Spending, CPI, demographics of overall market

Retail Channel $ Update – May Monthly & June Advance

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In June, Commodities prices vs last year fell to -0.4%, down from 0.1% in May. Although deflating for the 1st  time since July 2020, cumulative inflation still impacts consumer spending. The YOY Total Retail sales lift for June is only 4% of the 92>23 average and the Relevant Retail increase is 28%. Prices are now deflating in many 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 May Monthly Report and then go to the June 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 May Monthly. All were up from April. Gas Stations were down Ytd vs 23. All other actual $ are up. We should note that Gas Stations are still selling less product than in 2019. Also, Relevant Retail is “really” up again monthly vs 21. They have now been all positive in 5 of the last 6 months. ($ are Not Seasonally Adjusted)

The May Monthly is $2.3B more than the Advance report. Restaurants: +$1.4B; Auto: -$0.2B; Gas Stations: +$0.1B; Relevant Retail: +$0.9B. As expected, $ales were up vs April for all. Actual sales for all but Gas Stations were positive in all YOY monthly & Ytd measurements. Gas prices increased and sales were up for the month but down Ytd vs 23. Auto prices are still deflating, and sales increased across the board. There were 5 “real” sales drops, down from 7 last month but all were in Auto or Gas Stations. Restaurants still have the biggest increases vs 21 & 19 but Relevant Retail stayed at the top of “real” performance vs 2019. However, only 52% of their growth is real.

Now, let’s see how some Key Pet Relevant channels did in May in the Stacked Bar Graph Format

Overall– All 11 were up from April. vs May 23, 5 were actually and 7 “really” up. Vs May 21, 9 were up but only 5 were real increases. Vs 2019, Off/Gift/Souv were actually & really down and Disc Dept Strs were also really down.

  • Building Material Stores – The pandemic focus on home has produced sales growth of 30.5% since 2019. Prices for the Bldg/Matl group have inflated 16.8% since 2021 which is having an impact. HomeCtr/Hdwe are only actually up monthly and Ytd vs 21 & 19 but Farm stores are only actually up vs May 21 & 19. All “real” measurements vs 21 are negative for Home/Hdwe. However, all “real” numbers but vs 19 are negative for Farm Strs. Plus, only 22% of the overall Building Materials group’s 19>24 lift was real. Avg 19>24 Growth: HomeCtr/Hdwe: 5.2%, Real: 1.1%; Farm: 6.5%, Real: 2.3%.
  • Food & Drug – Both are truly essential. Except for the pandemic food binge buying, they tend to have smaller changes in $. In terms of inflation, the Grocery rate is less than one-third of the rate for Drug/Med products. Drug Stores are only actually down vs May 23 but they are also “really” down monthly & Ytd vs 2023. 64% of their 2019>24 growth is real. Supermarkets $ are up in all measurements and they are only “really” down vs 2021. However, only 7% of their 19>24 increase is real growth. Avg 19>24 Growth: Supermarkets: +5.2%, Real: +0.4%; Drug Stores: +4.5%, Real: +2.9%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up from April but their only positives are actual & real Ytd vs 19. Prices are still deflating, -0.3% vs 23. Deflation started in April 23 and is a big change from +1.1% in 22>23 and +7.9% in 21>22. The result is that 59% of their 38.1% lift since 19 is real. Avg 19>24 Growth Rate is: +6.7%; Real: +4.1%.
  • Gen Mdse Stores – All actual & real sales were up for Club/SupCtrs & $ stores. On the other hand, Discount Dept Stores were only actually up Ytd vs 21 & 19 and really up vs May 2023. Plus, none of their growth since 2019 is real. The other channels average 48% in real growth. Avg 19>24 Growth: SupCtr/Club: 6.0%, Real: 2.8%; $/Value Strs: +6.5%, Real: +3.3%; Disc. Dept. Strs: +1.7%, Real: -0.3%.
  • Office, Gift & Souvenir Stores – Sales were up 13.9% from April, but it was not enough. They are negative in all actual comparisons but vs 2021 and their real sales numbers are all negative. This includes all negatives vs 2019. Their recovery started late, and their slow progress has been stalled since June 23. Avg Growth Rate: -0.9%, Real: -2.9%
  • Internet/Mail Order – $ are only up 4.0% from April but still set a new monthly record of $112.9B. All measurements are positive, but their growth is still only 64.5% of their average since 2019. However, 82.1% of their 115.5% growth since 2019 is real. Avg Growth: +16.6%, Real: +14.3%. 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>May. All measurements vs 23, 21 & 19 are positive. They are still in 2nd place, behind the Internet, in the % increase vs 19 and vs 21. Also, 74% of their 58.5% growth since 2019 is real. Average 19>24 Growth: +9.7%, Real: +7.5%.

May brought its usual lift. All channels – big and small were up vs April. The YOY lifts continue to be small as only 5 of 11 smaller channels were actually up vs May 23. Prices are now deflating in 9 of 11 channels but cumulative inflation is still a factor. Sales increases are lower as 6 of 11 channels were really down vs May 21. The Retail Recovery is definitely slowing. The commodities CPI dropped from 0.1% in May to -0.4% in June. Let’s look for any impact on Retail $ales.

June sales vs May decreased for all, not surprising. A May>Jun Total Retail drop has happened in all but 4 years since 1992. However, the -5.6% drop tied 2014 for the biggest ever. All actual $ measurements are positive for all groups but Auto & Gas Stations. The 3 lifts vs Jun 23 were far below their 92>23 Average. Total: -96%; Relevant Rtl: -72%; Restaurants: -33%. Inflation is still a big factor. The rate for all commodities, the best pricing measure for Retail, fell from 0.1% to -0.4% but is 11.9% vs 21. There is also more “real” retail bad news. In May, 4 measurements were “really” down vs 23 & 21 and all came from Auto & Gas Stations. In June, 6 were really down – Total & Relevant Retail each added 1 – vs Jun 2021. Also of note, from Nov 23>Feb 24 Relevant Retail had 4 straight months of all positive measurements. That pattern has now been broken in 2 of the last 3 months. BTW – Total Retail has the same Apr>Jun pattern.

Overall – Inflation Reality – For Total Retail, prices deflated but all measurements are no longer positive. For Restaurants, inflation remains high, +3.9% but they are still all positive. Gas prices fell and that group is still in turmoil. Auto prices are down but are still +4.1% vs 21 which continues to slow actual & real sales. Prices flipped from slight deflation to +0.1% for Relevant Retail and real sales vs Jun 21 turned negative. Their progress continues to slow.

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 Jul>Aug, down Sept, up Oct>Dec, down Jan 24, up Feb>Mar, down April, up in May, down in Jun. Prices are now -0.4%. YOY sales growth is only 4% of the 92>23 avg. Sales are up 2.8% Ytd vs 2023, only 41% of their avg 19>24 growth. Monthly Real sales vs 21 turned negative and only 39% of the 19>24 growth is real. YOY inflation in Total Retail slowed and is now deflating but we still see its cumulative impact. Growth: 23>24: 2.8%; Avg 19>24: +6.8%, Real: +2.9%.

Restaurants – They were hit hard by the pandemic and didn’t begin recovery until March 2021. However, they have had strong growth since then, exceeding $1T for the 1st time in 2023 and even setting a new June sales record, despite the -3.3% $ drop. They have the biggest Ytd increases vs 23, 21 & 19 and all real sales are positive. Inflation stayed at 3.9% in June but is still +20.2% vs 21 and +26.4% vs 19. 37.9% of their 50.7% growth since 19 is real and they remain 3rd in performance behind Relevant & Total. Recovery started late but inflation started early. Growth: 6.0%; Avg 19>24:+8.5%, Real: +3.6%. They just account for 13.7% 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, grew Feb>Mar, fell in Apr, grew in May, fell in June. Actual & Real vs Jun 23 & real vs 21 are negative. Their CPI is -4.2%. Only 19.6% of 19>24 growth is real. Growth: 1.3%; Avg 19>24: +5.7%, Real: +1.2%.

Gas Stations – Gas Stations were hit hard by “stay at home”. 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>May they grew then fell in June. $ are only down vs 23. Pricing is a factor in the $ drop vs 23 but real $ vs June 21 & Ytd vs 21 & 19 are also down. Growth: -0.9%; Avg 19>24: +4.6%, Real: -1.0%.They show the cumulative impact of inflation and demonstrate how 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 set new records with December reaching a new all-time high, $481B, and an annual record of $4.81T. In 2023, the roller coaster continued. A December lift set a new monthly record of $494.7B & an annual record of $4.997T. Sales fell in Jan>Feb 24 rose in Mar, fell in Apr, rose in May, then fell in June, a normal pattern. The June YOY lift of 1.3% is down 72% from their 92>23 avg and monthly Real vs 21 turned negative. All other  measurements are positive. We should also note that 51% of their 41.4% 19>24 growth is real – #1 in performance. Growth: 3.1%; Avg 19>24: +7.2%, Real: +3.9%.This is where America shops. They finished 2023 and started up 2024 strong. In Mar>Apr their recovery slowed. In May, things improved but then worsened in June.

Inflation is still low, but the cumulative impact is still there. Sales increases are even smaller, which is very evident in June. It is also significant that there are now 6 real drops vs 23 & 21, up from 4 in May. Restaurants are still doing well, but the Auto group and Gas Stations remain in turmoil. Although not as visible, the biggest concern is still with Relevant Retail. Sales increases remain markedly lower and monthly real sales vs 21 turned negative for the 2nd time in the last 3 months. Total Retail has a similar pattern. After a relatively strong May, the recovery appears to be markedly slowing.

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

  • Relevant Retail: Growth: +3.1%;Avg: +7.2%, Real: +3.9%. Only 1 was up from May. Vs Jun 23: 6 were up, Real: 6. Vs Jun 21: 6 were up, Real: 4. Vs 19: Only Dept Stores were actually & really down. Furnishing strs. were also really down.
  • All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Sales are down -4.6% from May. Their actual $ are only up vs Jun 23 & Ytd vs 21. Except vs Jun 23, their real numbers are all negative. They are even actually & really down vs 2019. Growth: -1.4%; Avg 19>24: -0.1%, Real: -2.1%.
  • Club/SuprCtr/$- They fueled a big part of the recovery because they focus on value which has broad consumer appeal. $ales are -1.8% from May, but they are positive in all measurements. However, only 44.5% of their 34.6% 19>24 lift is real – inflation’s impact. Ytd growth is below Avg for the 3rd straight month. Growth: 4.1%; Avg: +6.1%, Real: +2.9%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Actual $ are -3.9% from May but positive for other comparisons. However, cumulative inflation has hit them hard. Real $ are only up vs 23 & 19 and only 6% of 19>24 growth is real. Growth: 1.7%; Avg 19>24: +5.2%, Real: +0.4%.
  • Health/Drug Stores – Many stores are essential, but consumers visit less frequently than Grocery stores. $ are -3.4% from May. They are only actually, and really down vs Jun 23 and really down vs Jun 21 & Ytd 23. Because inflation has been relatively low, 62% of their 25.2% growth from 2019 is real. Growth: 1.4%; Avg 19>24: +4.6%, Real: +2.9%
  • Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Sales are down -8.2% from May but positive in all comparisons but real vs Jun 21. Plus, 63% of their 19>24 growth is real. Growth: 2.9%; Avg 19>24: +3.3%, Real:+2.2%
  • Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices are still deflating but they were high in 2022. Sales are -4.2% from May and negative in all other measurements but actual Ytd sales vs 2019. They have sold less product in 2024 than 2019. Growth: -7.0%; Avg 19>24: +2.4%, Real: -0.2%
  • Electronic & Appliances – This channel has had many issues. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 21. $ are -0.1% from May but all comparisons are again positive – the turnaround continues. We should also note that their current Ytd growth is about equal to their 19>24 avg. Growth: +0.76%; Avg 19>24: +0.84%, Real: +3.7%.
  • 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, but sales are -7.7% from May, and they are only positive Ytd vs 19. Prices may be deflating but are still 16.3% above 21 so real sales are all negative except Ytd vs 19. Also, just 22% of their 19>24 sales growth is real. Growth: -3.5%; Avg 19>24: +5.5%, Real: +1.3%.
  • 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 up +1.3% from May (the only May>Jun lift) but down for all but Ytd vs 2019. The only positive real sales measurement is Ytd vs 19. Their inflation rate has been lower than most groups so 71% of their 26.1% growth since 2019 is real. Growth: -3.2%; Avg 19>24: +4.7%, Real: +3.5%.
  • 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 -7.3% vs May but positive in all measurements but vs Jun 23 – actual & real. They are still 2nd to NonStore in the % increase vs 19 and vs 21. 67.5% of their 41.9% 19>24 growth is real but their current lift is still below Avg. Growth: +5.3%; Avg 19>24: +7.3%, Real: 5.1%.
  • 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. $ are -6.6% from May. Their YOY lift slowed to +4.8% in June and Ytd they are 43% below Avg. They are positive in all measurements and 81% of their 101% 19>24 growth is real. Growth: 8.5%; Avg: +15.0%, Real: +12.7%.

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 and in June, 7 channels are deflating. This should help the Retail Situation. As expected, Sales fell from May. The 5.2% drop for Relevant Retail was 79% worse than their -2.9% avg but the big problem is with slowing YOY monthly increases. The 1.3% Relevant Retail lift vs Jun 23 was 72% below their 92>23 average 4.7% increase and 5 of 11 channels actually had a decrease. Nonstore led the way among the 6 with increases with +5.5%, no surprise. Inflation is low and even deflating in many 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 April>Jun no channels had a Ytd lift above their 19>24 Avg. There is more bad news. Relevant Retail is again no longer positive in all comparisons vs 23, 21 & 19. That’s happened in 2 of the last 3 months. 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 – June Update: Increases to +2.0% vs 2023

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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, then turned up Jan>Jun 24. However, the CPI slowed in June to +3.0% from +3.3% in May. Grocery prices increased slightly, 0.02% from May and inflation rose to 1.1% from 1.0%. After 12 straight months of double-digit YOY monthly increases, grocery inflation has now had 16 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 22, but at 2.0% in June, it is 33.3% below the national rate, a big change from +52% in January. We will look deeper into the data. 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 June 22 to June 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 June, Pet prices were up 0.3% from May. The Product segments were up, while the Service segments were down.

In June 22, the CPI was +15.3% and Pet was +11.1%. Prices in the Services segments generally inflated after mid-2020, while Product inflation stayed low until late 21. In 22 Petflation surged. Food prices consistently grew but the others had mixed patterns until July 22, when all increased. In Aug>Oct Petflation took off. In Nov>Dec, Services & Food prices grew 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 Jun/Jul this 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. In April, prices in all but Vet fell. In May, all but Food grew. In June, Products drove a price lift.

  • 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 23, dipped in Oct>Dec, then rose Jan>Jun 24, but 31.5% of the 22.3% increase in the 54 months since Dec 2019 happened from Jan>Jun 2022 – 11.1% of the time.
  • Pet Food – Prices were at or below Dec 19 levels from Apr 20>Sep 21. They grew & peaked in May 23. In Jun>Aug they fell, grew Sep>Nov, fell Dec>Feb, rose in Mar, fell Apr>May, grew in June. 97% of the lift was 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 2009. They plateaued Feb>May, grew in June, flattened in July, then turned up in Aug>Oct to 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 with Dec>Feb lifts, Mar/Apr drops & May/Jun lifts, to a new high.
  • Pet Services– Inflation is usually 2+%. Perhaps due to closures, prices increased at a lower rate in 2020. In 2021 consumer demand increased but with fewer outlets. Inflation grew in 21 with the biggest lift in Jan>Apr. Inflation was strong in 22 but prices got on a rollercoaster in Mar>Jun. They turned up Jul to Mar 23 but the rate slowed in April and prices fell in May. They rose Jun>Aug, fell Sep>Dec, rose Jan>Mar, fell in Apr, rose in May, fell in June.
  • 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 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, grew Feb>May, then fell in June.
  • 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 24 to a record high. Prices fell in April then rose in May & June, a new record, but Petflation is just 2/3 of the National CPI.

