Retail Channel Monthly $ Update – November Final & December Advance

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By 2021, the market had generally recovered from the impact of the pandemic. In 2022, we are being hit by extreme inflation, with rates higher than we have seen in 40 years. Obviously, this can affect retail sales, so we’ll continue to track the retail market with data from two reports provided by the Census Bureau and factor in the CPI from US BLS.

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

We begin with the Final Report for November and then go to the Advance Report for December. Our focus is comparing 2022 to 2021 but also YTD 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 in 2021
    • Current Month Real change – % vs same month in 2021 factoring in inflation
  • Current YTD change – % & $ vs 2021
    • Current YTD Real change – % vs 2021 factoring in inflation
  • Current YTD change vs 2019 – % & $
    • Current Real change YTD vs 2019 – % factoring in inflation
  • Monthly & YTD $ & CPIs which are targeted by channel will also be shown. (CPI details are at the end of the report)

First, the November Final. Only Relevant Retail and Total were up from last month but all were up for November & YTD vs 2021. However, considering inflation, only Restaurants and Gas Stations were up for the month and YTD, only Restaurants were up. Here is the November data for the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The November Final is $1.8B less than the Advance. Relevant Retail had the only positive: +$0.3B; Restaurants: -0.8B; Auto: No Change; Gas Stations: -$1.3B. 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. Only Restaurants and Gas Stations are really up for the month but again only Restaurants are really up in YTD $. Auto & Gas Stations also remain really down YTD vs 2019. The inflation impact on Relevant Retail is significant and concerning. Their Real YTD $ales vs 2021 have been negative for 8 straight months. They do have the best performance since 2019 as 60.9% of their 32.2% growth is “Real”.

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

Overall – 6 of 11 were up from October. Vs Nov 2021, 9 reported more $ but only 3 were really up. In YTD vs 2021, 10 reported increases but only 4 were real. Vs 2019, Discount Dept Stores are the only “real” negative. In Sep & Oct all were up.

  • Building Material Stores – Sales are down vs Oct for Home Ctr/Hdwe, but up 7.2% YTD vs 21. Farm stores are -8.5% vs Oct but +11.7% vs Nov 2021. YTD sales are +6.0%. The Bldg/Matl group has a YTD 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 36.6% since 2019. Importantly, 55% 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: 6.2%; Farm: 12.2, 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 YTD rate for Grocery products is 4 times higher than for Drugs/Med products. Drug Store $ are down from October but positive in all other measurements and 88% of their growth since 2019 is real. The Real Sales for Supermarkets are down for the month & YTD. Also, only 14% of their growth since 2019 is real. Avg Growth Rate: Supermarkets: +6.8%, Real: +1.0%; Drug Stores: +4.9%, Real: +4.3%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up 6.2% from October but down vs 2021. YTD sales are still 1.5% above 2021. Their current inflation rate is 2.7% which is down from 7.5% in April but YTD it is still 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 October and only Discount Dept Stores were down for the month and YTD vs 2021. All real numbers for all channels monthly and YTD vs 2021 are negative. Disc. Dept Stores were hurting before COVID and their YTD sales are again “really” down vs 2019. The other channels have 37% real growth. Avg Growth Rate: SupCtr/Club: 5.9%, Real: 2.1%; $/Value Strs: +7.8%, Real: +4.2%; Disc. Dept.: +2.6%, Real: -0.1%
  • Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are down 30% from October and Real Sales are down vs November 2021 but their 2022 sales growth has been strong enough to make them positive in all other measurements vs 2021 & 2019. They have made remarkable progress. Avg Growth Rate: +3.3%, Real: +0.6%
  • Internet/Mail Order – Sales are up 18% from October and set a new monthly record. They are positive for all other measurements, but their YTD growth rate is only half of their average since 2019. However, 89% of their 78.9% growth since 2019 is real. Avg Growth Rates: +21.4%, Real: +19.4%. 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 by December 2021 as annual sales reached $100B for the first time. Their sales dipped in January, July, Sept>Nov but all measurements have been positive for every other month. In 2022, they are by far the Sales increase leaders over 2021. Plus, 85% of their 56.4% growth since 2019 is real. Average Growth Rate is: +16.7%, Real: +14.6%. They are 2nd in growth since 2019 to the internet. I’m sure Pet Stores are helping.

There is no doubt that high inflation is an important factor in Retail. In actual $, 9 channels reported increases in monthly $ and 10 in YTD $ over 2021. When you factor in inflation, the number with any “real” growth falls to 3 for monthly & 4 for YTD. 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 December.

