Archive for category: Pet Market Distribution Channels

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

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

We will begin with the February Monthly Report and then go to the March Advance Report. Our focus is comparing to last year but also 2021 & 2019. We’ll show both actual and the “real” change in sales as we factor inflation into the data.

Both reports include the following:

• Total Retail, Restaurants, Auto, Gas Stations and Relevant Retail (removing Restaurants, Auto and Gas)
• Individual Channel Data – This is more detailed in the Monthly reports, and we’ll focus on Pet Relevant Channels.

The data will be presented in detailed charts to facilitate visual comparison between groups/channels. The charts will show 11 separate measurements. To save space they will be displayed in a stacked bar format for the channel charts.

• Current Month change – % & $ vs previous month
• Current Month change – % & $ vs same month last year and vs 2021.
  • Current Month Real change vs last year and vs 2021 – % factoring in inflation
• Current Ytd change – % & $ for this year vs last year, 2021 & 2019.
  • Current Ytd Real change % for this year vs last year and vs 2021 and 2019
• Monthly & Ytd $ & CPIs for this year vs last year and vs 2021 which are targeted by channel will also be shown. (CPI Details are at the end of the report)

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

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

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

Overall– 8 of 11 were up from January. vs Feb 23, 8 were actually and 9 “really” up. Vs Feb 21, All were up and 8 were real increases. Vs 2019, Off/Gift/Souv were actually & really down. All others were up in both measurements.

• Building Material Stores – The pandemic focus on home has produced sales growth of 32.3% since 2019. Prices for the Bldg/Matl group have inflated 19.7% since 2021 which is having an impact. Both HomeCtr/Hdwe and Farm stores are only actually up vs 21 & 19. Deflation pushed Home Ctr/Hdwe really positive vs Feb 23 and they are again really up vs 19. Other real measurements vs 23 & 21 are negative for both and only 25% of the overall Building Materials group’s 19>24 lift was real. Avg 19>24 Growth: HomeCtr/Hdwe: 5.5%, Real: 1.3%; Farm: 7.2%, Real: 3.0%
• Food & Drug – Both are truly essential. Except for the pandemic food binge buying, they tend to have smaller changes in $. The inflation situation has flipped as the Grocery rate is now 66% lower than Drug/Med products. Both are down from January in $. Drug Stores are positive in all other measurements and 67% of their 2019>24 growth is real. All actual $ are up for Supermarkets and inflation is slowing but their 24 real sales are still down vs 21. Only 14% of their 19>24 increase is real growth. Avg 19>24 Growth: Supermarkets: +5.7%, Real: +0.9%; Drug Stores: +4.9%, Real: +3.4%.
• Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up 1.5% from January and their only negative is real Ytd vs 21. Prices are still deflating, -1.8% vs 23. Deflation started in April 23 and is a big change from +1.1% in 22>23 and +7.1% in 21>22. The result is that 65.2% of their 49.4% lift since 2019 is real. Their Avg 19>24 Growth Rate is: +8.4%; Real: +5.7%.
• Gen Mdse Stores – All were up vs January. Actual sales vs 21 & 19 were up for all. In fact, the only negatives came from Discount Department Stores. They were actually down Ytd vs 23 and really down Ytd vs 23 & 21. They are again really positive vs 19 but only 21% of their growth is real. The other channels average 47% in real growth. Avg 19>24 Growth: SupCtr/Club: 5.9%, Real: 2.7%; $/Value Strs: +6.8%, Real: +3.6%; Disc. Dept. Strs: +2.6%, Real: +0.6%
• Office, Gift & Souvenir Stores – Actual sales are up slightly, +0.4% from January but they are negative in all actual measurements but vs 21. Their real sales numbers are all negative but vs February 21. This includes negatives vs 2019. Their recovery started late, and their slow progress has been stalled since June 23. Avg Growth Rate: -0.9%, Real: -2.8%
• Internet/Mail Order – $ are down -4.7% from January but set a new monthly record of $100.3B. All measurements are positive, but their growth is only 68.2% of their average since 2019. However, 82.9% of their 121.9% growth since 2019 is real. Avg Growth: +17.3%, Real: +15.0%. As expected, they are still by far the growth leaders since 2019.
• A/O Miscellaneous – Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level of $100B for the first time in 2021. In 2022 their sales dipped in January, July, Sept>Nov, rose in December, fell in Jan>Feb 23, grew Mar>May, fell in Jun>Aug, rose in Sep>Nov, fell in Dec>Jan, then grew in Feb. All measurements vs 23, 21 & 19 are positive. They are in 2^nd place, behind the Internet, in the % increase vs 19 but the leader vs 21. Also, 78% of their 73.8% growth since 2019 is real. Average 19>24 Growth: +11.7%, Real: +9.5%.

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

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

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

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

Restaurants – They were hit hard by the pandemic and didn’t begin recovery until March 2021. However, they have had strong growth since then, setting an all-time monthly record of $96B in December 23 and exceeding $1T for the 1^st time. They have the biggest increases vs 23, 21 & 19 and all real sales are positive. Inflation slowed to 4.1% from 4.5% last month but is still +20.8% vs 21 and +25.8% vs 19. 39.5% of their 51.2% growth since 19 is real and they remain 3^rd in performance behind Relevant & Total. Recovery started late but inflation started early. Growth: 6.6%; Avg 19>24:+8.6%, Real: +3.7%. They just account for 13.5% of Total Retail $, but their performance improves the overall retail numbers.