Next, we’ll turn our attention to the Year Over Year inflation rate change for June and compare it to last month, last year and to previous years. We will also show total inflation from 21>24 & 19>24. Petflation rose to 2.0%, up from 1.6% in May, but it is still 33% below 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 +0.03% from May and were +3.0% vs June 23, down from +3.3% last month because there was a bigger May>Jun price lift in 23. Grocery inflation grew slightly to +1.1% from +1.0%. Only Pet Services & Veterinary had  price decreases from last month. There were also 2 drops in May – Pet Food & Groceries. The national YOY monthly CPI rate of 3.0% is down from 3.3% and equal to the 22>23 rate but only 33% of 21>22. The 23>24 rate is also equal to 22>23 for Pet Serv & Haircuts and only more for Med Serv. 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 104% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were still recovering from a deflationary period. Services expenditures now account for 64.1% of the National CPI so they are very influential. Their current CPI is +5.0% while the CPI for Commodities is -0.4%. This clearly shows that Services are driving the current 3.0% inflation rate.

  • U.S. CPI– Prices are +0.03% from May. The YOY increase is 3.0%, down from 3.3%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 50+% higher than the target. After 12 straight declines, we had 2 lifts, a stable month, 2 consecutive drops and now 4 of 7 with drops – a little better. The current rate is equal to 22>23 but the 21>24 rate is still +15.6%, 68.7% of the total inflation since 2019. Inflation was low in June 2021.
  • Pet Food– Prices are +0.7% vs May and -0.2% vs June 23, up from -1.1%. They are still significantly below the Food at Home inflation rate, +1.1%. The YOY drop of -0.2% is being measured against a time when prices were 23.1% above the 2019 level and the current decrease is still less than the -0.7% drop from 2019 to 2020. The 2021>2024 inflation surge has generated 98.7% of the total 23.4% inflation since 2019.
  • Food at Home – Prices are up 0.02% from May and the monthly YOY increase is 1.1%, up from 1.0%. It is radically lower than Jul>Sep 2022 when it exceeded 13%. The 26.7% Inflation for this category since 2019 is 18% more than the national CPI but still in 4th place behind 3 Services expenditures. 70.4% 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 up 1.0% from May and are +0.6% vs June 2023. They have the lowest increase since 2019. As we noted, prices were deflated for much of 20>21. As a result, the 2021>24 inflation surge accounted for 100+% of the total price increase since 2019. Prices reached an all-time high in October 2022 then deflated. 3 months of increases pushed them to a record high in Feb 23. Prices fell in March, rose in Apr/May to a new record, fell in Jun>Aug, grew in Sep>Oct, fell in Nov, grew again Dec>Feb, fell Mar>Apr, then rose May>Jun to a new record.
  • Veterinary Services– Prices are -0.5% from May but +6.4% from 2023, still the highest rate in the Pet Industry. Plus, they are the leader in the increase since 2019 with +38.6% and since 2021, +27.5%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 22 & 23. It is still high in 24, so 71.2% 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 2% from May, and they are +3.3% vs last year. Medical Services are not a big part of the current surge as only 50% of the 15.0% 2019>24 increase happened from 21>24.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021. In 2024 prices surged Jan>Mar dropped in April, set a record in May, then fell to +6.3% vs 23 in June. Inflation peaked at +8.0% in March 23. Now, 69% of their total 19>24 inflation has occurred since 2021. In December, it was only 49%. They still have the 2nd highest 19>24 rate.
  • Haircuts/Other Personal Services – Prices are +0.6% from May and +5.0% from 23. 4 of the last 6 months have been 4.0+%. Inflation has been pretty consistent. 62% of the 19>24 inflation happened 21>24.
  • Total Pet– Petflation rose to 2.0% from 1.6% in May but is still 79% less than the 22>23 rate and 33% less than the U.S. CPI. For June, 2.0% is 35.5% below the 3.1% average rate since 1997. Vs May, prices grew 0.3% as Product prices were up while Services prices fell. A May>Jun price increase has happened in 18 of the last 27 years, so this month’s data was not surprising. In terms of Petflation, even with the CPI increase, 2024 appears to be returning to a more normal pattern. However, the path to get there may be unusual and there is still a ways to go.

Now, let’s look at the YTD numbers.

The inflation rate for 22>23 was the highest for 4 of 9 categories – All Pet – Pet Food, Services, Veterinary & Total Pet. The 23>24 rate is usually much lower than 22>23 for all but Medical Services. 21>22 still has the highest rate for Food at Home, the CPI, Pet Supplies & Haircuts. 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 (2.2%). It comes as no surprise that Veterinary Services has the highest average rate (6.7%), but all 5 other categories are +4.5% or higher.

  • U.S. CPI – The 23>24 rate is 3.2%, down from 3.3% in May, but also down 35% from 22>23 and 61% less than 21>22. It is also 24% below the average YOY increase from 2019>2024, but it’s still 52% more than the average annual increase from 2018>2021. 76% of the 22.7% inflation since 2019 occurred from 2021>24. Inflation is a big problem that started recently.
  • Pet Food – Ytd inflation is 1.3%, down from 1.6% in May and 91% less than the 22>23 rate. Now, it is also 80% lower than 21>22 and 24% below 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. 95% of the inflation since 2019 occurred from 2021>24.
  • Food at Home – The inflation rate has slowed remarkably. At 1.1%, it is down over 86% from 22>23, 89% from 21>22 and 50% from 20>21. Also, it is even 44% lower than the average rate from 2018>20. It remains in 3rd place for the highest inflation since 2019 but still beat the U.S. CPI by 16%. You can see the impact of supply chain issues on the Grocery category as 76% of the inflation since 2019 occurred from 2021>24.
  • Pets & Pet Supplies – Prices increased Jan>Feb, fell Mar>Apr then rose in May>Jun. The 2024 inflation rate of 0.2% is only higher than the deflation in 19>20 & 20>21. Supplies have the lowest inflation since 2019. The only significant increases were 4% in 22 & 5.2% in 23. The 2021 deflation created a unique situation. Prices are up 11.5% from 2019 but 115% of this increase happened from 2021>24. Prices are up 13.2% from their 2021 “bottom”.
  • Veterinary Services – Inflation was high in 2019 and steadily grew until it took off in late 2022. The rate may have peaked in 2023, but it is still going strong at the start of 2024, +8.0%, the highest on the chart. They are also #1 in inflation since 2019 and since 2021. At +6.7%, they have the highest average annual inflation rate since 2019. It is 1.6 times higher than the National Average but 2.4 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 2.1%. In a non-pandemic year, “normal” is 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 surged in 2024,except for drops in Apr & Jun. The 23>24 inflation rate of 5.3% is 2nd to Vet in the Pet Industry. It is 24% less than 22>23 and 13% below 21>22. However, it is still 1.7 times higher than the 2018>21 average rate. Pet Services is 2nd in 19>24 inflation but only 5th in inflation since 21.
  • Haircuts & Personal Services – The services segments, essential & non-essential, were hit hardest by the pandemic. The industry responded by raising prices. Ytd inflation is 4.4%, which is 19% below the 21 & 22 peak but 40% above the 18>20 average. Consumers are paying over 25% more than in 2019, which usually reduces the frequency.
  • Total Pet – Ytd Petflation is 2.9%, down from 3.0%. It is 72% less than 22>23 but 24% higher than the 2018>21 average rate. However, it is still 9% below the CPI. Despite the May & June price lifts, Petflation has slowed in 24. This is primarily being driven by drops in Pet Food inflation but Ytd Supplies inflation is also low. Services and Veterinary prices both fell from record highs in May, which also contributed to the slight drop in the Ytd Pet CPI.

Petflation has definitely slowed in 24. June was 35% below the average for the month and 33% lower than the National CPI. This is about the same as it was back In 2021. One fact is often ignored in the headlines – Inflation is cumulative. Pet prices are 21.7% above 2021 and 25.8% higher than 2019. Those are big lifts. In fact, in June prices for Supplies & Total Pet set new records. Services & Veterinary prices are less than 0.5%s below the highest in history and Food prices are 0.4% below their peak. Only Supplies prices (+11.5%) are less than 24% higher than 2019. Since price/value is the biggest driver in consumer spending, inflation will affect the Pet Industry. 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 evidence of this at GPE 24 & will see it at SZ 24 as a huge # of exhibitors offer OEM services. Strong, cumulative inflation has a widespread impact.

U.S. Pet Services Spending (Non-Vet) $12.77B (↑$1.90B): 2023 Mid-Year Update

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In our analysis of Supplies Spending, we saw a big drop in the 2nd half of 2022, but the $ mostly rebounded in 2023. Food was different. After the big drop in Mid-2021, following the 2020 binge, spending has had strong growth for 2 years. Strong inflation was a factor in both. Now we turn our attention to Pet Services. The Mid-year numbers show that spending in this segment was $12.77B, up $1.90B (+17.5%) from the previous year. Up until 2018, this segment was known for consistent, small growth. In 2018, increased outlets and competitive prices brought on a wave of new users and spending increased +$1.95B. Spending remained near this new high normal until 2020. Pandemic closures drove spending down $1.73B, essentially returning to the level of 2017. In 2021 things opened up and spending spiked until growth slowed in 2023. This deserves a closer look. First, we’ll look at Services spending history since 2014.

Here are the 2022 Mid-Yr Details:

Mid-Year 2023: $12.77B, ↑$1.90B (+17.5%) vs Mid-Yr 2022

The $190B Came From:

Jul > Dec 2022: ↑$1.49B;     Jan > Jun 2023: ↑$0.41B

Pet Services is by far the smallest industry segment. However, except for 2010 and 2011, the period immediately following the Great Recession, it had consistent annual growth from 2000 through 2016. Spending in Food and Supplies have been on a roller coaster ride during that period. Services Spending more than tripled from 2000 to 2016, with an average annual growth rate of 7.6%. Spending in the Services Segment is the most discretionary in the industry and is more strongly skewed towards higher income households. Prior to the great recession, the inflation rate averaged 3.9% with no negative impact. The recession affected every industry segment, including Services. Consumers became more value conscious, especially in terms of discretionary spending. Services saw a slight drop in spending in both 2010 and 2011, but then the inflation rate fell to the 2+% range and the segment returned to more “normal” spending behavior. In mid-2016 inflation dropped below 2% and continued down to 1.1% by the end of 2017. This was primarily due to increased competition from free-standing businesses but also an increase in the number of Pet Stores and Veterinary Clinics offering pet services. While prices still went up slightly, there were deals to be had and consumers shopped for the best price. There was no decrease in purchase frequency. Consumers just paid less so spending fell slightly. In the 2nd half of 2017 spending turned up again. More Consumers began to take advantage of the value and convenience of the increased number of outlets offering Services. This deeper market penetration caused Services Spending to take off in 2018, up $1.95B, the biggest annual increase in history. Prices turned up again in the 1st half of 2019, +2.8% from 2018. However, Services spending inched up $0.09B. In the 2nd half of 2019 consumers Value Shopped again so spending fell -$0.19B. Then came 2020 and the pandemic. Many of these nonessential businesses were forced to close and spending fell precipitously, -$1.73B to $6.89B, about the same as yearend 2017. In 2021 things opened up again and spending bounced back, +$0.55B vs the 1st 6 months of 2020. Unlike Food and Supplies the increase continued to accelerate through 2022 with record increases until slowing in 2023. This lift happened despite an inflation rate of over 6% and sales reached a new record highof $12.77B in Mid-2023.

Let’s take a closer look at some key spending demographics – Age and Income.

In the graphs that follow we compare spending for the 12 months ending 6/30/23 to the previous 12 months. The graphs also include the 2022 yearend $, so you can see spending changes in the 2nd half of 2022 and the 1st half of 2023.

The first graph is for Income, the single most important factor in increased Pet Spending, especially in Services.

Here’s how you get the change for each half using the Over $70K group as an example:

Mid-yr Total Spending Change: $10.13B – $8.41B = Up $1.72B (Note green outline = increase; red outline = decrease)

  • 2nd half of 2022: Subtract Mid-22 ($8.41B) from Total 2022 ($9.61B) = Spending was up $1.20B in 2nd half of 2022.
  • 1st half of 2023: Subtract Total 2022 ($9.61B) from Mid-23 ($10.13B) = Spending was up +$0.52B in 1st half of 2023.

  • Services Spending is definitely skewed towards higher incomes. The halfway spending point is about $137K so about 23% of CUs spend 50% of Services $.
  • All groups $50K> increased spending while the $ dropped slightly for the <$50K but we should note that all groups had increases in the 2nd half of 2022. However, only $50>70K and $100K> had increases in both halves.
  • All groups $50K> had double digit growth with those from $50>150K having spending increases of 28+%. Also, the 2 decreases were small, about -6%.
  • The $50>70K group had the worst performance in 22, -20.9%. In 23, they were the best, +39.4%.
  • The over $150K group has 18.7% of the CUs but accounts for 44.4% of Services $. This is actually a much larger share than the 37.6% that they had in pre-pandemic 2019. The pandemic has increased the importance of this group.
  • Income, especially when it is over $150K, is still by far the biggest factor in the discretionary spending in the Services segment so Services spending is more unbalanced in regard to income. The highest income groups are more driven by convenience than value so high inflation rates are likely to actually increase spending because of higher prices.

Now, Services’ Spending by Age Group.

  • All groups spent more. The only negatives were small 1st half 2023 drops by 25>34 & 65>74.
  • The 45>54 group had the biggest increase, up +$0.8B (+41.5%) and moved from #3 to #1in Services spending.
  • The 55>64 yr-olds spent only +$0.13B more (+5.1%) and fell from the top spot to 2nd in spending.
  • The 35>44 yr olds had a small increase +$0.07B (+3.0%) and dropped to #3 from #2 in spending.
  • Although spending dipped in 23, the 25>34 yr-olds are the only group with 3 consecutive mid-year increases.
  • The 65> groups were up $0.47B (+19.0%), driven by a +$0.49B lift in the 2nd half of 2022. You see the importance of Services to older Pet Parents. They actually spend the most. The 65>74 Baby Boomers set the pattern – No Surprise.
  • Although <25 spends very little, they had lifts in both halves and an 82% increase over 2022.

Now let’s look at what is happening in Pet Services spending at the start of 2023 across the whole range of demographics. In our final chart we will list the biggest $ moves, up and down by individual segments in 12 demographic categories. The lift in the 1st half of 2023 was +$0.41B vs 2022. Last year it was +$1.77B vs 2021.

2023 has started slower than 2022 but spending continues to grow. There were no categories where all segments spent more. Last year, there were 5. Back in 2020, there were 4 categories in which all segments spent less. Also, except for CU Comp, the $ changes for the winners are still much larger than the negatives of the losers. The +$0.41B increase in Pet Services came from 52 of 82 demographic segments (63%) spending more. Last year it was 90% and in 2021, 78%. The strong recovery has slowed, but spending is still up +85% from 2020 and even +45% from 2019.

The usual winners have overwhelmingly returned with only 1 minor surprise  –  5+ People

Virtually all of the Losers were also expected. Here are the surprises:

  • Self-employed
  • BA/BS Degree
  • Boomers

The older Gen Xers are driving the 1st half lift, replacing the Baby Boomers. Gen X CUs have the largest number of people. Gen Xers have a high income and are educated. 70% own a home, usually in a larger suburb of a major metropolitan area. Also, 70% of Gen X homeowners still have a mortgage. They match most of the “winners”.