We have had memorable times since 2019. Some big negatives, including the 2 biggest monthly drops in history but a lot of positives in the Pandemic recovery. Total Retail reached $600B in a month for the first time and broke the $7 Trillion barrier in 2021.  Relevant Retail was also strong as annual sales reached $4T and all big groups set annual $ales records in 2021. In 2022 radical inflation is a big factor with the largest increase in 40 years. At first this reduces the amount of product sold but not $ spent. Only Gas Stations were down from Nov, but all groups were up vs December & YTD 2021. However, in the amount of product sold: Monthly: Only Relevant Retail was down. YTD: All were down but Restaurants.

Overall – Inflation Reality December inflation vs 2021 fell below the $ increase rate. Gas Stations were down vs Nov, but all are up for the month and YTD vs 2021. When you factor inflation into the data, all but Relevant Retail are really up for the month vs 2021. However, the real YTD sales vs 2021 are down for all but Restaurants for the 9th straight month.

Total Retail – Every month in 2022 has set a monthly sales record. December $ are $749.4B, a new all-time record. 2022 has become somewhat normal as sales dipped in September then grew in Oct>Dec. December $ are +7.8% vs November, +5.3% vs December 2021 and +9.2% vs YTD 2021. However, when you factor in inflation, monthly sales are up +0.5% but YTD sales are down for the 10th consecutive month. Plus, only 39% of the 31.5% growth since 2019 is real. Avg Growth Rate: +9.6%, Real: +3.9%. Even as inflation slows, it continues to have an impact.

Restaurants – They were hit hard by the pandemic and didn’t truly start to recover until March 2021. Sales in the last 9 months of 2021 exceeded $70B and 2021 was the biggest year in history, $876B. January sales fell from December but then turned up, setting new all-time monthly records in March>May. $ fell in June, set a new record in July and then fell again in Aug>Sep. October sales hit $90B for the 1st time, fell in November, then rose in December. They are the only big group that is positive in all measurements vs 2021 & 2019. Inflation slowed to 8.2% for December from 8.4% last month. However, it remains 7.5% YTD. 55.2% of their 32.4% growth since 2019 is real. Avg Growth Rate: +9.8%, Real: +5.6%. They only account for 12.7% 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 December being up. They have 4 down months in actual sales which are the only reported sales negatives by any big group vs 2021. This is bad but their real YTD sales numbers are much worse. Extremely high inflation has pushed their real YTD sales down -8.1% vs 2021, the worst of any group. Plus, their 23.8% growth since 2019 is really down -7.7%. Avg Growth: +7.3%, Real: -2.6%. Inflation slowed for 6 months then prices deflated in December. The 4 drops in $ales were tied to high inflation.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and obviously need less gas. This group started recovery in March 2021 and reached a record $584B for the year. Sales fell Jan>Feb, turned up Mar>Jun, fell in Jul>Sep, up in Oct then down in Nov>Dec. They have the biggest increases vs 2021 and 2019 but it is not reality. Gasoline inflation slowed then deflated -0.9% in December. However, it is 32.1% YTD. Monthly real sales are again positive, but YTD sales are still really down -2.2% vs 2021 and -2.5% vs 2019. Avg Growth Rate: +13.9%, Real: -0.9%. The YTD numbers show a big impact of inflation. Consumers spend more but buy less, even less than they bought 3 years ago.

Relevant Retail – Less Auto, Gas and Restaurants – This the “core” of U.S. retail and accounts for 60+% of Total Retail $. This group 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 fell in Jan>Feb, went on an up/down roller coaster from Mar>Oct, then grew in Nov & Dec. All months in 2022 set new records with a new all-time high in December, $482B, and an annual record of $4.81T. However, their YTD increase is 28% below their 9.6% avg growth since 2019. Now, we’ll look at the impact of inflation. 59.7% of their 31.8% growth since 2019 is real. However, real sales vs 2021 are down -2.3% for the month and -1.2% YTD. This shows that inflation is only a 2022 problem. Their Avg Growth Rate: +9.6%, Real: +6.0%. The performance of this huge group is critically important. This is where America shops. Real annual sales are down 1+% so consumers bought less than in 2021. They just paid more. That’s not good.

