restaurants – This group has no negative measurements vs 2020 or 2019 for 7 straight months. February 2020 YTD sales were up 8.1% vs 2019. In March Restaurants started to close or cease in person dining and sales fell -$33.3B (-52.5%) vs 2019. Sales hit bottom in April at $30.1B, the lowest April $ since 2003. Sales started to slowly increase in May but never reached a level higher than 88% vs the previous year. 2021 started off slowly. Through February, YTD sales were -16.7% from pre-pandemic 2020 and -10.0% from 2019. In March sales took off and hit a record $76.5B in July. 7 of the last 8 months in 2021 exceeded $70B which produced a record year, $821B. +32.1% vs 2020 and +6.1% vs 2019. Avg Growth since 2019 = +3.0%

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 a record March and slowed only slightly from April>December as sales exceeded $119.8B in all 10 months – the 10 biggest months in history. Their campaign was amazingly effective in recovering the business in 2020 and generated a record $1.54T in 2021, up 23.6% vs 2020. Their Year-end Avg Annual Growth Since 2019 = +11.4% – the best performance of any big group.

Gas Stations – Gas Station $ales have been mixed. If you drive less, you need less gas. 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 and continued to grow to a record level in July. They fell in Aug/Sept but reached a record $55.3B in October. Sales fell in Nov/Dec, but they have been positive in all measurements vs 2019 & 2020 since March. This produced a record $588B for 2021, +36.6%. However, inflation comes to the forefront in this channel. Gas prices can be volatile. They dipped in the first 2 months of the pandemic but returned to more normal levels for the balance of 2020. Strong inflation began in 2021. In fact, December prices were 49.6% above 2020. That means that the 41.4% year over year $ lift in December was actually a decrease in the amount of gas sold. Year-end Growth Rate Since 2019 = +7.1%

Relevant Retail – Less Auto, Gas and Restaurants – This is considered the “core” of U.S. retail and traditionally accounts for about 60+% of Total Retail Spending. In looking at the individual channels in this group, we have seen a variety of results due to many factors, like 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. 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 2021 but set monthly records. In March they turned sharply up and then began an up/down $ roller coaster ride. Sales turned up in October and set a record in November which was blown away by $461B in December. March>December are 10 of the 12 highest $ months of all time and helped generate a record $4.47T in 2021, +14.1%. Relevant Retail has exceeded $361B in monthly sales 12 times. 11 of those have occurred since the onset of the pandemic. It is also very important that the Relevant Retail group has posted positive numbers versus last year and YTD for every month since April 2020 and their average YTD growth rate since 2019 is +10.5%. The recovery has become widespread as all channels have been positive in all measurements vs both 2020 and 2019 for 5 consecutive months. The primary recovery drivers were and continue to be Nonstore, Grocery, SuperCenters/Clubs/$ Stores plus a never ending “spring lift” from Hardware/Farm and Sporting Goods and growing help from Miscellaneous Stores (includes Pet).

Now let’s look at what is happening in the individual retail channels to see where the $ are coming from. December $ were up 13.3% from November and an increase occurred in 12 of 13 channels. Remember, the groups in the chart are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets.

Sales in 12 of 13 channels were up vs November but all were up vs December 2020, vs December 2019 and YE (Year-end) vs 2020 and 2019. (Relevant Retail Avg Annual Growth Rate since 2019 = +10.5%)

After hitting bottom in April 2020, Relevant Retail has beat the previous year’s $ for 20 consecutive months. They set an all-time record of $406.8B in December and finished 2020 +$260B vs 2019. 2021 was even stronger with record sales in every month and a new all-time record of $461.0B in December & YE: $4.47T. Essential channels were consistent drivers:

  • Nonstore Retailers – The biggest driver. Online shopping continues to grow in # of households and in $.
  • Food & Beverage – Grocery– Restaurant $ have come back but consumers continue to eat & drink more at home.
  • Bldg Materials/Garden/Farm– Their “Spring” lift may be ending but consumers are still focused on their homes.
  • SuperCtrs/Club/Value/$ Strs – They kept the GM channel strongly positive. Value is still a big consumer priority.

Regarding the Individual Large Channels (Includes YE Actual increase vs 2020 & Avg Annual Growth Rate since 2019)

General Merchandise Stores – Sales increased for all channels vs November and all other numbers were also positive. Even Department Stores $ are growing increasingly positive. After dipping to +7.5% in February, the avg growth rate by Club/SuperCtr/$ stores has stabilized at about 8.9% ever since. These stores are still the key to this channel.

  • All GM: +12.1%, Avg = +7.6%; Dept Stores: 21.7%, Avg = +1.5%; Club/SuprCtr/$: +10.2%, Avg = +8.9%

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. In Jun>Dec they beat 2020 $. Health/Personal Care finished 2020 at +1.8% but 2021 has been better. December was up 15.1% from November and YE $ are +9.5%% vs 2020 and +11.4% vs 2019.

  • Food & Bev: +4.2%, Avg = +7.9%; Grocery: +3.7%, Avg = +7.6%; Health/Drug Stores: +9.5%, Avg = +5.6%

Clothing and Accessories; Electronic & Appliances; Home Furnishings – March > Dec have been spectacular for all these channels. The increase in Clothing vs November was an incredible +41.0%. All were up vs last month, remained positive in all measurements vs 2020 or 2019 for the 10th consecutive month and ended 2021 at least 25% ahead of 2020.

  • Clothing: +48.4%, Avg = +6.2%; Electronic/Appliance: +25.2%, Avg = +3.0%; Furniture: +26.4%, Avg = +10.1%

Building Material, Farm & Garden & Hardware – The lift that began in 2020 has slowed but they have benefited from consumers focusing on their home needs. They ended 2020 +53B (+14.3%). Sales took off in March, set a record in April, but have slowed and stabilized around $39B, including the only Nov>Dec channel $ drop. 2021: +13.5%. Avg = +13.9%

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 +7.0% vs 2019. The growth accelerated in 2021 ending with a huge lift in December, up 30.7% from November to $13.5B, by far their biggest month ever. At year-end they were +28.6%. 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 +$1.2B, +0.9%. In March 2021 sales took off and reached the $14+B level in May. They have stayed there and set a record of $15.3B in October. Sales spiked spectacularly in December, setting a new monthly record of $17.1. At  year-end they were +27.3% with an Avg Growth = +13.3% (4th Best). Their recovery is very real.

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 made them the largest channel and every month in 2021 has produced record $. December set a new all-time monthly record of $115.4B and Year-end 2021 $ exceeded $1 Trillion, +13.6%. Avg Annual Growth= +17.4%

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 YOY sales decreases in history while December sales broke $600B for the first time. 2021 may be even more memorable. With a strong December, Total Retail and all major groups had a record year. Total Retail broke $7T for the 1st time. The Relevant Retail group began their recovery in May 2020 and kept Total Retail positive in 2020. They continued to grow in 2021 to a record $4.47T. The recovery was widespread. A few small channels are still struggling but all groups in the December chart, but Dept & Electronics Stores set sales records in 2021. FYI: Nonstore reached $1 Trillion and is the largest channel for the second consecutive year, with 23.5% of Relevant Retail $. The Holiday season also set records. It likely began early with a record October but Nov/Dec still “rule”. In 2021, Nov/Dec Relevant Retail $ were a record $868B, +14.0% from 2020. Some Services Outlets are still suffering but almost all Retail Channels have recovered. While some Consumer retail spending behaviors may have changed, the U.S. Retail Market is the strongest in history.