Auto (Motor Vehicle & Parts Dealers) – They actively worked to overcome the stay-at-home attitude with great deals and a lot of advertising. They finished 2020 up 1% vs 2019 and hit a record $1.48T in 2021 but much of it was due to skyrocketing inflation. In 22 sales got on a rollercoaster. Inflation started to drop mid-year, but it caused 4 down months in actual sales which are the only reported sales negatives by any big group in 21>22. This is bad but their Y/E real 2022 sales numbers were much worse, down -8.2% vs 2021 and -8.9% vs 2019. 2023 was a true rollercoaster but the $ set a new record, $1.595T. $ fell in Jan 24 but grew in Feb>Mar. However, actual & real $ vs Mar 23 & 21 are negative plus real Ytd vs 21. Prices vs 23 are -0.8%. Only 23% of 19>24 growth is real. Growth: 2.1%; Avg 19>24: +6.0%, Real: +1.5%.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and need less gas. They started recovery in March 2021 and inflation began. Sales got on a rollercoaster in 2022 but reached a record $583B. Inflation started to slow in August and prices slightly deflated in Dec & Feb 23, then strongly fell in Mar>Jul to -20.2%. In August they rose to -3.7%. In Sep they were +2.7% but began deflating to -4.2% in Feb. In Mar they are +1.0%. Pricing is a big factor in the $ drop vs 23 but real $ vs Mar 21 & Ytd vs 21 & 19 are also negative. Growth: -3.0%; Avg 19>24: +5.4%, Real: -1.0%. They show the cumulative impact of inflation and demonstrate how strong deflation can be both a positive and a negative.

Relevant Retail – Less Auto, Gas and Restaurants – They account for 60+% of Total Retail $ in a variety of channels, so they took many different paths through the pandemic. However, their only down month was April 2020, and they led the way in Total Retail’s recovery. Sales got on a roller coaster in 2022 but all months in 2022 set new records with December reaching a new all-time high, $481B, and an annual record of $4.81T. In 2023, sales continued on the roller coaster. A December lift set a new monthly record of $494.7B and annual record of $4.997T. Sales fell in Jan>Feb 24 but rose in March, which is normal. However, the 9.5% lift is 24% below the 92>23 avg and the YOY lift of 3.1% is down 36% from avg. Also, real sales vs Mar 21 turned negative after 4 straight months of all positives. However, 54% of their 44.2% 19>24 growth is real – #1 in performance. Growth: 3.8%; Avg 19>24: +7.6%, Real: +4.3%. This is where America shops. They finished 2023 and started up 2024 strong but in March their recovery appears to be slowing. This is concerning.

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

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

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

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

Recap – The Retail recovery from the pandemic was largely driven by Relevant Retail and by the end of 2021 it had become very widespread. In 2022, there was a new challenge, the worst inflation in 40 years. Overall, inflation has slowed considerably from its June 22 peak, which has helped the Retail Situation. As expected, Sales grew from February. However, the lift was below average for most channels. The YOY monthly increase is also slowing. The Relevant Retail lift vs Mar 23 was 36% below its average 4.9% increase and 6 of 11 channels actually had a decrease. Among the 5 with increases, only SupCtr/$ Stores had a double-digit lift over 23. Inflation is low and now slightly deflating in most channels. However, we are still seeing the impact of high cumulative inflation. Only a few channels are doing well. The slowing of the  YOY sales increase has become the biggest problem. In March, only SupCtr/Club/$ & Electronics had a Ytd lift above their 19>24 Avg, down from 3 in February, which was still bad. Relevant Retail is now really down Ytd vs 21, after 4 straight months of all positives. The recovery has definitely slowed.

Finally, here are the details and updated inflation rates for the CPIs used to calculate the impact of inflation on retail groups and channels. This includes special aggregate CPIs created with the instruction and guidance of personnel from the US BLS. I also researched data from the last Economic Census to review the share of sales by product category for the various channels to help in selecting what expenditures to include in specific aggregates. Of course, none of these specially created aggregates are 100% accurate but they are much closer than the overall CPI or available aggregates. The data also includes the CPI changes since 2021 to show cumulative inflation.

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

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

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

In February, Commodities inflation vs last year rose from 0.1% in January to 0.3%. Although down from its peak, cumulative inflation still impacts consumer spending. The sales increase rate is lower than in recent years for most channels and even below the inflation rate in a number of cases. A sales increase below inflation indicates a drop in the amount of product sold. The recovery continues but there is still a long road ahead, 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 Final Report includes data from all respondents, so it takes longer to compile the data – about 6 weeks. Although the sample size for the Advance report is smaller, the results over the years have proven it to be statistically accurate with the final monthly reports. The biggest difference is that the full sample in the Final report allows us to “drill” a little deeper into the retail channels.

We will begin with the January Final Report and then go to the Advance Report for February. Our focus is comparing to last year but also 2021 & 2019. We’ll show both actual and the “real” change in $ as we factor inflation into the data.

Both reports include the following:

• Total Retail, Restaurants, Auto, Gas Stations and Relevant Retail (removing Restaurants, Auto and Gas)
• Individual Channel Data – This will be more detailed in the “Final” reports, and we’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. (For Jan, Monthly = Ytd)
  • 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 January Final. All were down from December. However, all but Gas Stations were up vs 23, 21 & 19. Considering inflation, the # of real drops vs last year & 21 (4) were the same as December. Gas Stations are still really down vs 2019 but for the 3rd straight month, Relevant Retail is “really” up vs all years. ($ are Not Seasonally Adjusted)

The January Final is $3.7B less than the Advance report. Restaurants: -$2.6B; Auto: -$0.7B; Gas Stations: +$0.1B; Relevant Retail: -$0.3B. As expected, $ were down for all vs December, but actual sales for all but Gas Stations were positive in all measurements vs 23, 21 & 19. Gas prices fell but Gas Stations sales were down vs 23. There were 5 “real” sales drops, 3 from Gas Stations. The real measurement vs last year for Relevant Retail was positive again at +2.3%. Total Retail also has all positive measurements (actual & real) vs 23, 21 & 19. 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 January in the Stacked Bar Graph Format