Inflation is slowing slightly but the impact is still there. All groups but Restaurants have no YTD (annual) real growth vs 2021 and Auto & Gas Stations are still “really down” vs YTD 2019. We’ve now had 10 straight months of real YTD drops for Total Retail and 9 straight for Relevant Retail. We are still in Inflation Phase II. Consumer spending grows but the amount bought declines. Inflation slowed markedly for Auto & Gas Stations and prices even deflated in December, so they have avoided Phase III, when consumer spending drops. We hope that this pattern is repeated in Relevant Retail.

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

  • Relevant Retail: Avg Growth Rate: +9.6%, Real: +6.0%. 9 of 11 channels were up from November and 8 were up vs December 2021, but 10 were up YTD 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 up 33% from November but down vs December 2021. Their YTD actual $ are down vs 2019. They were positive Apr>Nov. They are still “really” down in all measurements vs both 2019 & 2021. Avg Growth: -0.1%, Real: -3.1%.
  • Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. Inflation is a big factor in their current numbers. Sales are up from November and vs 2021. Their real numbers are all down vs 2021 and only 36.2% of their 19.6% lift from 2019 is real. Avg Growth: +6.2%, 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 up from November. The increases vs 2021 are strong but inflation is stronger. Real sales are down and only 13.1% of the growth since 2019 is real. Avg Growth: +6.9%, Real: +1.0%.
  • Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. Sales are up from November but are really down vs Dec 2021. All other measurements vs 2019 & 2021 are positive. Their inflation rate is low so 89% of their 16.4% growth from 2019 is real. Avg Growth: +5.2%, Real: +4.6%.
  • Clothing and Accessories – They were nonessential, and clothes mattered less when you stayed home. That changed in March 2021 with strong growth through May 2022. December sales are +41% from November and +3.5% from 21. For the 1st time in 2022, all measurements are positive. 84% of their 2019>22 growth is real. Avg Growth: +5.0%, Real:+4.3%
  • Home Furnishings – Sales dipped Mar>May in 2020. Then as consumers’ focus turned to their homes, furniture became a priority. Inflation has been high. Monthly Sales are -0.7% vs 2021 and only up 1.0% YTD. All of their real numbers vs 2021 are very negative. Only 11.1% of their growth since 2019 is real. Avg Growth: +5.9%, Real: +0.7%.
  • 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 up +14.6% from November but down vs 2021. Deflation pushed their real December sales up +1.8%. Their sales are even down vs 2019 – both actual and real. Avg Growth: -1.0%, Real: -0.15%.
  • Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. This year’s spring lift ended in May. Sales fell in Nov>Dec after a slight lift in October. Monthly & YTD sales are up vs 2021, but when you factor in double-digit inflation, the real amount sold is down for both measurements. However, 54.0% of their strong 36.5% sales growth since 2019 is real. Their Avg Growth is: +10.9%, Real: +6.2%.
  • 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. December $ jumped +30.4% from November and are ahead of 2021, monthly & YTD. However, real YTD $ are still down vs 2021. Inflation in this group is lower than most groups and most comes from Sporting Goods. 78.7% of their 39.0% growth since 2019 is real. Avg Growth: +11.6%, Real: +9.3%.
  • 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. December sales are +5.2% from November and up vs 2021. Since April they have held the top spot in YTD increase vs 2021. Their YTD growth since 2019 is 2nd only to NonStore and 80% of the 42.2% growth since 2019 is real. Their Avg Growth is: +16.1%, Real: +13.9%.
  • 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. In December monthly sales exceeded $100B for the 1st time and they broke the $1 Trillion barrier for the year. Their YTD Growth has slowed significantly in 2022 but all measurements are positive. 87.2% of their 71.1% increase since 2019 is real. Their Avg Growth is: +19.6%, Real: +17.5%.

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, a new challenge came to the forefront – extreme inflation, the worst in 40 years. Overall, and in most product categories it has slowed in Jul>Dec. On the surface, the Retail impact is almost invisible. Sales in the total market and in the Relevant Retail group continue to grow but the growth rate has markedly slowed compared to last year. Overall, the retail market is generally in phase II of strong inflation – spending grows but the amount purchased falls. December is the traditional peak of the Holiday Shopping season and monthly sales. “How did it go?” The channels most impacted are – Clothing, General Merchandise, Electronics, Nonstore, Sporting Gds and Miscellaneous. These channels produced 63% of Relevant Retail December $ but 82% of the increase from November & the lift from 2021. They were up 6.6% from 2021 and real sales were +2.3%, much better than -2.3% for Relevant Retail. The December lift was smaller than we hoped for, but it still happened. BTW – 59% of the increase came from Nonstore.

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.

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.

  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.