Services $ are at a record high and still growing. Let’s review how they got here and speculate on what comes next.

Except for the trauma caused by the Great Recession which hit Services in 2010>11, from 2000 to 2016 the Services segment had slow but consistent growth. The number of outlets also was increasing. Services were gaining in popularity and many retail pet stores were looking for a competitive edge over the growing pet product sales of online retailers. Afterall, you can buy product, but you can’t get your dog groomed on the internet. By 2017 the number of outlets offering Pet Services had radically increased. This created a highly competitive market and the inflation rate dropped to near record lows. Value conscious consumers saw that deals were available, and they took advantage of the situation. However, they didn’t increase the frequency of purchase. They just paid less. This drove overall Pet Services spending down in the 1st half of 2017. The segment started to recover in the 2nd half but not enough to prevent the first annual decrease in Pet Services spending since 2011. However, it was a start. In 2018, more consumers started to recognize the convenience offered by more outlets. The latest big food upgrade was also winding down. The result was that Services started a deeper penetration into the market, especially in the younger groups. The <45 groups spent $1.47B more on Services in 2018, 74% of the total $1.95B increase in the segment. After such a big lift, a slight downturn in 2019 was not unexpected and it happened, -$0.1B. Then came 2020 and COVID. Although the consumer use of Services was becoming increasingly widespread, many Services outlets were deemed nonessential and were subject to pandemic restrictions and closures. Services Spending fell -$1.73B (-20.1%) in 2020 and nearly wiped out the big gain made in 2018.

In 2021, things opened up and Services spending began to rebound with a +$0.55B lift in the 1st half. This lift accelerated in the 2nd half and continued through 2022. Spending slowed in the 1st half of 2023 but reached a new record high of $12.77B, with an annual growth rate of 9.7% since mid-yr 2019. That’s 90% higher than the 5.1% rate from 2009 to 2019. Pet Services have become an important option that is exercised by an increasing number of Pet Parents. However, much of the growth is increasingly being driven by higher incomes. There is some good news in this trend. Higher incomes are less negatively impacted by strong inflation. They buy the same amount, just pay more. This means that Services Spending growth will probably slow but the $ are likely to continue to increase.

 

U.S. PET SUPPLIES SPENDING $23.59B (↓$0.79B): MID-YR 2023 UPDATE

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In our analysis of Pet Food spending, we saw that spending had continued strong growth after the up & down due to the pandemic. Supplies had a different pattern. At the beginning of 2020, Supplies Spending was down due to Tarifflation. The pandemic caused consumers to focus on needs so Supplies $ continued its steady decline from its 2018 peak reaching a low point below 2016. In 2021, that all changed. Supplies Prices had been steadily deflating and Consumers finally responded. In 2021 Pet Supplies spending took off, especially in the 2nd half. The increase slowed significantly in the 1st half of 2022 and fell in the 2nd half of 22 as inflation reached 8.0%. Inflation slowed to 5.2% in 23 and spending rebounded to $23.59B, only -3.2% below the record high in Mid-2022. The following chart should put the recent spending history of this segment into better perspective.

Here are this year’s specifics:

Mid 2023: $23.59B; ↓$0.79B, -3.2% from Mid 2022.

The -$0.79B came from:

Jul > Dec 2022: ↓$2.44B

Jan > Jun 2023: ↑$1.65B

The 2nd half 22 drop was big but not unexpected after the $6.39B increase in the 2nd half of 2021, by far the biggest YOY 6 month increase in history. Like Pet Food, Pet Supplies spending has been on a roller coaster ride, but the driving force is much different. Pet Food is “need” spending and has been powered by a succession of “must have” trends and the emotional response to the Pandemic. Supplies spending is largely discretionary, so it has been impacted by 2 primary factors. The first is spending in other major segments. When consumers ramp up their spending in Pet Food, like upgrading to Super Premium, they often cut back on Supplies. However, when they value shop for Premium Pet Food, they take some of the saved money and spend it on Supplies. The other factor is price. Before breaking the record in 2022, Pet Supplies prices reached their peak in September of 2009. Then they began deflating and in March 2018 were down -6.7% from 2009. Price inflation in this segment can retard sales, usually by reducing the frequency of purchase. While deflation generally drives Supplies spending up. A new “must have” product can “trump” both of these influencers. Unfortunately, we haven’t seen much significant innovation in the Supplies segment recently.

Recent history gives a perfect example of the Supplies roller coaster. In 2014 Supplies prices dropped sharply, while the movement to Super Premium Food was barely getting started – Supplies spending went up $2B. In 2015, consumers spent $5.4B more on Pet Food. At the same time, Pet Supplies prices went up 0.5%. This combination caused Supplies $ to fall $2.1B. In 2016 consumers value shopped for Food, saving $2.99B. Supplies spending stabilized then increased by $1B in the 2nd half when prices fell sharply. Consumers spent some of their “saved” money on Supplies. Supplies prices continued to deflate through 2017. Food spending increased $4.61B in 2017 but this generally came from older CUs, less focused on Supplies. The result was a $2.74B increase in Supplies spending.

In the 1st half of 2018 Pet Food spending slowed, +$0.25B. Supplies’ prices began inflating but were only +0.1% vs 2017. During this period Supplies Spending increased $1.23B. Inflation grew in the 2nd half of 2018 due to impending new tariffs in September. By June 2019 they were 3.4% higher than 2018. The impact of the tariffs on Supplies was very clear. Spending flattened in the 2nd half of 2018, then plummeted in the 1st half of 2019, -$2.09B. Prices stayed high for the rest of 2019 and spending fell an additional -$0.9B. In 2020 prices turned up again through March before plummeting, -3.8% by June, but due to the pandemic focus on “needs”, spending dropped an additional -$0.54B. The situation worsened in the 2nd half as the $ fell an additional -$1.12B. However, 2021 brought a record resurgence as consumers “caught up” on the Supplies purchases that had been delayed due to the pandemic. Supplies spending increased +$8.65B in 21 and passed $24B in  Mid-yr 22. Inflation in Supplies took off at the beginning of 22 and spending dropped in the 2nd half. Inflation slowed a little in 23 as prices peaked and the $150K> income group drove most of a $1.65B lift.

Here’s what Pet Supplies inflation looked like in Mid-2023:

  • Mid-Yr 23 vs 22: 6.6%       • 2nd Half 22 vs 2021: 8.0%       • 1st half 23 vs 22: 5.2%

You can see that the rate slowed in early 2023 but prices still reached a record high. The 6.6% rate is the 2nd highest in history. Surprisingly, Pet Parents continued to spend at a near record level. However, they bought -9.8% less product. Inflation slowed significantly in the 2nd half of 2023. We’ll see if that impacts spending.

Now, let’s take a closer look at the data, starting with two of the most popular demographic measures – income and age. The graphs that follow will show both the current and previous 12 months $ as well as 2022 yearend. This will allow you to track the spending changes between halves.

The first graph is for Income, which has been shown to be the single most important factor in increased Pet Spending, especially in Pet Supplies and both of the Service segments.

Here’s how you get the change for each half using the $70K> group as an example:

Mid-yr Spending Change: $17.12B – $17.26B = Down $0.14B (Note: green outline = increase; red outline = decrease)

  • 2nd half of 2022: Subtract Mid-22 ($17.26B) from Total 2022 ($15.58B) = Spending was down $1.68B in 2nd half of 22.
  • 1st half of 2023: Subtract Total 2022 ($15.58B) from Mid-23 ($17.12) = Spending was up $1.54B in 1st half of 23.

  • There are a mixture of patterns. The groups <$50K and $150> had decreases in the 2nd half of 2022. They also had lifts in 2023 along with the $70>100K group. The biggest lift in 2023, +$1.13B came from $150K>. The other groups had only small changes. No group had a decrease in both halves and only $70>100K had increases in both. The net result was that sales  for <$50K and $150K> were down vs 2022 while the middle income $50>150K groups were up.
  • Supplies spending is a little more balanced but it still driven by the higher incomes, especially the $150K> group. Over $100K has 35.1% of CUs but accounts for 56.8% of Supplies $. That’s a performance level of 161.9%. However, the $150K> is even stronger with 18.7% of CUs generating 36.0% of Supplies spending – performance: 192.8%. The highest performance for any group under $100K is from $70>100K at 112.2% but the averages were: <$100K = 66.5%; <$70K = 53.9%. The halfway point in Supplies spending is an income of $116K, down from $124K in 2022 but still 17% higher than the new elevated level for Food. Pet Supplies spending is still very much driven by income.

Now let’s look at Pet Supplies spending by Age Group.

  • Except for 35>44, which had a drop in 22 and a lift in 23, all groups were either up or down in both halves. All those with an annual increase spent more in the 1st half of 23 than they did in 22 – <25, 45>54 and 65>.
  • The biggest lift came from 45>54, +$2.0B. Most of their increase came in the 1st half of 23.
  • The biggest drop came from 35>44, -$2.56B. All of the decrease came in the 2nd half of 22 as they had a lift in 23.
  • Supplies spending skews a little younger but it moved up in age in 2023. The halfway point is now 49 yrs old, a little younger than Food at 53 but in the middle of the highest income group. Income is still the biggest driver.

Now let’s look at what happened in Supplies spending at the start of 2023 across the whole range of demographics. In our final chart we will list the biggest $ moves, up and down by individual segments in 12 demographic categories.

  • The lift didn’t equal the 2nd half drop but the biggest increases are still radically larger than the biggest decreases.
  • The increase was relatively widespread across the marketplace as 77% of segments spent more. There was 1 category in which all segments spent more – Race/Ethnic. Last year there were none.
  • Many of the winners are the “usual suspects”, like $150K>, 3+ Earners, 45>54, White & Homeowners w/Mtge but there are a couple of surprises – Tech/Sls/Clerical & Associates degree.
  • In regard to the losers, only a couple are expected – Center City & 2+ Adults. Most are surprising, especially $100>149K, Mgrs & Prof., 2 Earners and Adv. College Degree.
  • One of the biggest trends is that Gen X returned to the top with a $1.64B lift. This highest income, family oriented group passed recent strong showings by Millennials & Boomers.
  • While Supplies spending became slightly more balanced, income is still very important. 5 of the 12 “winners” have the highest income of any segment in their category.

Since the Great Recession the Supplies segment has become commoditized and very sensitive to inflation/deflation. Plus, since most categories are discretionary, Supplies spending can be affected by spending changes in other segments, as Pet Parents trade $. In 2018, the Pet Industry was introduced  to a new “game changer” – outside influence. The FDA warning on grain free dog food caused a big decrease in food spending but the government also radically increased tariffs which drove Supplies prices up and spending down, a record $2.98B.

However, we weren’t done yet. That brought us to 2020 and a new, totally unexpected outside influence, the COVID pandemic. This affected all facets of society, including the Pet Industry. Consumers, including Pet Parents, focused on needs rather than wants. In the Pet Industry, this meant that their attention was drawn to Food and Veterinary Services. This led to a huge lift in Pet Food $ due to binge buying but also a big increase in Veterinary spending. The more discretionary segments, Supplies and Services, suffered. Services had an extra handicap. Many outlets were not considered essential, so they were subject to restrictions and closures. Supplies were still available, but many were considered optional by consumers so spending continued to decline throughout 2020. By yearend, $ had reached the lowest level since 2015. This all happened while prices continued to deflate. That brought us to 2021. The retail economy had largely recovered and spending patterns were returning to “normal”. This was also true in Pet Supplies. Pet Parents opened their wallets and  bought the Pet Supplies that they had been holding back on for a year. The result was the biggest annual increase in history. At the end of 2021 and throughout 2022, inflation came back into the picture with the highest YOY increases in history. Supplies spending slowed in the 1st half of 22 then plummeted in the 2nd half but that spending was going against a record increase in 21. Despite record high prices, spending had a widespread sales rebound in 23 but the amount purchased fell by -9.8%.  Prices remain high. We’ll see if that has an impact.

 

Retail Channel $ Update – April Monthly & May Advance

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In May, Commodities inflation vs last year slowed to 0.1% from 0.3% in April. Although radically down from its peak, cumulative inflation still impacts consumer spending. The YOY sales increase for May is 40+ below the 92>23 average for Relevant Retail and for all big channels but Restaurants. Prices are now deflating in many 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 April Monthly Report and then go to the May 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 April Monthly. All but Gas Stations were down from March. Gas Stations were down Ytd vs 23 & Auto vs Apr 23. All other actual $ are up. We should note that Gas Stations are still selling less product than in 2019. Also, Relevant Retail is “really” down again monthly vs 21, after 4 straight months of all positives. ($ are Not Seasonally Adjusted)

The April Monthly is $1.4B less than the Advance report. Restaurants: +$0.6B; Auto: +$1.0B; Gas Stations: -$1.3B; Relevant Retail: -$1.8B. As expected, $ales were down vs March for all but Gas Stations. Actual sales for all but Auto &  Gas Stations were positive in all YOY monthly & Ytd measurements. Gas prices turned up, but their sales were down Ytd vs 23. Auto prices are deflating but $ were down vs April 21. There were 7 “real” sales drops, down from 8 last month. Gas Stations had 3 but only Restaurants had none. Restaurants have the biggest increases vs 21 & 19 but Relevant Retail is still the top “real” performer vs 2019. However, only 52% of their growth is real.

Now, let’s see how some Key Pet Relevant channels did in April in the Stacked Bar Graph Format

Overall– Only 5 were up from March. vs Apr 23, Only 3 were actually and “really” up. Vs Apr 21, 6 were up but only 3 were real increases. Vs 2019, Off/Gift/Souv were actually & really down and Disc Dept Strs were also really down.

  • Building Material Stores – The pandemic focus on home has produced sales growth of 30.3% since 2019. Prices for the Bldg/Matl group have inflated 18.0% since 2021 which is having an impact. HomeCtr/Hdwe are only actually up vs Apr 23 and Ytd vs 21 & 19 but Farm stores are only actually up vs 19. All “real” measurements vs 21 are negative for Home/Hdwe. However, all “real” numbers but vs 19 are negative for Farm Strs. Plus, only 25% of the overall Building Materials group’s 19>24 lift was real. Avg 19>24 Growth: HomeCtr/Hdwe: 5.3%, Real: 1.2%; Farm: 6.2%, Real: 2.1%
  • Food & Drug – Both are truly essential. Except for the pandemic food binge buying, they tend to have smaller changes in $. In terms of inflation, the Grocery rate is still less than half of the rate for Drug/Med products. Drug Stores are down vs March but again up in all other measurements and 64% of their 2019>24 growth is real. Supermarkets $ are down vs April 23 and their only real positives are Ytd vs 23 & 19. Plus, only 7% of their 19>24 increase is real growth. Avg 19>24 Growth: Supermarkets: +5.2%, Real: +0.4%; Drug Stores: +4.6%, Real: +3.1%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are down from March and their only positives are actual & real Ytd vs 19. Prices are still deflating, -1.1% vs 23. Deflation started in April 23 and is a big change from +1.1% in 22>23 and +7.9% in 21>22. The result is that 60% of their 38.6% lift since 19 is real. Avg 19>24 Growth Rate is: +6.7%; Real: +4.3%. 
  • Gen Mdse Stores – Sales were down for all vs March. All actual sales but vs April 23 were up for Club/SupCtr/$ Stores. $ stores were up for all. On the other hand, Disc Dept Stores were only actually up Ytd vs 21 & 19 but were really down for all. Plus, only 8% of their growth is real. The other channels average 47% in real growth. Avg 19>24 Growth: SupCtr/Club: 6.0%, Real: 2.8%; $/Value Strs: +6.4%, Real: +3.2%; Disc. Dept. Strs: +1.9%, Real: -0.2%.
  • Office, Gift & Souvenir Stores – Sales were up from March, but it was not enough. They are negative in all actual comparisons but Ytd vs 21 and their real sales numbers are all negative. This includes all negatives vs 2019. Their recovery started late, and their slow progress has been stalled since June 23. Avg Growth Rate: -0.8%, Real: -2.8%
  • Internet/Mail Order – $ are up 13.1% from March and set a new monthly record of $108.5B. All measurements are positive, but their growth is still only 77.5% of their average since 2019. However, 82.3% of their 118.2% growth since 2019 is real. Avg Growth: +16.9%, Real: +14.6%. 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>Apr. All measurements vs 23, 21 & 19 are positive. They are still in 2nd place, behind the Internet, in the % increase vs 19 and vs 21. Also, 75% of their 64.1% growth since 2019 is real. Average 19>24 Growth: +10.4%, Real: +8.2%.