Overall– All were down from December. vs 23, 6 were both actually and “really” up. Vs 21, 10 were up but only 4 were real increases. Vs 2019, Off/Gift/Souv were actually & really down. Plus, Home Ctr & Hardware were also really down

• Building Material Stores – The pandemic focus on home has produced sales growth of 23.6% since 2019. Prices for the Bldg/Matl group have inflated 20.5% since 2021 which is having an impact. Both HomeCtr/Hdwe and Farm stores are only actually up vs 21 & 19. However, all real measurements vs 22 & 21 are negative for both and Home Ctr/Hdwe is now really down vs 19. This means that only 2.1% of the overall Building Materials group’s 19>24 lift was real. Avg 19>24 Growth: HomeCtr/Hdwe: 4.0%, Real: -0.2%; Farm: 6.2%, Real: 1.9%
• Food & Drug – Both channels are truly essential. Except for the pandemic food binge buying, they tend to have smaller fluctuations in $. They have been very different in inflation and the situation has flipped as the Grocery rate is now 60% lower than Drug/Med products. Drug Stores are positive in all measurements and 68% of their 2019>24 growth is real. All actual $ are up for Supermarkets and inflation is slowing but their 24 real sales are still down vs 21. Only 5% of their 19>24 increase is real growth. Avg 19>24 Growth: Supermarkets: +5.1%, Real: +0.3%; Drug Stores: +4.9%, Real: +3.4%.
• Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are down -42.2% from December, but their only other negatives are actual & real vs 21. Prices are still deflating, -1.1% vs 23, a big change from +1.5% in 22>23 and especially the +8.2% in 21>22. The result is that 66.5% of their 50.5% lift since 2019 is real. Their Avg 19>24 Growth Rate is: +8.5%; Real: +6.0%.
• Gen Mdse Stores – All were down vs December. Actual sales vs 21 & 19 were up for all but only $/Value had a lift vs 23. Real sales for Clubs & Disc Dept Stores were down vs 23 & 21. $/Value Stores were up vs all years. Disc Dept Strs are now really positive vs 19 but only 23% of their growth is real. The other channels average 41% in real growth. Avg 19>24 Growth: SupCtr/Club: 5.3%, Real: 2.2%; $/Value Strs: +6.3%, Real: +3.2%; Disc. Dept. Strs: +2.5%, Real: +0.6%
• Office, Gift & Souvenir Stores – Actual sales are down -32.5% from December, and they are negative in all measurements but vs 21. Their real sales numbers are all negative including -15.0% vs 2019. Their recovery started late, and their slow progress has stalled since June. Avg Growth Rate: -1.3%, Real: -3.2%
• Internet/Mail Order – $ are down -20.3% from December but set a new monthly record of $105.0B. All measurements are positive, but their growth is only 63.5% of their average since 2019. However, 83.4% of their 119.7% growth since 2019 is real. Avg Growth: +17.0%, Real: +14.8%. 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, then fell in Dec>Jan. However, all measurements vs 22, 21 & 19 are positive. They are in 2^nd place, behind the Internet, in the % increase vs 19 but the leader vs 21. (Only ahead of the Internet by +0.9%). 56% of their 70.4% growth since 2019 is real. Average 19>24 Growth: +11.2%, Real: +9.1%.

Cumulative inflation is becoming more important in Retail. In actual $, 6 channels reported sales increases vs 23 & 10 vs 21. When you factor in inflation, the number with “real” growth is still 6 vs 23 but only 4 vs 21. Inflation’s is slowing but it is still lowering sales increases. The January  lift vs 23 was only 18% of the 22>23 increase. The impact is also visible in specific retail channels. The commodities CPI increased slightly in February. Let’s look for any impact on Retail $ales.

February sales vs January grew for all big groups but Relevant Retail – a big surprise. A Jan>Feb Total Retail lift has only happened once in the last 30 years -2016 (+0.7%). That was also the only year that February wasn’t on the bottom in Retail Sales. All actual $ measurements are again positive vs 23, 21 & 19 for all big groups but Gas Stations, and the lifts vs 2023 have improved. Inflation is still a big factor. The national CPI grew from 3.1% to 3.2% but is still 18.0% vs 21. The all commodities rate, which is the best pricing measure for Retail, grew from 0.1% to 0.3% and is 17.4% vs 21. Here is some “real” good news. In February only 1 measurement was “really” down vs 22 & 21 and it came from Gas Stations. Relevant Retail’s real monthly sales vs last year have now been positive for 8 straight months, but the best news is that Relevant Retail is positive in all measurements vs last year, 2021 and 2019 for the 4^th consecutive month.

Overall – Inflation Reality – For Total Retail, inflation grew but all real sales are again positive. For Restaurants, inflation remains high, +4.5% but they are really positive vs 22 & 21. Gas prices are still deflating but that group is in turmoil. Auto prices are down but still up 19.6% vs 21 which significantly slowed their real sales. Inflation is down to 0.1% for Relevant Retail and all of their real sales are positive for the 4^th  straight month. They continue to make slow progress.

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 (new record), down in Jan 24, then unexpectedly up in Feb. Inflation grew but is only 0.3%. YOY sales growth is still low. Sales are up 3.4% Ytd vs last year, but this is only 46% of their avg 19>24 growth. All real sales are positive again but only 41% 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: 3.4%; Avg 19>24: +7.4%, Real: +3.3%.

Restaurants – They were hit hard by the pandemic and didn’t begin recovery until March 2021. However, they have had strong growth since then, setting an all-time monthly record of $96B in December 23 and exceeding $1T for the 1^st time. They have the biggest increases vs 23, 21 & 19 and all real sales are positive. Inflation slowed to 4.5% from 5.0% last month but is still +20.6% vs 21 and +25.6% vs 19. 40.4% of their 52.4% growth since 19 is real and they fell to 3^rd in performance behind Relevant & Total. Recovery started late but inflation started early. Growth: 6.3%; Avg 19>24:+8.8%, Real: +3.9%. They just account for 13.4% 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 $ grew in December pushing them to a new record, $1.595T. $ fell in January but surprisingly grew in February. All numbers are positive. Prices vs 23 are -0.3%. Only 29% of their 19>24 growth is real. Growth: 3.1%; Avg 19>24: +6.5%, Real: +2.0%.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and need less gas. They started recovery in March 2021 and inflation began. Sales got on a rollercoaster in 2022 but reached a record $583B. Inflation started to slow in August and prices slightly deflated in Dec & Feb 23, then strongly fell in Mar>Jul to -20.2%. In August they turned up to -3.7%. In Sep they were +2.7% but then began deflating and are -4.2% in Feb. Pricing is a big factor in the actual $ drop vs 23 but only Ytd real sales vs 21 & 19 are negative.  Growth: -4.3%; Avg 19>24: +5.5%, Real: -1.1%. Their data shows the cumulative impact of inflation and demonstrates how strong deflation can be both a positive and a negative.

Relevant Retail – Less Auto, Gas and Restaurants – They account for 60+% of Total Retail $ in a variety of channels, so they took many different paths through the pandemic. However, their only down month was April 2020, and they led the way in Total Retail’s recovery. Sales got on a roller coaster in 2022 but all months in 2022 set new records with December reaching a new all-time high, $481B, and an annual record of $4.81T. In 2023, sales continued on the roller coaster. A December lift set a new monthly record of $494.7B and annual record of $4.997T. Sales fell in January and February which is normal for all years but 2024. The -1.6% drop is much better than the -4.4% average since 2019. However, the big news is that all real sales vs last year, 21 & 19 are positive for a 4th consecutive month. 54% of their 44.5% 19>24 growth is real – #1 in performance. Growth: 3.9%; Avg 19>24: +7.6%, Real: +4.4%. This is where America shops. They finished 2023 and now have started up 2024 with all positive sales vs last year, 21 & 19. This is great news!

Inflation is still low, but the cumulative impact is still there. Sales increases are still small, but the Jan>Feb lift and the fact that all Non-Gas Station real sales numbers vs 22 & 21 are still positive is a good sign. Restaurants are still doing well, and Auto is improving. Inflation/Deflation has caused turmoil in Gas Stations’ sales. The biggest positive is from Relevant Retail. All sales measurements are again positive. This means that consumers not only spent more $ in 2023 and in Jan & Feb 24 vs last year, 21 & 19, they also bought more product. The turnaround continues to gain ground.

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

• Relevant Retail: Growth: +3.9%; Avg: +7.6%, Real: +4.4%. 6 were up from Jan. Vs Feb 23: 8 were up, Real: 10. Vs Feb 21: 10 were up, Real: 8. Vs 19: Only Dept Stores were actually & really down. Furnishing stores 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 from January. Their actual & real $ are only up vs Feb 23 & 21. All Ytd numbers are actually and really down, even vs 2019. Growth: -2.1%; Avg 19>24: +0.6%, Real: -1.3%.
• Club/SuprCtr/$- They fueled a big part of the recovery because they focus on value which has broad consumer appeal. $ales are up from January. In fact, both actual and real sales are positive in all measurements. However, only 44% of their 33.6% 19>24 lift is real – inflation’s impact. Note: Growth exceeds Avg. Growth: 3.1%; Avg: +2.8%, Real: +2.5%.
• Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Actual $ are down from January but up monthly and Ytd vs 22, 21 & 19. However, inflation hit them hard. Real $ are down vs 21 and only 14% of the growth since 2019 is real. Growth: 2.7%; Avg 19>24: +5.7%, Real: +0.9%.
• Health/Drug Stores – Many stores are essential, but consumers visit less frequently than Grocery stores. $ are down from Jan but positive in all other measurements, actual & real. Inflation has been relatively low so 67% of their 27.4% growth from 2019 is real. Note: Their growth is above the 19>24 avg. Growth: 5.7%; Avg 19>24: +5.0%, Real: +3.4%.
• Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Sales are up 12.8% from January and positive in all comparisons, actual & real vs 22, 21 & 19. Plus, 74% of their 19>24 growth is real. Growth: 2.4%; Avg 19>24: +3.9%, Real:+3.0%
• Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices are now deflating but they were high in 2022. Sales are up from January but negative in all other measurements but actual vs Feb 21 & 2019. Even their 19>24 real growth is negative. Growth: -9.2%; Avg 19>24: +2.3%, 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 2021. $ales are down from January, but they may have “turned it around”. Sales are now positive in all measurements. Note: Their growth also exceeds the average. Growth: +3.3%; Avg 19>24: +0.9%, Real: +3.5%.
• 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 now deflating, and sales are up from January but they are only positive vs 21 & 19. Prices are deflating but still high, 19.7% above 21. Real sales are negative for all but vs Feb 23 & 2019. Also, just 24% of their 19>24 sales growth is real. Growth: -4.2%; Avg 19>24: +4.3%, Real: +1.5%.
• Sporting Goods, Hobby and Book Stores – Consumers turned their attention to recreation and Sporting Goods stores sales took off. Book & Hobby Stores recovered more slowly. Actual sales are down from January and vs 23. However, due in part to recent deflation, real sales are positive in all measurements. Their inflation rate has been lower than most groups so 71% of their 29.5% growth since 2019 is real. Growth: -1.0%; Avg 19>24: +5.3%, Real: +3.9%.
• All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 at +0.9% but sales took off in March 21 and have continued to grow. Sales are up vs January and have returned to being positive in all measurements – both actual & real. They are still 2^nd in increase size vs 19 and moved back up to 2^nd from 3^rd vs 21. 73% of their 52.3% 19>24 growth is real. Growth: +4.1%; Avg 19>24: +8.8%, Real: 6.6%.
• 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 1^st time and they broke the $1 Trillion barrier. Their growth slowed significantly in 22/23 but is back to double digits. $ales are down from January but up in all other measurements. 81.3% of their 105.8% 2019>24 growth is real. Growth: 10.0%; Avg: +15.5%, Real: +13.2%