April brought it’s usual drop. Most channels – big and small were down vs March. The YOY lifts continue to be small as only 3 of 11 smaller channels were actually and really up vs April 23. Prices are still deflating in 7 of 11 channels but cumulative inflation is still a factor. Sales increases are lower as 8 of 11 channels were really down vs April 21. The Retail Recovery is definitely slowing. The commodities CPI slowed to 0.1% in May. Let’s look for any impact on Retail $ales.

May sales vs April increased for all, not surprising. An Apr>May Total Retail lift has happened every year since 1992. Plus, the 6.1% lift is just 2% less than the average of 6.2%. All actual $ measurements are positive vs 23, 21 & 19 for all groups but Gas Stations Ytd vs 23. The lifts for all big groups but Restaurants (-21%) vs May 23 were all at least 41% below their 92>23 Average. Inflation is still a big factor. The rate for all commodities, the best pricing measure for Retail, fell from 0.3% to 0.1% but is 14.0% vs 21. There is some “real” retail good news. In April, 6 measurements were “really” down vs 23 & 21 and 2 came from Gas Stations. In May, 4 were still really down – only from Auto & Gas Stations. Also, you may remember that from Nov 23>Feb 24 Relevant Retail had 4 straight months of all positive measurements. In Mar>Apr their real monthly sales vs 21 turned negative. In May they are again all positive. BTW – So is Total Retail.

Overall – Inflation Reality – For Total Retail, inflation slowed and all measurements are again positive. For Restaurants, inflation remains high, +3.9% but they are still all positive. Gas prices rose and that group is still in turmoil. Auto prices are down but are still +9.9% vs 21 which continues to slow actual & real sales. Prices are slightly deflating for Relevant Retail and all measurements are again positive. Their slow progress is continuing.

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, up in Feb>Mar, down in April, up in May. Inflation is down to 0.1%. YOY sales growth is only 59% of the 92>23 avg. Sales are up 3.3% Ytd vs 2023, only 48% of their avg 19>24 growth. All YOY comparisons are now positive but only 39% of the 19>24 growth is real. YOY inflation in Total Retail has significantly slowed but we still see its cumulative impact. Growth: 23>24: 3.3%; Avg 19>24: +6.9%, Real: +2.9%.

Restaurants – They were hit hard by the pandemic and didn’t begin recovery until March 2021. However, they have had strong growth since then, exceeding $1T for the 1st time in 2023 and even setting a new monthly record of $99.5B this month. They have the biggest Ytd increases vs 23, 21 & 19 and all real sales are positive. Inflation slowed to 3.9% in May but is still +20.6% vs 21 and +26.2% vs 19. 38.6% of their 50.8% growth since 19 is real and they remain 3rd in performance behind Relevant & Total. Recovery started late but inflation started early. Growth: 6.1%; Avg 19>24:+8.6%, Real: +3.6%. They just account for 13.6% 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, grew Feb>Mar, fell in Apr, then grew in May. Only May & Ytd $ vs 21 are “really” negative. Prices vs 23 are -3.9%. Only 21.4% of 19>24 growth is real. Growth: 2.6%; Avg 19>24: +5.8%, Real: +1.4%.

Gas Stations – Gas Stations were hit hard by “stay at home”. 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>May they grew again. $ are only down Ytd vs 23. Pricing is a factor in the $ drop vs 23 but real $ vs May 21 & Ytd vs 21 & 19 are also down. Growth: -0.8%; Avg 19>24: +4.7%, Real: -1.2%. They show the cumulative impact of inflation and demonstrate how 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, the roller coaster continued. A December lift set a new monthly record of $494.7B & an annual record of $4.997T. Sales fell in Jan>Feb 24 rose in Mar, fell in Apr, then rose in May, a normal pattern. The May YOY lift of 2.8% is down 41% from their 92>23 avg. However, all actual & real comparisons are again positive. We should also note that 51% of their 41.6% 19>24 growth is real – #1 in performance. Growth: 3.4%; Avg 19>24: +7.2%, Real: +4.0%. This is where America shops. They finished 2023 and started up 2024 strong. In Mar>Apr their recovery appeared to be slowing. In May, the situation is improving.

Inflation is still low, but the cumulative impact is still there. Sales increases are still small, which is very evident in May. However, it is also significant that there are only 4 real drops vs 23 & 21, down from 6 in April. Restaurants are still doing well, but the Auto group and Gas Stations remain in turmoil. Although not as visible, the biggest concern is still with Relevant Retail. Sales increases remain markedly lower but actual & real sales comparisons are again all positive. Total Retail is also all positive. The recovery appears to be growing again.

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

  • Relevant Retail: Growth: +3.4%; Avg: +7.2%, Real: +4.0%. All 11 were up from Apr. Vs May 23: 7 were up, Real: 8. Vs May 21: 8 were up, Real: 5. Vs 19: Only Dept Stores were actually & really down. Furnishing strs. were also really down.
  • All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Sales are up 12.0% from April but their actual $ are only up vs May 23 & Ytd vs 21. Except vs May 23, their real numbers are all negative. They are even really down -10.1% vs 2019. Growth: -2.0%; Avg 19>24: -0.1%, Real: -2.1%.
  • Club/SuprCtr/$- They fueled a big part of the recovery because they focus on value which has broad consumer appeal. $ales are +9.5% from April and they are positive in all measurements. However, only 45% of their 34.3% 19>24 lift is real – inflation’s impact. Ytd growth is below Avg for the 2nd consecutive month. Growth: 4.1%; Avg: +6.1%, Real: +2.9%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Actual $ are +8.4% from April and positive for all comparisons. However, cumulative inflation has hit them hard. Real $ are down vs 21 and only 7% of the growth since 2019 is real. Growth: 1.6%; Avg 19>24: +5.2%, Real: +0.4%.
  • Health/Drug Stores – Many stores are essential, but consumers visit less frequently than Grocery stores. $ are +3.4% from Apr. They are only actually, and really down vs May 23 and really down Ytd vs 23. Because inflation has been relatively low, 63% of their 24.8% growth from 2019 is real. Growth: 2.2%; Avg 19>24: +4.5%, Real: +2.9%
  • Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Sales are up +13.6% from April and positive in all comparisons but real vs May 21. Plus, 63% of their 19>24 growth is real. Growth: 2.5%; Avg 19>24: +3.2%, Real:+2.1%
  • Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices are still deflating but they were high in 2022. Sales are +4.2% from April but negative in all other measurements but actual Ytd sales vs 2019. They have sold less product in 2024 than 2019. Growth: -7.9%; Avg 19>24: +2.3%, Real: -0.4%
  • Electronic & Appliances – This channel has had many issues. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 21. $ are up +7.6% from April and all comparisons are now positive – a big turnaround. We should also note that their current Ytd growth is essentially equal to their 19>24 avg. Growth: +0.76%; Avg 19>24: +0.79%, Real: +3.6%.
  • 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 8.0% from April but they are only positive vs May 21 & Ytd vs 21 & 19. Prices may be deflating but are still 16.8% above 21 so real sales are all negative except Ytd vs 19. Also, just 22% of their 19>24 sales growth is real. Growth: -3.0%; Avg 19>24: +5.5%, Real: +1.3%.
  • 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 +11.0% from April but down for all but Ytd vs 2019. The only positive real sales measurements are vs May 23 and Ytd vs 23 & 19. Their inflation rate has been lower than most groups so 71% of their 27.3% growth since 2019 is real. Growth: -2.5%; Avg 19>24: +4.9%, Real: +3.6%.
  • 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 +10.7% vs April and are again positive in all measurements – actual & real. They are still 2nd to NonStore in the % increase vs 19 and vs 21. 68% of their 44% 19>24 growth is real but their current rate is still below Avg. Growth: +7.2%; Avg 19>24: +7.5%, Real: 5.4%.
  • 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. $ are only +3.0% from April. Their YOY lift slowed to +7.3% in May and Ytd they are 40% below Avg. They are positive in all measurements and 81% of their 102% 19>24 growth is real. Growth: 9.1%; Avg: +15.1%, Real: +12.7%.

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 and in May, 8 channels are now deflating. This should help the Retail Situation. As expected, Sales grew from April. The 7.1% lift for Relevant Retail was above their 6.1% avg but the problem is with slowing YOY monthly increases. The 2.8% Relevant Retail lift vs May 23 was 41% below their 92>23 average 4.8% increase and 4 of 11 channels actually had a decrease. Miscellaneous led the way among the 7 with increases with +8.0%. Inflation is low and even deflating in many 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 April & May no channels had a Ytd lift above their 19>24 Avg. There is some good news. After a 2-month pause, Relevant Retail is again positive in all comparisons vs 23, 21 & 19. That’s 5 of the last 7 months. The slow recovery continues.

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.

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 – May Update: Slows to +1.6% vs 2023

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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, then turned up Jan>May 24. However, the CPI slowed in May to +3.3% from +3.4% in April. Grocery prices fell slightly, -0.01% from April and inflation slowed to 1.0% from 1.1%. After 12 straight months of double-digit YOY monthly increases, grocery inflation has now had 15 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 22, but at 1.6% in May, it is -51.5% below the national rate, a big change from +52% in January. We will look deeper into the data. 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 May 22 to May 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 May, Pet prices were up 0.1% from April. All but Food were up, with Services leading the way, +1.5%.

In May 22, the CPI was +13.7% and Pet prices were +10.5%. 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 consistently grew 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 Jun/Jul this 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. In April, prices in all but Vet fell. In May, all but Food grew.

  • 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 23, dipped in Oct>Dec, then rose Jan>May 24, but 31% of the 22.2% increase in the 53 months since Dec 2019 happened from Jan>Jun 2022 – 11.3% of the time.
  • Pet Food – Prices were at or below Dec 19 levels from Apr 20>Sep 21. They turned up & peaked in May 23. In Jun>Aug they fell, grew Sep>Nov, fell Dec>Feb, rose in Mar, fell Apr>May. 97% of the 22.0% 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 with Dec>Feb lifts, Mar/Apr drops & a May lift.
  • Pet Services– Inflation is usually 2+%. Perhaps due to closures, prices increased at a lower rate in 2020. In 2021 consumer demand increased but with fewer outlets. Inflation grew in 21 with the biggest lift in Jan>Apr. Inflation was stronger in 22 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 Jun>Aug, fell Sep>Dec, rose Jan>Mar, fell in Apr and rose in May.
  • 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 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>May.
  • 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 fell in April then rose in May, but Petflation is again about half of the National CPI.

Next, we’ll turn our attention to the Year Over Year inflation rate change for May and compare it to last month, last year and to previous years. We will also show total inflation from 21>24 & 19>24. Petflation fell to 1.6%, down from 1.7% in April. It is again 50% below 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 +0.2% from April but were +3.3% vs May 23, down from +3.4% last month because there was a bigger Apr>May price lift in 23. Grocery inflation also fell slightly to +1.0% from +1.1%. Only Pet Food & Groceries had a price decrease from last month. There were 4 drops in April – all Pet. The national YOY monthly CPI rate of 3.3% is down from 3.4% and 83% of the 22>23 rate but only 38% of 21>22. The 23>24 inflation rate is below 22>23 for all categories but Medical & Pet 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 102% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were still recovering from a deflationary period. Services expenditures now account for 64.1% of the National CPI so they are very influential. Their current CPI is +5.2% while the CPI for Commodities is +0.1%. This clearly shows that Services are driving almost all of the current 3.3% inflation rate.

  • U.S. CPI– Prices are +0.2% from April. The YOY increase is 3.3%, down from 3.4%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 65+% higher than the target. After 12 straight declines, we had 2 lifts, a stable month, 2 consecutive drops, now 3 of 6 with drops – still not good! The current rate is 17% below 22>23 but the 21>24 rate is still 16.7%, 73.9% of the total inflation since 2019. Inflation was low in early 2021.
  • Pet Food– Prices are -0.1% vs April and -1.1% vs May 23, down from -0.1%. Now, they are significantly below the Food at Home inflation rate, +1.0%. The YOY drop of -1.1% is being measured against a time when prices were 23.3% above the 2019 level and the current decrease is still below the -0.01% drop from 2020 to 2021. The 2021>2024 inflation surge has generated 99.1% of the total 23.0% inflation since 2019.
  • Food at Home – Prices are down -0.01% from April and the monthly YOY increase is 1.0%, down from 1.1%. It is radically lower than Jul>Sep 2022 when it exceeded 13%. The 26.2% Inflation for this category since 2019 is 16% more than the national CPI but still in 4th place behind 3 Services expenditures. 74.8% 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 up 0.6% from April but are -1.0% vs May 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, rose in Apr/May to a new record high, fell in Jun>Aug, grew in Sep>Oct, fell in Nov, grew again in Dec>Feb, fell in Mar>Apr, then rose in May.
  • Veterinary Services– Prices are +0.3% from April and +7.6% from 2023, still the highest rate in the Pet Industry. Plus, they are the leader in the increase since 2019 with +39.6% and since 2021, +28.2%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 22 & 23. It is still high in 24, so 71.2% 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 0.3% from April, and they are +3.1% vs last year. Medical Services are not a big part of the current surge as only 47% 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 surged Jan>Mar dropped in April then rose to a record high in May, +6.4% vs 23. Inflation peaked at +8.0% back in March 23. Now, 70% 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 +0.2% from April and +4.8% from 23. 3 of the last 5 months have been 4.0+%. Inflation has slowed but has been pretty consistent. 62% of the 19>24 inflation happened 21>24.
  • Total Pet– Petflation slowed to 1.6% from 1.7% in April and is 85% less than the 22>23 rate and 52% less than the U.S. CPI. For May, 1.6% is 48% below the 3.1% average rate since 1997. Vs April, prices grew 0.1% as all but Food had increases. Services led the way with +1.5%. An Apr>May price increase has happened in 22 of the last 27 years, so this month’s data was not surprising. In terms of Petflation, 2024 appears to be returning to a more normal pattern. However, the path to get there may be unusual and there is still a ways to go.

Now, let’s look at the YTD numbers.

The inflation rate for 22>23 was the highest for 4 of 9 categories – All Pet – Pet Food, Services, Veterinary & Total Pet. The 23>24 rate is usually much lower than 22>23 for all but Medical Services. 21>22 still has the highest rate for Food at Home, the 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 (2.2%). It comes as no surprise that Veterinary Services has the highest average rate (6.7%), but all 5 other categories are +4.5% or higher.