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 peak in June 2022, which has helped the Retail Situation. Surprisingly, Sales grew from January for all but Relevant Retail. Their drop was driven by NonStore, Grocery, Health/Drug & Sporting Gds. Inflation is slowing in most channels and even deflating in some. However, we are still seeing the impact of high cumulative inflation in some channels. Only a few channels are doing well. The new problem is that the YOY sales increase rate for almost all channels has markedly slowed. In February, only SupCtr/Club/$, Health/Drug & Electronics had a Ytd lift above their 19>24 Avg. This is bad, but better than January, when there was only 1. Some great news is that Relevant Retail has been positive in all measurements for 4 straight months. However, in February, 5 of 11 channels were really down vs 23. The slow turnaround continues, and we are making progress, but we still have a long way to go for a full recovery.

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.

In December, Commodities prices inflated 0.8% vs 2022, after deflating in November. Although down from its peak, cumulative inflation still impacts consumer spending. The sales increase rate is lower than the inflation rate in a number of channels, which indicates a drop in the amount of product sold. The recovery continues but there is still a long road ahead, 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 Final Report includes data from all respondents, so it takes longer to compile the data – about 6 weeks. Although the sample size for the Advance report is smaller, the results over the years have proven it to be statistically accurate with the final monthly reports. The biggest difference is that the full sample in the Final report allows us to “drill” a little deeper into the retail channels.

We will begin with the November Final Report and then go to the Advance Report for December. Our focus is comparing to last year but also 2021 & 2019. We’ll show both actual and the “real” change in $ as we factor inflation into the data.

Both reports include the following:

• Total Retail, Restaurants, Auto, Gas Stations and Relevant Retail (removing Restaurants, Auto and Gas)
• Individual Channel Data – This will be more detailed in the “Final” reports, and we’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 in 2022 and 2021.
  • Current Month Real change for 2023 vs 2022 and vs 2021 – % factoring in inflation
• Current Ytd change – % & $ for 2023 vs 2022, 2021 and 2019. (Ytd numbers for Dec are actually the Yr-End, (Y/E) totals)
  • Current Ytd Real change % for 2023 vs 2022, 2021 and 2019
• Monthly & Ytd $ & CPIs for 22>23 and 21>23 which are targeted by channel will also be shown. (CPI Details are at the end of the report)

First, the November Final. Only Relevant & Total Retail were up from October. However, all but Gas Stations were up vs 22, 21 & 19. Considering inflation, the # of real drops vs 22 & 21 (4) were down from (6) in October. Gas Stations are still really down vs 2019 but for the 1^st time in 2023, Relevant Retail is “really” up vs all years. ($ are Not Seasonally Adjusted)

The November Final is $1.3B less than the Advance report. Restaurants: -$0.3B; Auto: +$0.4B; Gas Stations: -$0.5B; Relevant Retail: -$0.7B. $ were only up vs October for Relevant & Total but actual sales for all but Gas Stations were positive in all measurements vs 22, 21 & 19. Gas prices fell but Gas Stations sales were down again monthly & YTD vs 22. There were 5 “real” sales drops, 4 from Gas Stations. The YTD real measurement vs 22 for Relevant Retail turned positive at +0.1%. They joined Total Retail and Restaurants with all positive measurements (actual & real) vs 22, 21 & 19. They are still the top “real” performer vs 2019 but only about half (48%) of their growth is real.

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

Overall– 7 were up from October. vs 22, 7 were up vs Nov and 8 YTD. 5 were “really” up monthly & Ytd. Vs 21, 7 were up monthly & 10 Ytd, but only 6 monthly & 3 Ytd were real. Vs 2019, Off/Gift/Souv & Disc Dept Strs were really down.

• Building Material Stores – The pandemic focus on home has produced sales growth of 34.4% since 2019. Prices for the Bldg/Matl group have inflated 13.1% since 2021 which is having an impact. HomeCtr/Hdwe stores are only actually up Ytd vs 21 & 19, but Farm Stores are up for all. However, Farm Stores vs Nov 21 is the only real positive number vs 22 & 21 for either channel. Importantly, only 20.1% of their 19>23 lift was real. It was only this high because most of the lift came prior to the inflation wave. Avg 19>23 Growth: HomeCtr/Hdwe: 7.1%, Real: 1.1%; Farm: 11.4%, Real: 5.2%
• Food & Drug – Both channels are truly essential. Except for the pandemic food binge buying, they tend to have smaller fluctuations in $. They have been very different in inflation and the situation has flipped as the Grocery rate is now 66% lower than Drug/Med products. Drug Stores are positive in all measurements and 73% of their growth since 2019 is real. All actual $ are up for Supermarkets but their 23 real sales are down vs 22 & 21 and just slightly positive vs 2019. Only 7% is real growth. Avg 19>23 Growth: Supermarkets: +6.3%, Real: +0.5%; Drug Stores: +6.0%, Real: +4.5%.
• Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up +10.4% from October. Their only other positives are YTD vs 22 & 19. Prices are still deflating, -1.8% and YTD, -0.3%, a big change from +5.6% in 21>22 and +6.5% in 20>21. The result is that 61% of their 42.6% lift since 2019 is real. Their Avg 19>23 Growth Rate is: +9.3%; Real: +5.9%.
• Gen Mdse Stores – All were up vs October. Actual sales vs 22, 21 & 19 were up for Clubs & $ stores but Disc Dept Stores were only up YTD vs 21 & 19. In real sales Clubs were down Ytd vs 22 & 21. $/Value Stores were only down Ytd vs 21. Disc Dept Strs were down for all, even vs 2019, -2.0%. The other channels average 37% In real growth. Avg 19>23 Growth: SupCtr/Club: 6.2%, Real: 2.3%; $/Value Strs: +6.9%, Real: +2.9%; Disc. Dept. Strs: +2.1%, Real: -0.5%
• Office, Gift & Souvenir Stores – Actual sales are down from October (-34.3%) and in all measurements but YTD vs 21 & 19. Their real sales numbers are all negative including -7.2% Ytd vs 2019. Their recovery started late, and their slow progress has stalled since June. Avg Growth Rate: +0.8%, Real: -1.8%
• Internet/Mail Order – Sales are up 16.5% from October and set a new monthly record of $124B. All measurements are positive, but their Ytd growth is only 50% of their average since 2019. However, 79.5% of their 94.6% growth since 2019 is real. Avg Growth: +18.1%, Real: +15.0%. As expected, they are still by far the growth leaders since 2019.
• A/O Miscellaneous – Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level of $100B for the first time in 2021. In 2022 their sales dipped in January, July, Sept>Nov, rose in December, fell in Jan>Feb 23, grew Mar>May, fell in Jun>Aug, then rose in Sep>Nov. All measurements are positive. They are in 2^nd place in the % increase vs 21 & 19, trailing only the internet, and 72% of their 54.2% growth since 2019 is real. Average 19>23 Growth: +11.4%, Real: +8.5%. .

Inflation remains an important factor in Retail. In actual $, 7 channels reported monthly sales increases vs 22 & 21. When you factor in inflation, the number with “real” growth drops to 5 vs 22 and 6 vs 2021. Inflation’s impact is slowing but it is still lowering sales increases. The November lift vs 2022 was still 20% below Jan/Feb. The impact is also visible in specific retail channels. The commodities CPI inflated in December. Let’s look for any impact on Retail $ales.

In November, sales vs last month were down in Auto, Restaurants, Gas Stations & 4 small channels. December was better as only Gas stations & 2 small channels had a sales decrease from November. A Nov>Dec lift in Total Retail has happened every year since 1992. The average increase was 15.4% so the 8.3% lift in 2023 was about half of the average. All actual $ measurements are again positive vs 22, 21 & 19 for all big groups but Gas Stations, but the lifts vs 2022 are slightly smaller than in November. Inflation is still a big factor. The national CPI rose from 3.1% to 3.4% and the all commodities rate, which is the best pricing measure for Retail, rose from -0.05% to 0.8%. There is some significant “real” good news. The big groups have 20 “real” sales measurements vs 22 & 21. In December, again only 4 were negative and 3 of those came from Gas Stations. Relevant Retail’s real monthly sales vs 22 have now been positive for 6 straight months, but the best news is that Relevant Retail is positive in all measurements for the 2^nd consecutive month.

Overall – Inflation Reality – For Total Retail, prices inflated, but all real sales are again positive. For Restaurants, inflation remains high, +5.2% but they are still really positive vs 22 & 21. Gas prices are deflating but that group is in turmoil. Auto prices are down Y/E vs 22 but up 9.9% Y/E vs 21 which pushed their real sales down. Inflation is 0.5% for Relevant Retail and all of their monthly & Y/E real sales are positive for the 2^nd straight month. They continue to make slow progress.

Total Retail – Since June 20, every month but April 23 has set a monthly sales record. In 2023 Sales have been on a roller coaster. Up in Jul>Aug, down in Sept, then up in Oct>Dec to new record highs of $771.4B & $8.333T. Prices inflated 0.8% and sales growth is still low. Sales are up 4.0% monthly vs last year & 3.2% Y/E but the Y/E is only 41% of their avg 19>23 growth. All real sales are positive again but only 34% of the 19>23 growth is real. Inflation in Total Retail has radically slowed vs 2022 but we still see its cumulative impact. Growth: 22>23: 3.2%; Avg 19>23: +7.8%, 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, setting an all-time monthly record of $91B in December and exceeding $1T in 2022 for the 1^st time. They have the biggest increases vs 22, 21 & 19 and all real sales are positive. Inflation slowed to 5.2% from 5.3% last month but is still +13.8% vs 21 and +22.6% vs 19. 36.1% of their 40.7% growth since 19 is real but they remain 2^nd in performance behind Relevant Rtl. Recovery started late but inflation started early. Growth: 22>23: 11.3%; Avg 19>23: +8.9%, Real: +3.5%. They just account for 13.0% 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 $ grew in December pushing them to a new record, $1.595T. Only Y/E real $ vs 21 are down. Prices vs 22 are -0.9% monthly and -1.5% Y/E. Only 5% of their 19>23 growth is real. Growth: 22>23: 4.2%; Avg 19>23: +6.6%, Real: +0.4%.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and need less gas. They started recovery in March 2021 and inflation began. Sales got on a rollercoaster in 2022 but reached a record $583B. Inflation started to slow in August and prices slightly deflated in Dec & Feb, strongly dropped in Mar>Jul to -20.2%. In August they turned up to -3.7%. In Sep they were +2.7% but then began deflating and are -2.3% in Dec. Pricing is a big factor in the actual sales drops vs 22 and only real sales vs Dec 21 are positive.  Growth: 22>23:  -11.5%; Avg 19>23: +6.4%, Real: -1.2%. The numbers show the cumulative impact of inflation and demonstrate how strong deflation can be both a positive and a negative.