  • U.S. CPI – The 23>24 rate is 3.3%, the same as April, but down 38% from 22>23 and 60% less than 21>22. It is also 21% below the average YOY increase from 2019>2024, but it’s still 63% more than the average annual increase from 2018>2021. 78% of the 22.7% inflation since 2019 occurred from 2021>24. Inflation is a big problem that started recently.
  • Pet Food – Ytd inflation is 1.6%, down from 2.2% in April and 89% less than the 22>23 rate. Now, it is also 72% lower than 21>22 and 14% below 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. 94% of the inflation since 2019 occurred from 2021>24.
  • Food at Home – The inflation rate has slowed remarkably. At 1.1%, it is down over 87% from 22>23 & 21>22 and 56% from 20>21. Also, it is even 33% lower than the average rate from 2018>20. It remains in 3rd place 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 78% of the inflation since 2019 occurred from 2021>24.
  • Pets & Pet Supplies – Prices increased Jan>Feb, fell Mar>Apr then rose in May. The 2024 inflation rate of 0.1% is only higher than the -1.6% deflation in 20>21. Supplies have the lowest inflation since 2019. The only significant increases were 7.0% in 22 & 5.5% in 23. The 2021 deflation created a unique situation. Prices are up 11.4% from 2019 but 114% of this increase happened from 2021>24. Prices are up 13.0% from their 2021 “bottom”.
  • Veterinary Services – Inflation was high in 2019 and steadily grew until it took off in late 2022. The rate may have peaked in 2023, but it is still going strong at the start of 2024, +8.3%, the highest on the chart. They are also #1 in inflation since 2019 and since 2021. At +6.7%, they have the highest average annual inflation rate since 2019. It is 1.6 times higher than the National Average but 2.4 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 1.9%. In a non-pandemic year, “normal” is 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 surged in 2024,except for a drop in April. The Ytd 23>24 inflation rate of 5.1% is 2nd to Veterinary in the Pet Industry. It is 29% less than 22>23 and 16% 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 4.3%, which is 23% below the 20>21 peak but 39% above the 18>20 average. Consumers are paying over 25% more than in 2019, which usually reduces the frequency.
  • Total Pet – Ytd Petflation is 3.0%, down from 3.4%. It is 71% less than 22>23 but 32% higher than the 2018>21 average rate. However, it is now 9% below the CPI. Petflation is slowing in 2024. This is primarily being driven by drops in Pet Food inflation rates but Supplies inflation is also slowing. Services and Veterinary prices both reached record highs in May, but it was not enough to overcome the YOY monthly deflation in products.

Petflation is definitely slowing. May was 66% below the average for the month and 52% lower than the National CPI. This is about the same as it was back In 2021. One fact is often ignored in the headlines – Inflation is cumulative. Pet prices are 21.2% above 2021 and 25.6% higher than 2019. Those are big lifts. In fact, in May prices for Vet & Serv set new records. Total Pet is only 0.1% below the highest in history. Food prices are 1.1% below their peak and Supplies prices are 1.0% lower. Only Supplies prices (+10.3%) are less than 23% higher than 2019. Since price/value is the biggest driver in consumer spending, inflation will affect the Pet Industry. 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 evidence of this at GPE 24 where a record number of exhibitors offered OEM services. Strong, cumulative inflation has a widespread impact.

U.S. PET FOOD SPENDING $40.86B (↑$4.51B): MID-YEAR 2023 UPDATE

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The pandemic had a huge impact on Pet Food spending and the binge/bust was very visible. Recent strong inflation is also very impactful but is less visible. At Mid-year 2023, the strong $ growth that began in the 2nd half of 2021 continued. Pet Food Spending for the 12 months ending June 30, 2023 was $40.86B, up $4.51B (+12.4%) from a year ago. Let’s put that into proper perspective. In pre-pandemic, Mid-2019 Pet Food spending was $28.90B. That means that the average annual growth rate from 2019>23 is +9.1%. This is 62% higher than the average growth rate of +5.6% from 1984 to 2019. In the topline numbers, this industry segment is doing well. However, a new challenge began in 2022 – radically high inflation in Pet Food prices. Here’s what it was in mid-year 2023:

  • Mid-yr 23 vs 22: +14.1%
  • 2nd Half 22 vs 21: +14.0%
  • 1st Half 23 vs 22: +14.2%

Strong inflation began in 2022. It hit 10+% in June 2022 and prices reached a record high in May 2023. Prices have stabilized but are still within 1% of the peak. Traditionally, “normal” inflation increases have had little impact on Pet Food spending. However, the current increases are historic. While the 2024 inflation rate is now very low, high prices can affect Pet Parents’ buying behavior. We’ll get more evidence of any ongoing cumulative impact when the 2023 yearend Pet Food spending numbers are released  in early September.

If inflation was 14.1% for Mid-Yr 2023, then the 12.4% increase in Pet Food spending was really a -1.7% drop in sales. Consumers didn’t buy less. The drop came from a mixture of downgrading, moving to private label and value shopping.

Now, let’s get started with our Pet Food spending update for Mid-Year 2023. Pet Food (& Treat) Spending for the 12 months ending 6/30/23 was $40.86B, up +$4.51B (+12.4%). The following charts and observations were prepared from calculations based upon data from the current CEX report and earlier ones. The first chart will help put the current numbers into historical perspective and truly show you the recent change in the roller coaster ride of Pet Food Spending.

Here are the current numbers:

Mid-Yr 2023: $40.86B; ↑$4.51B (+12.4%) from Mid-Yr 2022. The net gain of $4.51B came from:

  ◦  Jul>Dec 2022: Up $2.34B from 2021.          ◦  Jan>Jun 2023: Up $2.17B from 2022.

Historical research has shown that Pet Food spending has been on a roller coaster since 2000, generally with 2 years up, followed by a flat or even declining year. This up and down “ride” was primarily driven by a succession of Food trends like Made in the USA, Natural and Super Premium”. The 2 yrs up then 1 yr flat/down pattern has been broken on a couple of occasions due to outside influences – the FDA grain free warning in 2018 and the COVID pandemic in 2020. We may see another major influence on spending – skyrocketing inflation. Right now, we’re seeing strong, consistent growth but it is primarily due to higher prices. We’ll see what happens, but the Pet Food spending rollercoaster ride is likely to continue in some form.

2013 was definitely a game changer for this segment as it began an extended period of deflation which continued through 2018. Midway through 2018, Pet Food prices were still 2.3% lower than in 2013. The spending drops in 2013 and 2016 were driven by pet parents value shopping for their recently upgraded pet food. As it turns out, 2014 brought out yet another new factor in Pet Food spending.

For over 30 years Baby Boomers were the leaders in Pet Food, both in spending and in adopting new products. Even in 2023, they still spend the most, but it turns out that the 25>34 yr-old Millennials led the movement to Super Premium in late 2014. The older groups, especially Boomers followed in 2015 and spending rose $5.4B. At the same time, the Pet Food spending of the 25>34 yr olds dropped. At first, we thought they had rolled back their upgrade. However, it turns out that they were leading the way in another element of the trend to Super Premium – value shopping. The Boomers once again followed their lead and spending fell -$2.99B in 2016. The Super Premium upgrade movement had 3 stages:

  1. Trial – The consumer considers the benefits vs the high price and decides to try it out. Usually from a retail outlet.
  2. Commitment – After a period of time, the consumer is satisfied and is committed to the food.
  3. Value Shop – After commitment, the “driver” is to find a cheaper price! – The Internet, Mass Market, Private label.

This brought us to 2017. Time for a new “must have” trend. That didn’t happen but competitive pricing brought about another change. Recent food trends have been driven by higher income and higher education groups. However, the “value” of Super Premium was established and now more “available”. Blue Collar workers led a new wave of spending, +$4.6B, as Super Premium penetrated the market more deeply. 2018 started off slowly, +$0.25B. Then came the FDA warning on grain free dog food. Many of the recent Super Premium converts rolled back their upgrade and spending fell -$2.51B. This decrease broke a 20 year spending pattern. In the 1st half of 2019, Pet Food spending remained stable at the new lower level. In the second half of 2019 we started to see a recovery from the overreaction to the FDA warning and spending increased by $2.3B. Then came 2020. The recovery was continuing but a new outside influence was added  – the COVID-19 pandemic. In March nonessential businesses were closed. This also produced a wave of panic buying in some truly essential product categories. In the Pet Industry there is only 1 truly essential category – Pet Food. Coupled with the FDA “recovery” and the ongoing movement to Super Premium, this produced an incredible $6.76B lift in Pet Food Spending in the 1st half of 2020. Spending fell in the 2nd half of 2020 and plummeted in the 1st half of 2021. Pet Parents didn’t binge again, and some began using up the stockpile that they panic bought in the early days of COVID. In the 2nd half of 2021, the up/down impact of COVID was essentially over. Pet Parents were still committed to their children’s health which included Super Premium Foods and Medical Supplements, often in treat form. The internet also made this quality choice accessible to more households, so Pet Food spending increased both in the 2nd half of 21 and the 1st half of 22. In 2022, strong inflation began. Prices peaked in May 2023 but remained high. Sales had strong growth in both the 2nd half of 22 and the 1st half of 23. However, inflation drove 100+% of the lift as there was a “real” -1.4% drop in Pet Food Sales. Strong inflation has stopped but prices remain within 1% of the peak. We’ll see what happens.

Let’s look at Pet Food spending by the 2 most popular demographic measures – income & age group. They both show the current and previous 12 months $ as well as 2022 yearend. This will allow you to track the spending changes between halves. The first graph is Income, which has been shown to be the single most important factor in increased Pet Spending and its influence continues to grow.

Here’s how you get the change for each half of the 22>23 mid-yr numbers using the over $100K group as an example:

  • $100K> Mid-yr Total Spending Change: $20.45B – $16.36B = Up $4.09B (green outline = increase; red outline = decrease)
    • 2nd half of 2022: Subtract Mid-22 ($16.36) from Total 2022 ($17.60B) = Spending was up $1.24B in 2nd half of 2022.
    • 1st half of 2022: Subtract Total 2022 ($17.60B) from Mid-23 ($20.45B) = Spending was up $2.85B in 1st half of 2023.
  • Spending was mixed for the year in the smaller segments but there were basically 3 different patterns in the individual groups. #1. $150K>, $100>149K & <$30K spent more in both halves. #2. $30>49K & $50>69K spent less in the 1st half of 2023. #3. $70>99K spent less in both halves. Note: The very price sensitive groups from $30K to $99K all had spending drops when inflation peaked in the 1st half of 2023.
  • Perhaps the most obvious fact is the continued spending disparity due to income. Back in 2014, prior to the big lift due to Super Premium, $70K was the “halfway point” in Pet Food spending. The under $70K group accounted for 66.7% of CUs and 51.1% of Pet Food spending. They lost the lead in 2015 as $70K> spent 50.8% of Pet Food $. In 2020, the binge buying of Pet Food by $100>150K pushed the $100K> group to the top at 55.1%. Then the big drop in 2021 flipped $70K> back into the lead at 60.8%. High inflation has caused another flip as $100K> is back on top with over 50.0%. The halfway point in Pet Food spending grew from $91K to $100K, the 2nd highest in history.
  • < $70K > The Pet Food spending patterns of these big groups changed in 2023. The Fall 2022 lift is larger for <$70K. However, that changed in 2023 when their sales fell while $70K> $ spiked. The impact of Higher Inflation on most lower incomes is very apparent in this big group.
  • < $100K > The spending patterns of these 2 groups closely mirrors the Under/Over $70K pattern except that the Fall 2022 spending lift for the $100K> group was slightly larger than for <$100K. The Total Spring 2023 lift came from the lowest and highest income groups, but with a $2.85B lift, $100K> was the primary driver.
  • <$30K – With a lift in the Fall and an even bigger increase in the Spring, spending for this lowest income group grew 31.2%, over twice the inflation rate. They obviously have a strong commitment to the health of their pet children.
  • $30>49K – This low-income group includes many Retirees. They are definitely committed to their pets, but their timing often lags behind other groups. The drop in 2023 was probably due to value shopping after their big 2022 lift.
  • $50>69K – This low-income group was hit hard by the pandemic. With strong growth in the 2nd half of 2022 and only a minor drop in 2023, their Pet Food spending is again above pre-pandemic 2019.
  • $70>99K –This middle-income group was the most negatively affected by the pandemic. However, they fully recovered in 2021. Spending flattened in early 2022, then dropped in the 2nd half and 1st half of 2023. They are very value conscious. The skyrocketing inflation in late 2022 and early 2023 obviously affected their Pet Food spending.
  • $100K>149K – High income is increasingly becoming “where it’s at” in Pet Spending. This group led the way in Pet Food binge buying and the subsequent drop. Sales grew in both halves but 57% of the lift was due to inflation.
  • $150K > Their Pet Food spending also fell in 2020, likely due to value shopping on the internet. They came back strong in 2021, Their pattern is similar to $100>149K but with a bigger lift in 2023. 53% of the lift was from inflation.

Now let’s look at Pet Food spending by Age Group.

  • <25 & 75> yr olds had spending drops from 2022. All other groups spent more.
  • <25 – After a huge increase in 2022, their spending fell -30%, but it’s still $1B. Most of the drop occurred in the 1st half of 2023 when prices peaked. It’s likely mostly due to downgrades, switching to private label & value shopping.
  • 25>34 – Up $1.42B, a strong rebound from last year’s -$1.35B drop. This group, especially those with families, are under a lot of financial pressure. They ignored it and spent 34% more. Only 41% of the lift was from inflation.
  • 35 > 44 – Spending grew overall but fell in 2023 likely because high prices intensified value shopping. They are 2nd in income and their spending has smaller fluctuations. They are again above $6B at mid-year but broke $7B in 2022.
  • 45 > 54 and – They have the highest income, so an annual up/down spending pattern is not expected. Their Pet Food $ dropped throughout 2020 but it has increased in every half since then. In 2023, it is now above the previous peak of $7.09B in 2019. The money is definitely there but 54% of the lift came from inflation.
  • 55>64 – This group is still mostly Boomers, the most emotional Pet Parents. In 2020 they led the way in Pet Food binge buying. They also had the biggest 2021 drop. With growth in both halves for 2 consecutive years, including a $1.5B lift in mid-2023 they are now 33% ahead of their pre-pandemic 2019 spending level.
  • 65 > 74– This group is all Boomers but with lower income. Spending grew slightly in both halves. They are committed to their pets. Even though the members change, they are the only age group with steady annual growth since 2016.
  • 75> – In 2021 they upgraded. Spending plummeted in the 2nd half of 22 then grew in 23 but was negative for mid-yr.

That gives us the “big picture” for our 2023 Mid-year update of Pet Food spending. Now we’ll take a closer look at the start of 2023. We’ll compare it to the 1st half of 2022 and document the biggest $ changes since then.

  • The biggest increases are much larger than the biggest decreases in all categories. In 4 categories – # Earners, Race/Ethnic, Housing and Area, all segments spent more in 2023 than in 2022.
  • There are a number of usual winners, $150K>, White, Not Hisp., Adv College Degrees, Boomers and Homeowners w/Mtges. There are also some surprises like Retirees, 2+ Unmarried Adults, No Earner in 2+CUs and 25>34 yr-olds.
  • When we look at the losers, we also see some familiar names, $30>49K, Gen Z, No Earner Single and Center City. However, there are 2 big surprises – Self-employed and 35>44 yr olds.
  • Pet Food spending in the 1st half of 2023 was $2.17B ahead of the 1st half of 2022 but $5.61B ahead of 2019. In fact, 66 of 82 demographic segments (80%) spent more in 2022 than in 2021. The widespread growth continues.

The spending lift was large in the 1st half, but not unexpected. After the huge drop in Pet Food $ in the 1st half of 2021 following the buying binge in 2020, we’ve had 4 consecutive halves with strong growth. The pandemic roller coaster ended in 2021 and we now appear to be on a path of consistent growth. Pet Food spending in mid-yr 2023 was $40.86B. This is $2.9B above the binge peak of $37.96B in mid-2020 and $11.96B more than the $28.90 in pre-pandemic mid-yr 2019. If we ignore the pandemic turmoil, then Pet Food spending has grown 41.5% in 4 years. That’s an annual growth rate of +9.1%, which is 62% higher than the +5.6% rate from 1984 to 2019. That’s real proof that the Pet Food segment is back and doing even better than usual. Unfortunately, a new challenge has risen and may have driven most of the strong growth – runaway inflation. It started slowly at the end of 2021, then continued to grow in 2022, hitting 10+% in June 2022. Prices peaked in May 2023 but are still high. Past periods of Pet Food inflation just caused Pet Parents to spend more. Pets must have food. However, this price increase is at record levels. We should note that the pandemic is also a factor in inflation because supply chain issues related to COVID had a big impact on prices. Overall inflation has lessened and dropped in Pet Food in 2024. All pet spending has been moving towards higher incomes. Households with a lot of financial pressure could cut back on more discretionary pet spending, reduce purchase frequency, and even downgrade their pet food. We see evidence of inflation’s negative impact on Pet Food in early 2023 as the 12.4% lift was really a -1.7% drop. We’ll see what happens in the 2nd half of 2023 when get the 2023 data in September

Retail Channel $ Update – March Monthly & April Advance

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In April, Commodities inflation vs last year slowed to 0.3% from 0.6% in March. Although radically down from its peak, cumulative inflation still impacts consumer spending. The YOY sales increase for April is below the 92>23 average (-20%) for Relevant Retail and for all but 2 channels. Prices are now deflating in many 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 March Monthly Report and then go to the April 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 March Monthly. All were up from February. Gas Stations were down vs 23 & Auto vs Mar 23 & 21. All other actual $ are up. We should note that Gas Stations are still selling less product than in 2019 but the worst news is that Relevant Retail is really down vs Mar 21, after 4 straight months of all positives. ($ are Not Seasonally Adjusted)

The March Monthly is $4.1B less than the Advance report. Restaurants: No/Chg; Auto: +$0.2B; Gas Stations: -$0.2B; Relevant Retail: -$3.9B. As expected, $ales were up vs FebruaryE for all. Actual sales for all but Auto &  Gas Stations were positive in all measurements. Gas prices turned up and their sales were down vs 23. Auto prices are deflating but $ were down vs March 23 & 21. There were 8 “real” sales drops, up from only 2 last month. Gas Stations had 4 but only Restaurants had none. Restaurants have the biggest increases vs 21 & 19 but Relevant Retail is still the top “real” performer vs 2019. However, only 53% of their growth is real.

Now, let’s see how some Key Pet Relevant channels did in March in the Stacked Bar Graph Format

Overall– All 11 were up from February. vs Mar 23, Only 5 were actually and “really” up. Vs Mar 21, 6 were up but only 3 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 30.3% since 2019. Prices for the Bldg/Matl group have inflated 18.8% since 2021 which is having an impact. HomeCtr/Hdwe are only actually up Ytd vs 21 & 19 but Farm stores are only actually up vs 19. Despite strong deflation, all “real” measurements but Ytd vs 2019 are negative for both. Plus, only 22% of the overall Building Materials group’s 19>24 lift was real. Avg 19>24 Growth: HomeCtr/Hdwe: 5.3%, Real: 1.2%; Farm: 5.9%, Real: 1.8%
  • Food & Drug – Both are truly essential. Except for the pandemic food binge buying, they tend to have smaller changes in $. In terms of inflation, the Grocery rate is still less than half of the rate for Drug/Med products. Drug Stores are now actually down vs March 23 & really down vs 23 & 21 but 66% of their 2019>24 growth is real. Supermarkets had the biggest $ lift from February and all sales comparisons but “real” vs 21 are positive. However, only 10% of their 19>24 increase is real growth. Avg 19>24 Growth: Supermarkets: +5.4%, Real: +0.6%; Drug Stores: +4.8%, Real: +3.2%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up 21.1% from February but their only positives are actual & real Ytd vs 23 & 19. Prices are still deflating, -2.2% vs 23. Deflation started in April 23 and is a big change from +1.1% in 22>23 and +7.9% in 21>22. The result is that 63% of their 43.4% lift since 19 is real. Avg 19>24 Growth Rate is: +7.5%; Real: +5.0%.
  • Gen Mdse Stores – Sales were up double digits for all vs February. All actual sales were up for Club/SupCtr/$ Stores. $ stores were only really down vs Mar 21. On the other hand, Disc Dept Stores were only actually up Ytd vs 21 & 19 and only really up vs 19. Plus, only 12% of their growth is real. The other channels average 46% in real growth. Avg 19>24 Growth: SupCtr/Club: 6.2%, Real: 3.0%; $/Value Strs: +6.7%, Real: +3.5%; Disc. Dept. Strs: +2.3%, Real: +0.3%
  • Office, Gift & Souvenir Stores – Sales are up strong, +10.0% from February but it was not enough. They are negative in all actual comparisons but Ytd vs 21 and their real sales numbers are all negative. This includes all negatives vs 2019. Their recovery started late, and their slow progress has been stalled since June 23. Avg Growth Rate: -0.9%, Real: -2.9%
  • Internet/Mail Order – $ are up 7.4% from February and set a new monthly record of $106.3B. All measurements are positive, but their growth is only 50.3% of their average since 2019. However, 82.5% of their 119.7% growth since 2019 is real. Avg Growth: +17.1%, Real: +14.7%. 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>Mar. All measurements vs 23, 21 & 19 are positive. They are still in 2nd place, behind the Internet, in the % increase vs 19 but fell to 2nd from 1st vs 21. Also, 76% of their 64.5% growth since 2019 is real. Average 19>24 Growth: +10.5%, Real: +8.3%.

March brought it’s usual lift. All channels – big and small were up vs February. However, the lifts were smaller as only 5 of 11 smaller channels were actually and really up vs March 23. Prices are now deflating in 9 of 11 channels but cumulative inflation is still a factor. Sales increases are lower as 8 of 11 channels were really down vs March 21. The Retail Recovery may be stalling. The commodities CPI slowed to 0.3% in April. Let’s look for any impact on Retail $ales.

April sales vs March only grew for Gas Stations, not surprising. A Mar>Apr Total Retail lift has only happened 5 times since 1992. However, the -1.0% drop is 48% less than the average of -1.9%. All actual $ measurements are positive vs 23, 21 & 19 for all groups but Gas Stations Ytd vs 23 and Auto vs Apr 21. The lift for all big groups vs April 23 were all at least 20% below their 92>23 Average. Inflation is still a big factor. The rate for all commodities, the best pricing measure for Retail, fell from 0.6% to 0.3% but is 15.7% vs 21. There is more “real”, but not good news. In March, 7 measurements were “really” down vs 23 & 21 and 3 came from Gas Stations. In April, 6 were still really down – 2 from Gas Stations. Relevant Retail’s real monthly sales vs last year have now been positive for 10 straight months, but after 4 straight months of all positives, their real monthly sales vs 21 are down again.

Overall – Inflation Reality – For Total Retail, inflation slowed but real sales vs Apr 21 are still 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 13.7% vs 21 which has slowed actual & real sales. Prices are slightly up for Relevant Retail and their monthly real sales are again down vs 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, up in Feb>Mar, then down in April. Inflation fell and is only 0.3%. YOY sales growth is only 79% of the 92>23 avg. Sales are up 3.5% Ytd vs 2023, only 50% of their avg 19>24 growth. Monthly Real sales vs 21 are again negative and only 40% of the 19>24 growth is real. YOY inflation in Total Retail has significantly slowed but we see its cumulative impact. Growth: 23>24: 3.5%;Avg 19>24: +7.0%, Real: +3.0%.

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 Ytd increases vs 23, 21 & 19 and all real sales are positive. Inflation stayed at 4.1% in April but is still +20.8% vs 21 and +20.7% vs 19. 39.4% of their 51.5% growth since 19 is real and they remain 3rd in performance behind Relevant & Total. Recovery started late but inflation started early. Growth: 6.2%; Avg 19>24:+8.7%, Real: +3.8%. They just account for 13.6% 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, grew in Feb>Mar, then fell in Apr. Actual & real $ vs Apr 21 are negative plus real Ytd vs 21. Prices vs 23 are -2.7%. Only 22.5% of 19>24 growth is real. Growth: 2.6%; Avg 19>24: +5.9%, Real: +1.5%.

Gas Stations – Gas Stations were hit hard by “stay at home”. 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/Apr they were +1.0%. $ are up vs Mar but down Ytd vs 23. Pricing is a factor in the $ drop vs 23 but real $ vs Apr 21 & Ytd vs 21 & 19 are also down. Growth: -0.8%; Avg 19>24: +5.1%, Real: -1.0%. They show the cumulative impact of inflation and demonstrate how 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, the roller coaster continued. A December lift set a new monthly record of $494.7B and annual record of $4.997T. Sales fell in Jan>Feb 24 rose in Mar, then fell in Apr, which is normal. The -0.7% drop is 40% less than the 92>23 avg and the YOY lift of 3.8% is down 20% from avg. Also, monthly real sales vs 21 are again down after 4 straight months of all positives. However, 52% of their 42.5% 19>24 growth is real – #1 in performance. Growth: 3.8%; Avg 19>24: +7.3%, Real: +4.1%. This is where America shops. They finished 2023 and started up 2024 strong but in Mar>Apr their recovery may 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 April. It is also significant that there are 6 real drops vs 23 & 21, only down 1 from 7 in March. Restaurants are still doing well, but the Auto group and Gas Stations remain in turmoil. Although not as visible, the biggest concern is still with Relevant Retail. Sales increases are markedly lower and monthly real sales vs 21 are again negative after 4 months of all positives. Consumers are spending more $ and buying more product than in 23, but less than in 21. Progress has definitely slowed.

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

  • Relevant Retail: Growth: +3.8%; Avg: +7.3%, Real: +4.1%. Only 3 were up from Mar. Vs Apr 23: 6 were up, Real: 5. Vs Apr 21: 6 were up, Real: 3. 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 down -5.3% from March. Their actual $ are only up Ytd vs 21 & 19. Their real numbers are all negative. They are even really down -9.4% vs 2019. Growth: -2.4%; Avg 19>24: +0.04%, Real: -2.0%.
  • Club/SuprCtr/$- They fueled a big part of the recovery because they focus on value which has broad consumer appeal. $ales are -5.8% from March, but they are positive in all measurements except real vs Apr 21. However, only 45% of their 34.8% 19>24 lift is real – inflation’s impact. Note: Ytd growth is now below Avg. Growth: 4.3%; Avg: +6.1%, Real: +2.9%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Actual $ are -5.5% from March but up for all except vs Apr 23. However, cumulative inflation has hit them hard. Real $ are down vs 21 and only 8% of the growth since 2019 is real. Growth: 1.5%; Avg 19>24: +5.3%, Real: +0.5%.
  • Health/Drug Stores – Many stores are essential, but consumers visit less frequently than Grocery stores. $ are -2.7% from Mar. Actual $ are all up and real $ are only down vs Apr 23. Inflation has been low so 65% of their 25% growth from 2019 is real. Note: Their growth is again below the 19>24 avg. Growth: 2.9%; Avg 19>24: +4.6%, Real: +3.1%
  • Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Sales are down -4.2% from March but positive in all comparisons but actual & real vs Apr 23 and real sales vs Apr 21. Plus, 63% of their 19>24 growth is real. Growth: 2.0%; Avg 19>24: +3.1%, Real:+2.0%
  • Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices are still deflating but they were high in 2022. Sales are -6.4% from March and negative in all other measurements but actual Ytd sales vs 2019. They have sold less product in 2024 than 2019. Growth: -9.0%; Avg 19>24: +2.4%, Real: -0.4%
  • Electronic & Appliances – This channel has many problems. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 21. $ are down -4.4% from March. Actual $ are up vs Apr 23 & Ytd vs 21 & 19. Due to strong deflation, all real sales are positive. Note: Their growth is now below their Avg. Growth: -0.2%; Avg 19>24: +0.7%, Real: +3.4%.
  • 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 16.9% from March but they are only positive vs Apr 23 & Ytd vs 21 & 19. Prices are deflating but still 18.0% above 21 so real sales are negative monthly & Ytd vs 21. Also, just 23% of their 19>24 sales growth is real. Growth: -2.5%; Avg 19>24: +5.5%, Real: +1.4%.
  • Sporting Goods, Hobby and Book Stores – Consumers turned their attention to recreation and Sporting Goods stores sales took off. Book & Hobby Stores recovered more slowly. Actual sales are -6.8% from March and 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 71% of their 27.3% growth since 2019 is real. Growth: -2.3%; Avg 19>24: +4.9%, Real: +3.6%.
  • 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 +4.1% vs March and are again positive in all measurements – actual & real. They are still 2nd to NonStore in the % increase vs 19 and vs 21. 70% of their 46% 19>24 growth is real but their current rate is still below Avg. Growth: +7.5%; Avg 19>24: +7.9%, Real: 5.7%.
  • 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. $ are +2.0% from March. Their YOY lift grew to +12.8% in April but Ytd they are 35% below Avg. They are positive in all measurements and 81% of their 104% 19>24 growth is real. Growth: 10.1%; Avg: +15.4%, Real: +13.0%.

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 and 7 channels are now deflating. This should help the Retail Situation. As expected, Sales fell from March. However, the drop was below average for many channels but he YOY monthly increase is also slowing. The 3.8% Relevant Retail lift vs Apr 23 was 20% below its 92>23 average 4.7% increase and 5 of 11 channels actually had a decrease. Among the 6 with increases, only NonStore & Misc. had double-digit lifts over 23. Inflation is low and now deflating in many 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. In April, there were none. Relevant Retail is really down Ytd vs 21 for the 2nd straight month, after 4 consecutive 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 – April Update: Drops to +1.7% vs 2023

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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, then turned up Jan>Apr 24. However, the CPI slowed in April to +3.4% from +3.5% in March. Grocery prices rose 0.1% from March, but inflation slowed to 1.1% from 1.2% due to a 0.1% price lift in 23. After 12 straight months of double-digit YOY monthly increases, grocery inflation has now had 14 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 22, but at 1.7% in April, it is again below the national rate, -50%, a big change from +52% in January. We will look deeper into the data. 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 April 22 to April 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 April, Pet prices were down -0.2% from March. All but Veterinary were down, with Supplies leading the way, -1.2%.

In Apr 22, the CPI was +12.5% and Pet prices were +10.2%. 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 consistently grew 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 Jun/Jul this 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 from all but Services. In April, prices in all but Vet fell.

  • 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, rose Jan>Mar, then fell in Apr, but 31% of the 22.0% increase in the 52 months since Dec 2019 happened from Jan>Jun 2022 – 11.5% of the time.
  • Pet Food – Prices were at or below Dec 19 levels from Apr 20>Sep 21. They turned up, peaking in May 23. In Jun>Aug they dipped, grew Sep>Nov, fell Dec>Feb, rose in Mar, fell in Apr. 96% of the 22.2% 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 drops in Mar/Apr, after Dec>Feb 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 Jun>Aug, fell in Sep>Dec, rose Jan>Mar, then fell in Apr.
  • 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>Apr.
  • 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 fell in April and Petflation is again below the National CPI for the first time since Nov 22.