Relevant Retail – Less Auto, Gas and Restaurants – They account for 60+% of Total Retail $ in a variety of channels, so they took many different paths through the pandemic. However, their only down month was April 2020, and they led the way in Total Retail’s recovery. Sales got on a roller coaster in 2022 but all months in 2022 set new records with December reaching a new all-time high, $481B, and an annual record of $4.81T. In 2023, sales continued on the roller coaster. A December lift set a new monthly record of $494.7B and annual record of $4.997T so actual sales are again up vs 22, 21 & 19. However, the big news is that all real sales vs 22, 21 & 19 are positive for a second consecutive month. 48% of their 36.9% 19>23 growth is real – #1 in performance. Growth: 22>23: 3.5%; Avg 19>23: +8.2%, Real: +4.1%. This is where America shops. Another month and now a full year of all positive sales vs 22, 21 & 19 is a great news.

Inflation is still low, but the cumulative impact is still there. Sales increases are still small, but the fact that 94% of all Non-Gas Station real sales numbers vs 22 & 21 are still positive is a good sign. Restaurants are still doing well, and Auto is improving. Inflation/Deflation has caused turmoil in Gas Stations’ sales. The biggest positive is from Relevant Retail. All sales measurements are positive again. This means that consumers not only spent more $ monthly in Nov, Dec & Annually in 2023 vs 22, 21 & 19, they also bought more product. The turnaround continues to gain ground.

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

• Relevant Retail: Growth: 22>23: 3.5%; Avg 19>23: +8.2%, Real: +4.1%. 9 were up from Nov. Vs 22: 8 were up monthly & Y/E, Real: 7 monthly, 6 Y/E. Vs 21: 8 monthly & Y/E, Real: 7 Monthly, 5 Y/E. Vs 19: Furnishing & Dept Strs had the only negatives.
• All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Their Actual $ are up 35.2% from November but down for all comparisons vs 22, 21 & even 19. Their real sales are also down in all measurements. Growth: 22>23: -2.7%; Avg 19>23: -0.4%, Real: -2.9%.
• Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. $ales are up from November and in all other measurements, both actual and real. However, only 35% of their 27.7% 19>23 lift is real – the impact of inflation. Growth: 22>23: 3.6%; Avg 19>23: +6.3%, Real: +2.4%.
• Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. $ are up from November and in all measurements vs 22, 21 & 19. However, inflation hit them hard. Real $ are down for all but Y/E vs 2019 and only 6.5% of the growth since 2019 is real. Growth: 22>23: 2.5%; Avg 19>23: +6.3%, Real: +0.5%.
• Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. Sales are up from November and positive in all other measurements but real vs December 21. Inflation has been relatively low so 73% of their 26.2% growth from 2019 is real. Growth: 22>23: 8.5%; Avg 19>23: +6.0%, Real: +4.4%.
• Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Actual $ales are up 41.5% from November and in all comparisons vs 22, 21 & 19. Real sales are down Y/E vs 22 & 21, but 65% of their 19>23 growth is real. Growth: 22>23: 1.6%; Avg 19>23: +3.9%, Real:+2.6%
• Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices are now deflating but they were high in 2022. Sales are down from November and negative in all other measurements but actual Y/E 2023 vs 2019. Their real sales are even down -4.4% vs 2019. Growth: 22>23: -5.4%; Avg 19>23: +2.6%, Real: -1.1%.
• Electronic & Appliances – This channel has many problems. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. $ales are up 16% from November and are now only down Y/E vs 21. Consistent deflation has caused real sales to be positive in all measurements. Growth: 22>23: 0.6%; Avg 19>23: +0.5%, Real: +2.8%.
• 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. Inflation has slowed to 0.9%. Sales are down from November, and they are only positive Y/E vs 21 & 19. They have the highest Y/E 22>23 Inflation rate of any channel so real sales are negative in all but Y/E vs 2019. Also, just 20% of their 19>23 sales growth is real. Growth: 22>23: -3.0%; Avg 19>23: +7.6%, Real: +1.7%.
• 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 $ales are up 31.9% from November and positive for all measurements. Real sales are only down Y/E vs 21. Prices deflated again and their inflation rate has been lower than most groups so 67.8% of their 29.8% growth since 2019 is real. Growth: 22>23: 0.4%; Avg 19>23 +6.7%, Real: +4.7%.
• 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 up vs November and positive in all other measurements – actual & real. They are 2^nd to NonStore in increases vs 21 & 19. 66% of their 40.4% 19>23 growth and 46% of their 16.0% 21>23 growth is real. Growth: 22>23: 3.2%; Avg 19>23: +8.9%, Real: 6.1%.
• NonStore Retailers – 90% of their volume comes from Internet/Mail Order/TV. The pandemic accelerated online spending. They ended 2020 +21.4%. The growth continued in 2021 as sales exceeded $100B for the 1^st time and they broke the $1 Trillion barrier. Their growth slowed significantly in 2022 and now 2023. $ales are up from November and in all other measurements. 77.8% of their 83.0% growth since 2019 is real. Growth: 22>23: 8.0%; Avg 19>23: +16.3%, Real: +13.3%.

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

Recap – The Retail recovery from the pandemic was largely driven by Relevant Retail and by the end of 2021 it had become very widespread. In 2022, there was a new challenge, the worst inflation in 40 years. Overall, inflation has slowed considerably from its peak in June 2022, which has helped the Retail Situation. Sales were up from November for Total & Relevant Retail & most channels. Inflation is slowing in many channels and even deflating in a few. However, some channels like Gas Stations, Grocery and Bldg Material stores still have high cumulative inflation rates so they are still struggling. Only a few channels are doing well. The new problem is that the sales increase rate vs 2022 for many channels has slowed. The evidence for this is now in. Only Restaurants, Health/Drug & Electronic/Appliances had a 22>23 change above their 19>23 average lift. Most of the other channels had an increase that was less than half of their 19>23 average. Some great news is that Relevant Retail has been positive in all measurement for 2 straight months. However, 5 of 11 channels were really down Y/E vs 22. The turnaround is a little more widespread, but 2023 was a mixed bag of pluses and minuses. We are making progress but still have a long way to go for a full recovery.