Next, we’ll turn our attention to the Year Over Year inflation rate change for April and compare it to last month, last year and to previous years. We will also show total inflation from 21>24 & 19>24. Petflation fell to 1.7%, down from 3.8% in March. It is now 50% below 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 +0.4% from March but were +3.4% vs April 23, down from +3.5% last month because there was a bigger Mar>Apr price lift in 23. Grocery inflation also fell slightly to +1.1% from +1.2%. 4 of 9 categories had a price decrease from last month – all Pet. There were only 2 in Jan>Mar. The national YOY monthly CPI rate of 3.4% is down and just 69% of the 22>23 rate and 41% of 21>22. The 23>24 inflation rate is below 22>23 for all categories but 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 97% 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 +0.3%. This clearly shows that Services are driving almost all of the current 3.4% inflation rate.

  • U.S. CPI– Prices are +0.4% from March. The YOY increase is 3.4%, down from 3.5%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 70% higher than the target. After 12 straight declines, we had 2 lifts, a stable month, 2 consecutive drops, now 2 of 5 with drops – still not good! The current rate is 31% below 22>23 but the 21>24 rate is still 17.4%, 76.7% of the total inflation since 2019. Inflation was low in early 2021.
  • Pet Food– Prices are -0.5% vs March and -0.1% vs April 23, down from +1.8%. Now, they are significantly below the Food at Home inflation rate, +1.1%. The YOY drop of -0.1% is being measured against a time when prices were 22.3% above the 2019 level and the current decrease is now below the -0.02% drop from 2020 to 2021. The 2021>2024 inflation surge has generated 94.1% of the total 23.9% inflation since 2019.
  • Food at Home – Prices are up +0.1% from March, but the monthly YOY increase is 1.1%, down from 1.2% last month. It is radically lower than Jul>Sep 2022 when it exceeded 13%. The 26.4% Inflation for this category since 2019 is 16% more than the national CPI but fell to 4th place behind 3 Services expenditures. 75.8% 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 -1.2% from March and -0.7% vs April 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 Mar>Apr.
  • Veterinary Services– Prices are +0.8% from March and +7.1% from 2023, still the highest rate in the Pet Industry. Plus, they are the leader in the increase since 2019 with +39.9% and since 2021, +29.5%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 22 & 23. It is still high in 24, so 73.9% 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 3% from March, and they are +2.7% vs last year. Medical Services are not a big part of the current surge as only 43% of the 15.3% 2019>24 increase happened from 21>24.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021. In 2024 prices surged to a record high before dropping in April but are still +4.5% vs last year. Inflation peaked at +8.0% back in March 23. Now, 65% 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 +1.2% from March and +4.7% from 23. 2 of the last 4 months have been 4.0+%. Inflation has slowed but has been pretty consistent. 59% of the 19>24 inflation happened 21>24.
  • Total Pet– Petflation fell to 1.7% from 3.8% in March and is now 90% less than the 22>23 rate and 50% less than the U.S. CPI. For April, 1.7% is 45% below the 3.1% average rate since 1997. Vs March, prices fell -0.2% as all but Veterinary had drops. Vet was +0.8%. A Mar>Apr price drop has only happened in 3 of the last 27 years, all since 2015, so this month’s data was somewhat surprising. In terms of Petflation, 2024 appears to be returning to a more normal pattern. However, the path to get there may be unusual and there is still a ways to go.

Now, let’s look at the YTD numbers.

The inflation rate for 22>23 was the highest for 4 of 9 categories – All Pet – Pet Food, Services, Veterinary & Total Pet. The 23>24 rate is usually much lower than 22>23 for all but Medical Services, where they are tied. 21>22 still has the highest rate for Food at Home, the 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 (2.2%). It comes as no surprise that Veterinary Services has the highest average rate (6.6%), but all 5 other categories are +4.6% or higher.

  • U.S. CPI – The 23>24 rate is 3.3%, up from 3.2% in March, but down 41% from 22>23 and 59% less than 21>22. It is also 21% below the average YOY increase from 2019>2024, but it’s still 68% more than the average annual increase from 2018>2021. 78% of the 22.7% inflation since 2019 occurred from 2021>24. Inflation is a big problem that started recently.
  • Pet Food – Ytd inflation is 2.2%, down from 3.0% in March and 85% less than the 22>23 rate. Now, it is also 54% lower than 21>22 and only 16% 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 88% from 22>23 & 21>22 and 62% from 20>21. Also, it is now 19% lower than the average rate from 2018>20. It remains in 3rd place 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 Mar & Apr and the 2024 inflation rate of 0.4% is only higher than the -2.2% deflation in 20>21. Supplies have the lowest inflation since 2019. The only significant increases were 7.0% in 22 & 5.4% in 23. The 2021 deflation created a unique situation. Prices are up 11.7% from 2019 but 113% of this increase happened from 2021>24. Prices are up 13.2% from their 2021 “bottom”.
  • Veterinary Services – Inflation was high in 2019 and steadily grew until it took off in late 2022. It may have peaked in 2023, but is still going strong at the start of 2024, +8.5%, the highest on the chart. They are also #1 in inflation since 2019 and since 2021. At +6.6%, they have the highest average annual inflation rate since 2019. It is 1.6 times higher than the National Average but 2.4 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 1.6%. In a non-pandemic year, “normal” is 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 surged in 2024 until April. The Ytd 23>24 inflation rate of 4.8% is 2nd to Veterinary in the Pet Industry. It is 37% less than 22>23 and 16% below 21>22. However, it is still 1.4 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 4.1%, which is 29% below the 20>21 peak but 55% above the 18>20 average. Consumers are paying over 25% more than in 2019, which usually reduces the frequency.
  • Total Pet – Ytd Petflation is 3.4%, down from 4.0%. It is 67% less than 22>23 but 48% higher than the 2018>21 average rate. It is also still 3% above the national CPI. Petflation is slowing in 2024. This is primarily being driven by drops in Pet Food inflation rates but Supplies inflation is also slowing. Services prices dropped in April after a record high in March. Vet inflation slowed in April, but prices hit a record high. It was not enough to overcome the drops.

Petflation is definitely slowing. April was 45% below the average for the month and 50% lower than the National CPI. This is the same as it was back In 2021. One fact is often ignored in the headlines – Inflation is cumulative. Pet prices are 21.4% above 2021 and 26.1% higher than 2019. Those are big lifts. In fact, in April prices for Vet hit a new record. Total Pet & Services are only 0.2% below the highest in history. Food prices are 1% below their peak and Supplies prices are 1.6% lower. Only Supplies prices (+10.4%) are less than 26.4% 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 evidence of this at GPE 24 where a record number of exhibitors offered OEM services. Strong, cumulative inflation has a widespread impact.

The Retail Market – Evolution 1992 > 2023

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All aspects of the world are constantly changing. The Retail Marketplace is no exception as retailers try to meet the evolving wants and needs of consumers. When I was growing up, Traditional Department Stores and Brand-named products “ruled” the Retail Market. Now, the focus is on value (quality + price) and convenience so the Internet and the big “1 stop shopping” outlets like Warehouse Clubs, SuperCenters and Home Centers dominate the market. Plus, even smaller chain stores now offer a variety of private label products.

Total Retail grew from $2.0T in 1992 to $8.3T in 2023, a 312% increase – over 4 times more $ were spent. In this report we will try to identify the specific changes in the Retail Market from 1992 to 2023 that drove the increase. Some channels rose to prominence while others fell. The primary source of the data is the Census Bureau’s Monthly Retail Trade Report. This evolution report is long and complex. We will start with the Big Retail Groups then ultimately drill down to the individual channel level. The final results are relatively simple but the journey to our goal is very complicated. To make it easier for you to understand, I have created and included 38 graphs and charts so you can literally “see” the details of the 1992>2023 Retail Evolution. It will also reduce the amount of comments. We should also note that the data is in actual $. Inflation can certainly impact consumer spending, but we will focus on the amount spent. FYI – The CPI increased 117% from 1992>2023 and Commodities prices grew by 73.1% so Total Retail only had a 138% lift in the amount of product sold 92>23. Services were the overwhelming “leader” in raising prices – +153%.

Let’s get started. Our first two pie charts show the Total Retail market share for the Big Groups – Restaurants, Auto, Gas Stations and Relevant Retail in 1992 and 2023.

The 2 charts look very similar. There was no change in share for Gas Stations. Restaurants were the only group to gain share, +3.1%. I’m sure that a 150+% increase in prices was a big factor. The Auto group lost -1.7% but the big surprise was Relevant Retail losing -1.5%. They are now 59.9% but still slightly above their 92>23 average of 59.8%. This is rather calm. Let’s look at the cumulative growth by year in a line graph.

The first thing that you notice is that there are 2 big negative events – the Great Recession which hit bottom in 2009 and the 2020 Pandemic. The Recession drove sales down in all big groups. Auto was actually down in both 2008 & 2009. Their drop in 2008 was large enough to drive Total Retail down for that year too. Auto didn’t return to the sales level of 2007 until 2013. Gas Stations had a huge drop in 2009 but they recovered by 2011. Relevant Retail had a small drop. They almost recovered in 2010 but didn’t officially exceed 2008 sales until 2011. BTW, this was their only annual sales decrease since 1992. Restaurants had a miniscule drop and were back on track in 2010. As noted, sales in Total Retail were down in both 2008 & 2009. They fully recovered in 2011.

Now, the 2020 Pandemic. Sales decreased in Restaurants, Auto and Gas Stations but the lift in Relevant Retail was large enough to keep Total Retail slightly positive. Due to the “stay at home” attitude, the drops in Restaurants and Gas Stations were huge but all groups had recovered by 2021. Here are some 1992>2023 specifics.

Total Retail – 2023 sales = $8.294T; growth from 1992: +$6.280T (+311.8%); avg growth: +4.6%. They only had 2 annual decreases, in 2008 & 2009. The biggest drop was -7.4% in 2009. Their biggest lift was +18.4% in 2021.

Restaurants – 2023 sales = $1.094T; growth from 1992: +$891.2B (+493.3%); avg growth: +5.6%. They also have had only 2 drops, in 2009 & 2020. The biggest drop was -15.3% in 2020. Their biggest increase was +29.1% in 2021.

Auto – 2023 sales = $1.583T; growth from 1992: +$1.165T (+278.3%); avg growth: +4.4%. They have had 3 down years, in 2008, 2009 & 2020. The worst was -14.5% in 2009. Their best year was +22.5% in 2021.

Gas Stations – 2023 sales = $650.1B; growth from 1992: +$493.8B (+315.9%); avg growth: +4.7%. As you can see on the chart, their sales have been on an up/down roller coaster ride for the last 20 years. Interestingly enough, in 2023 they are at about the same level as they would have been if they had just maintained their 1992>2003 growth rate. They’ve had 10 down years, the worst was -22.3% in 2009 but 4 drops, including 23 were over 10%. Their best year was +33.4% in 2021 but 10 were in double digits. Prices are up 216% since 1992, with big fluctuations, which explains the rollercoaster.

Relevant Retail (Less Restaurants, Auto & Gas) – 2023 sales = $4.967T; growth from 1992: +$3.731T (+301.7%); avg growth: +4.6%. As we noted, their only down year was 2009, -3.6%. In fact, they only had one other year below +2.0% –  +0.5% in 2008. Their best year was +13.7% in 2021 and was the only year that their increase exceeded 10%. They are the epitome of consistency. Their share of Total Retail has been 59>59.9% in all but 7 years. In those years, it ranged from 60.2% in 2008 to 63.2% in 2020. Two of the 60+ years were 1992>93 at the start of our analysis, but five – 2008>10 & 2020>21 occurred when the country was in crisis. Relevant Retail includes a variety of channels that often have a radically different reaction to trends and outside influences. However, they always manage to “unite” to produce consistent growth for this big group.

In our next analytical step, we will begin to drill down into Relevant Retail to see the specifics behind the consistent growth in the largest member of the Big Groups. It is the area of most interest to the CPG industry. We start with pie charts showing the 1992 & 2023 share of dollars of the large channel Subgroups.

Unlike Total Pet, you immediately see a major difference in the 2 charts. With a 21.1% increase in share, NonStore moved up from #7 to #1. All other subgroups but Health & Drug loss share. The biggest decrease was -10.3% by Food & Beverage, the former leader. The smallest drop was -0.6% by Building Materials/Farm. Obviously, this deserves a closer look. We will turn to line charts covering 1992>2023 sales. To make them easier to read, they are divided into 3 groups based on the % size of their 92>23 increase. We will start with the lowest performers and work our way to the top.

With some slight variations, all 3 had a very similar pattern. They also more than doubled their sales but that was significantly below the overall quadrupling by Relevant Retail.

Furniture, Appliances & Electronics – $230.6B; +$129.5B (+128.2%); avg: +2.7%. They had the biggest Recession drop, -17.5% which started in 2008. They actually didn’t recover to the 2007 level until the 24.9% lift in 2021, after the 2020, -10.8% COVID drop.

Sport, Book, Hobby, Music – $102.1B; +59.1B (+137.6%); avg: +2.8%. They had the smallest Recession drop and sales were down before COVID. They actually grew in 2020. Worst year: 2018 (-4.7%); Best year: 2021 (+22.5%).

Clothing & Access – $307.1B; +$187.0B (+155.7%); avg: +3.1%. They had drops in 2008>09 & 2020 but quickly recovered. Worst year: 2020 (-24.8%); Best year 2021 (+45.1%).

You see some distinct differences in the patterns of this mid-level group. While their 1992>2023 increases were all below Relevant Retail, all Subgroups except Food & Beverage at least tripled their sales vs 1992.

Food & Beverage – $979.2B; +$608.6B (+164.3%); avg: +3.2%. They have had relatively low growth, but it has been very consistent. They had only 1 down year, 2009 and the drop was small, -0.2%. Their biggest lift was +9.3% in 2020. Their growth accelerated from 2020>2023. This was primarily due to 2 factors – the move to eat at home and strong inflation.

Miscellaneous Stores (includes Pet) – $173.4B; +$118.5B (+216.2%); avg: +3.8%. They had drops in 2001>03, 2008>09 & 2020. The biggest decrease was -8.1% in 2009 and they didn’t recover to the 2007 level until 2015. The 2020 drop was a different story. They recovered immediately in 2021 with the biggest lift in history, +24.2%. This was their first double digit lift since +12.9% in 1994. Growth slowed markedly to +1.2% in 2023.

General Mdse – $884.2B; +$636.3B (+256.7%); avg: +4.2%. Although their growth is bigger, they have a pattern very similar to Food & Bvg. They have only 1 drop. It also occurred in 2009 and was minor, -1.0%. They also had no double digit increases but their biggest lift was in 2021, +9.4%, not 2020 and their growth after COVID was a little stronger.

Building Material/Farm – $495.2B; +$364.2B (+278.0%); avg: +4.4%. Their pattern was very different. Sales fell from 2007 through 2010 and also in 2023. The biggest drop was -13.3% in 2009. Plus, their growth accelerated in 2020 and continued through 2022. The biggest lift was +14.3% in 2021 but 2020 was 2nd with +13.0%. Now, the top performers…

As you can see, there were only 2 Subgroups whose growth exceeded Relevant Retail – Health/Drug & NonStore. While Health/Drug had consistent growth, NonStore accelerated in 2010 and then skyrocketed in 2020.

Health & Drug – $435.7B; +$346.0B (+385.7%); avg: +5.2%. Their growth was definitely consistent as they were the only Subgroup with no decreases in sales. Their smallest lift was +0.9% in 2012. They only had 1 double digit increase, +10.1% in 1999. Sales did increase +9.0% in 2021 & +8.1% in 2023 but their strongest growth was 1996>2003 – avg: +8.3%.

NonStore – $1.360T; +$1.281T (+1632.1%); avg: +9.6%. Their spectacular growth is obviously being driven by the internet. They did have 1 down year, -2.5% in 2009. Sales took off in 2010 then exploded with a 29.3% lift in 2020. Every year 2017>2023 had a double-digit increase. Consumers seek value & convenience, which is the internet game plan.

The next pie chart shows each Subgroup’s share of Relevant Retail’s total growth. If you divide the share of growth by the share of 1992 sales you get a measure of performance. The bar graph allows you to compare the results.

As expected, NonStore drove the growth and their performance was “off the chart”. Performance must exceed 100% for a group to “earn its share”. Only NonStore and Health/Drug exceeded 100%. All others underperformed. This is interesting but not really usable. We must “drill down” to the channel level to find out what is really happening in Retail. We will do that by analyzing key channels within the Subgroups, starting with Furniture, Appliance & Electronics stores.

The Subgroup loss 3.6% share of Relevant Retail. Within the subgroup, Electronics lost almost 25% of its share of group $. Most was picked up by Furniture but a little by Appliances. Let’s look at their cumulative growth by year in a line graph.

All had big drops in 2009 but Appliance sales increased in 2020. They have similar patterns but with some differences.

Relevant Retail: +301.7% Furniture, Appliance, Electronics Subgroup: 128.2%

Electronics – $70.4B; +$30.2B (+74.9%); avg: +1.8%; They had strong consistent growth through 2007. Since then, they have been on a rollercoaster but trending down from their 2007 peak. Biggest Chges – ↑: 2021: +28.8%; ↓: 2020: -23.5%

Appliance – $21.5B; +$13.1B (+154.8%); avg: +3.1%; They had a big 2008 & 2009 recession drop but sales actually grew in 2020 and after, until dropping in 2023. Biggest Changes – ↑: 2021: +16.5%; ↓: 2009: -10.0%

Furniture – $138.7B; +86.3B (+164.9%); avg: +3.2%; $ dropped 2007>2009, 2020 & 2023. The biggest decrease was -14.2% in 2009. In 2007 their growth fell below the subgroup. They have exceeded it 2016>23. Biggest lift – 2021: +24.3%

Building Material/Farm

The Subgroup lost only -0.6% share of Relevant Retail $. Within the Subgroup, Homecenters “rule” and only they gained share, +5.9%. The drops were pretty balanced, ranging from -1.5% for Hardware to -2.2% for Farm and Paint/Wallpaper.

Homecenters obviously drive the Subgroup’s business. Sales for all channels fell during the recession but grew in the pandemic as consumers focused on “home”.

Relevant Retail: +301.7%     Building Materials/Farm Subgroup: 278.0%

Paint/Wallpaper – $17.2B; +$9.7B (+129.3%); avg: +2.7%; They had a long 2007>2009 drop. The biggest decrease was in 2009, -15.5%. They didn’t recover until 2015. Their biggest lift was +10.8% in 2005 but 2022 was a close 2nd, +10.3%.

Hardware – $40.8B; +$28.1B (+221.9%); avg: +3.8%; Their recession decrease was 2008>2009 with the biggest drop in 2009, -7.0%. They recovered in 2012. They’ve only had 3 drops since 92 but they’ve only had 1 10+% lift, +20.4% in 2020.

Farm – $67.4B; +$46.7B (+226.0%); avg: +3.9%; They have had 4 occasional 1 year decreases. The biggest was -11.8% in 2009. Their largest lift was +18.6% in 2021, which surpassed +16.7% in 2020.

Homecenters – $369.8B; +279.6B (+310.2%); avg: +4.7%; Their growth slightly exceeded Relevant Retail, so they gained share. They have always led the group in cumulative growth. They’ve only had 5 drops – 2007>10 & 2023. The biggest decrease was -13.3% in 2009. Their 2 biggest increases were +14.3% in 2021, which beat +13.0% in 2020.

Food & Beverage

Food & Bvg was the biggest loser in share of Relevant Retail, -10.3%. Within the Subgroup there was little change. Supermarkets still have 85% of the $. However, Alcohol Stores were the only channel that gained share, +1.5%.

The Subgroup has shown consistent growth with only 1 down year, -0.2% in 2009. Alcohol Stores have been the growth leader since 2006. Only Convenience Stores have had a lot of fluctuations. The others have very consistent patterns.

Relevant Retail: +301.7%     Food & Beverage Subgroup: 164.3%

Convenience Stores – $42.9B; +$22.9B (114.4%); avg: +2.5%; There have been a lot of ups & downs since 2001 with 8 drops. One lasted from 2007>09. The biggest were 2009: -7.4%; 2020: -5.0%. The biggest lifts: 2021: 20.6%; 2022: 19.6%.

Specialty Food – $29.8B; +$18.3B (+160.1%); avg: +3.1%; They have had slow, but consistent growth with only 1 down year, -2.2% in 2009. Their big COVID lift, +11.7% didn’t happen until 2021 but strong growth continued through 2023.

Supermarkets – $834.5B; +$517.1B (+162.9%); avg: +3.2%; Although they have lost a big share of Relevant Retail $, their growth has been very consistent. They have had no decreases since 1992. Their smallest increase was +0.1% in 2009. As expected, their biggest lift occurred in 2020, +10.1%. It was their only double-digit increase.

Beer, Wine & Liquor – $72.0B; +$50.3B (+231.9%); avg: +3.9%; Their growth is 42% more than Supermarkets. It has also been consistent with drops in only 1993 (-0.7%) & 1995 (-0.5%). Their biggest & only double-digit lift was +16.1% in 2020.

Health & Drug Subgroup

Health/Drug gained 1.5% in share of Relevant Retail. NonStore had the biggest gain and was the only other Subgroup to gain share. Drug had a big sales increase but their share of $ within the Subgroup actually decreased by -3.2%.

The Subgroup has shown consistent, above average growth, +5.2%. They have had no down years, but only 1 year with a double digit increase, +10.1% in 1999. Non-Drug Store $ took a big dive in 2020, but it had little impact on the Subgroup.

Relevant Retail: +301.7%     Health & Drug Subgroup: +385.3%

Cosmetic, Optical, Health – $71.8B; +$59.9B (503.0%); avg: +6.0%; Except for a small drop in 2009 and a big one in 2020, -11.0% they have had steady growth. It has accelerated since 2010. The biggest lift, +22.0%, was in their 2021 recovery.

Drug – $363B; +$286.1B (+367.8%); avg: +5.1%; They have had only 1 down year, -0.6% in 2012.  Their biggest lift and only double-digit increase, +11.9% occurred back in 1999. Obviously, Drug “rules” this Subgroup but the lift is somewhat deceptive. Actual Drug Stores, both chain and independent have been struggling recently as a huge number of Grocery & General Mdse stores have added a pharmacy within the store and online pharmacies have become a major force. The online only companies are still classified as Drug Stores, even though they have no physical outlets.

Clothing & Accessories

The Clothing & Acc. Subgroup’s share of Relevant Retail $ fell from 9.7% to 6.2%, a 36% drop. Within the Subgroup, only Jewelry, Luggage, Leather gained share. Shoes’ share fell -2.5% but the big Clothing channel only lost -0.3%.

All channels have a similar pattern, with Recession & COVID drops. Clothing is definitely the driving force. This is very apparent as the sales pattern of the Subgroup almost exactly matches the pattern of Clothing.

Relevant Retail: +301.7%     Clothing & Accessories Subgroup: +155.7%

Shoe Stores – $40.0B; +$21.4B (+114.7%); avg: +2.5%; They had 5 annual dips in $, including 2023. Sales dropped -4.9% in 2009 but -21.2% in 2020. They had a strong recovery, +34.1% in 2021. These were their only double-digit changes.

Clothing – $217.3B; +132.0B (+154.6%); avg: +3.1%; They only had 3 annual decreases, 2008, 2009 and the biggest, -29% in 2020. They had a huge recovery lift of +45.4% in 2021. Like Shoes, these were their only double-digit changes.

Jewelry, Luggage, Leather – $49.8B; +$33.7B (+208.9%); avg: +3.7%; They had the largest increase but also the most fluctuation – 7 decreases. The worst drop was -11.2% in 2009. They had a huge 53.6% lift in 2021 after -5.4% in 2020.

Sporting Goods, Hobby, Toy, Book, Music

This smallest, “entertainment” Subgroup lost -1.4% in share of Relevant Retl $, -40%. Within the Subgroup, Sporting Gds’ share jumped from 36.3% to 61.4%. The other 3 channels all had significant losses, with Books leading the pack, -11.3%.

Sporting Goods moved to the top in 2006 and stayed there. Toy/Hobby/Game essentially stabilized while Book and Sewing/Music/News began to decline. All had their biggest lift in 2021 then growth flattened or declined.

Relevant Retail: +301.7%     Sporting Goods, Toy, Hobby, Book, Music Subgroup: +137.6%

Book Stores – $9.7B; -$0.01B (-0.1%); avg: -0.002%; With the rise of the internet, sales have trended down since 2008. Their biggest drop, -30.0% was in 2020, followed by a +29.7% lift in 2021. They are 1 of only 2 negative channels.

Sewing, Music, News – $9.7B; +$1.9B (+24.3%); avg: +0.7%; This group also includes CD stores. Sales turned down in 2008, then stabilized until a -11.4% drop in 2020 which was followed by their biggest lift, +9.9% in 2021.

Toy, Hobby, Game – $21.4B; +$10.2B (+90.3%); avg: +2.1%; Sales were stable around $16B from 1998 to 2013, when they turned slightly up. $ fell 2017>19, grew 2020>22 then dropped in 23. Biggest changes: 2018, -7.3%; 2021, +26.4%.

Sporting Goods – $62.7B; +$47.1B (+302.2%); avg: +4.6%; Unlike the others, this channel is driven by physical activity. Its growth is strong, even exceeding Relevant Retail. Sales dropped in 2009, 2017>18 & 2022>23. The biggest drop was -4.5% in both 2017 & 2018. Their sales actually grew +16.6% in 2020, but they beat that with a +22.3% lift in 2021.

General Merchandise

This Subgroup lost 2.2% in its share of Relevant Retail $. Within the Subgroup, there were huge changes. While $/Value stores essentially held their place, -0.5%, Clubs/SuperCenters’ share skyrocketed from 16.1% to 73.1%. Department Stores – Traditional & Discount paid the price. Their combined share fell from 71.5% in 1992 to 15.0% in 2023.

You see 3 different patterns. 1. Strong Growth: Club/SupCtr; 2. Stability: $/Value; 3. Decline: Dept Stores

Relevant Retail: +301.7%     General Merchandise Subgroup: +256.7%

Traditional Department Stores – $29.9B; -$55.2B (-64.8%); avg: -3.3%; They have been fading for years with only 11 “up” years since 1992. Their biggest drop was -46.2% in 2020 but they “recovered” with a +46.6% lift in 2021.

Discount Department Stores – $102.7B; +10.8B (11.8%); avg; +0.4%; They are also fading, with only 4 “up” years since 2001. In fact, they are going away. Many are adding a big grocery section. They will be SupCtrs. The others, just Dept Strs.

$/Value Stores – $105.5B; +$74.7B (242.8%); avg: +4.1%; They evolved from 5&10¢ Stores. They have had steady, mid-level growth with no drops since 1998, but some stores are now struggling, especially with high cumulative inflation. Their biggest lift was +12.7% in 2020.

Warehouse Clubs/SuperCenters – $646.1B; +$606.0B (1514.1%); avg: +9.4%; They have become the dominant General Merchandise channel and their impact on the Relevant Retail Marketplace is second only to the Internet. They have had no down years. Their smallest lift was +0.9% in 2009. They had all double digit increases until 2006. Their biggest increase this century was +18.0% back in 2001.

Miscellaneous Stores

This small, mixed Subgroup lost only 0.9% share of Relevant Retail $. Within the group, A/O Miscellaneous (includes Pet) became dominant. Used Mdse also gained ground. The other 2 channels had double digit losses in share.

A mixture of channels & patterns – Growth, Stability, Decline. All had recession drops & sales for all, but A/O fell in 2020.

Relevant Retail: +301.7%     Miscellaneous Store Subgroup: +216.2%

Office – $9.5B; +0.4B (+3.8%); avg: +0.1%; They have been headed down since 2007, with a sales decrease every year. The biggest drop was -8.8% in 2009. Their biggest lift, +21.2% happened over 30 years ago in 1993.

Gift & Souvenir – $20.5B; +$8.2B (+67.4%); avg: +1.7%; For years their sales were steady around $17>18B. They had big drops in 2009 & 2020. They recovered strongly from COVID, +29.9% in 2021 and hit a new $ high, $21.2B in 2022.

A/O Miscellaneous – $118.9B; +$91.0B (+326.7%); avg: +4.8%; This mixed group has had strong, steady growth since an  -8.1% drop in 2009, including a +22.5% lift in 2021. Their growth exceeds Relevant Retail’s increase.

Used Merchandise – $24.5B; +$18.9B (+340.0%); avg: +4.9%; As consumers’ have become more focused on value, the appeal of this channel has increased. They had drops in 2009 & 2020 (-9.7%) but a huge, +35.4% lift in 2021.

NonStore

Thanks to the Internet, NonStore gained 21.1% in share and now have the biggest portion of Relevant Retail $, 27.4%. With 91.4% of the $, the Internet essentially owns the NonStore Subgroup.

Fuel & Other Direct more than doubled sales but that is nothing compared to the Internet, which sold 35 times more $.

Relevant Retail: +301.7%     NonStore Subgroup: +1632.1%

Fuel Dealers – $40.0B; +$23.3B (+140.0%); avg: +2.9%; This small channel had 16 double digit sales changes. The worst was -23.2% in 2009. The best was +34.0% in 2000. We should note that they were -15.6% in 23 after being +33.1% in 22.

Other Direct Sellers – $76.8B (+188.6%); avg: +3.5%; Their only down years were 2001 & 2008>10. The biggest drop was -9.2% in 2009. Their biggest lift was +12.3% in 2021. They had only 1 other double digit change, +10.8% back in 1994.

Internet/Mail/TV – $1.243T; +$1.208T (+3429.9%); avg: +12.2%; Since 1992 they have had no down years and 23 years with double digit growth. Best yr: +34.1% in 2020. With Selection, Value & Convenience, they are now America’s choice.

Now, it’s time to wrap our analysis up and lay out the results. The best way to compare channels is by Performance – divide a channel’s share of Relevant Retail’s growth by their 1992 share of $ales. Channels with a score of 100+% are earning their share. Here are the results for 29 channels.

There were only 2 Subgroups with 100+% Performance. There are 8 individual channels. Here are the 100+% Winners:

  • Internet/Mail 1137%
  • Clubs/SupCtrs 502%
  • NonDrug Health 167%
  • Drug Stores 122%
  • Used Mdse 113%
  • A/O Misc. 108%
  • Homecenters 103%
  • Sporting Goods 100%

If performance is 30% or less, the channel is likely in trouble. Here are the 8 Worst Performers:

  • Hobby,Toy,Game 30%
  • Electronics 25%
  • Gift/Souvenir 22%
  • Sewing/Music 8%
  • Disc Dept Strs 4%
  • Office 1%
  • Book -0.01%
  • Reg Dept Strs -21%

Many of the other 13 channels have problems but right now are getting by. In fact, if you take NonStore out of total $, the 4 with a score of 70>99% are “winning” their battle against other brick ‘n mortar retailers with 100+% performance.

Summary

Key Consumer Drivers – Value (Quality + Price), Convenience, Selection along with a big drop in the importance of Brand

Biggest Retail Market Changes:

  1. Consumers’ Movement to online shopping – mostly to NonStore but also in Brick ‘n Mortar Retailers
  2. Growth of Warehouse Clubs & SuperCenters, largely at the expense of Grocery & Department Stores
  3. The fall of Department Stores – Traditional & Discount
  4. The increasing demise of Big Box Specialty Retailers – especially Books, CD’s, DVD’s, Toy, Game, Electronics…