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 from 2021 to 2023 to show cumulative inflation.

Monthly 22>23 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.

In October, Commodities inflation fell from 1.4% to 0.4%. Although down from its peak, inflation still impacts consumer spending. The sales increase rate is lower than the inflation rate in a number of channels, which indicates a drop in the amount of product sold. A recovery may have started but there is still a long road ahead, so we’ll continue to track the retail market with data from two 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 Final Report includes data from all respondents, so it takes longer to compile the data – about 6 weeks. Although the sample size for the Advance report is smaller, the results over the years have proven it to be statistically accurate with the final monthly reports. The biggest difference is that the full sample in the Final report allows us to “drill” a little deeper into the retail channels.

We will begin with the September Final Report and then go to the Advance Report for October. Our focus is comparing to last year but also 2021 & 2019. We’ll show both actual and the “real” change in $ as we factor inflation into the data.

Both reports include the following:

• Total Retail, Restaurants, Auto, Gas Stations and Relevant Retail (removing Restaurants, Auto and Gas)
• Individual Channel Data – This will be more detailed in the “Final” reports, and we’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 in 2022 and 2021.
  • Current Month Real change for 2023 vs 2022 and vs 2021 – % factoring in inflation
• Current Ytd change – % & $ for 2023 vs 2022, 2021 and 2019.
  • Current Ytd Real change % for 2023 vs 2022, 2021 and 2019
• Monthly & Ytd $ & CPIs for 22>23 and 21>23 which are targeted by channel will also be shown. (CPI Details are at the end of the report)

First, the September Final. All were down from August but all, but Gas Stations were up vs 22, 21 & 19. When you consider inflation, the # of real drops vs 22 & 21 (6) was down from August (8). Gas Stations are still really down vs 2019. A significant fact to note is that Relevant Retail is again “really” up monthly vs 22. (All $ are Not Seasonally Adjusted)

The September Final is $2.3B more than the Advance. Specifically, Restaurants: +$0.9B; Auto: +$0.5B; Gas Stations: +$0.1B; Relevant Retail: +$0.7B. $ were down vs August for all, but actual sales for all but Gas Stations were positive in all measurements vs 22, 21 & 19. Gas prices turned up and Gas Stations sales dropped again monthly & YTD vs 22. There were 7 “real” sales drops, 5 from Gas Stations. Restaurants and now Total Retail are the only groups with all positives. Monthly real sales for Relevant Retail vs 22 are up again but have been down in 15 of the last 19 months. Their YTD real measurement vs 22 is still negative. They are the top “real” performer vs 2019 but only 48% of their growth is real.

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

Overall– Only 1 was up from August, but vs 22, 7 were up vs Sep. and 8 YTD. 5 were “really” up monthly & 4 Ytd. Vs 2021, 10 had increases but only 6 monthly & 3 Ytd were real. Vs 2019, Off/Gift/Souv & Disc Dept Strs were really down.

• Building Material Stores – The pandemic focus on home has produced sales growth of 34.9% since 2019. Prices for the Bldg/Matl group have inflated 19.6% since 2021 which is having an impact. HomeCtr/Hdwe stores are down monthly & Ytd vs 22 but up vs 21 &19. Farm Stores are up in all measurements. However, both have all negative real numbers vs 2022 & 2021. Importantly, only 20.6% of their 19>23 lift was real. It was only this high because most of the lift came prior to the inflation wave. Avg 19>23 Growth: HomeCtr/Hdwe: 7.1%, Real: 1.2%; Farm: 11.6%, Real: 5.4%
• Food & Drug – Both channels are truly essential. Except for the pandemic food binge buying, they tend to have smaller fluctuations in $. They have been very different in inflation and the situation has flipped as the Grocery rate is now 43% lower than Drug/Med products. Drug Stores are positive in all measurements and 73% of their growth since 2019 is real. While the $ are all up for Supermarkets, their 23 real sales are down vs 22 & 21 and just slightly positive vs 2019. Only 7% is real growth. Avg 19>23 Growth: Supermarkets: +6.3%, Real: +0.5%; Drug Stores: +5.8%, Real: +4.3%.
• Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are down -16.9% from August. Their only positives are YTD vs 22, monthly vs 21 and YTD vs 19. Prices are still deflating, -0.1% and YTD they’re flat, a big change from +5.4% in 21>22 and +6.5% in 20>21. The result is that 60% of their 42.8% lift since 2019 is real. Their Avg 19>23 Growth Rate is: +9.3%; Real: +5.8%.
• Gen Mdse Stores – All were down vs August but actual sales vs 22, 21 & 19 were up for all but Disc Dept Stores vs 22. In real sales Clubs were only down YTD vs 22 & 21. $/Value Stores were only down YTD vs 21. Disc Dept Stores are the worst performer and again are really down vs 2019, -1.0%. The other channels average 36% In real growth. Avg 19>23 Growth: SupCtr/Club: 6.3%, Real: 2.4%; $/Value Strs: +6.8%, Real: +2.8%; Disc. Dept.: +2.4%, Real: -0.25%
• Office, Gift & Souvenir Stores – Actual sales are down from August and in all measurements but YTD vs 21 & 19. Their real sales numbers are all negative including -6.5% Ytd vs 2019. Their recovery started late, and their slow progress has stalled in Jun>Sep. Avg Growth Rate: +1.0%, Real: -1.7%
• Internet/Mail Order – Sales are down from August and fell below $100B, but still set a record for the month. All measurements are positive, but their growth is only 47% of their average since 2019. However, 79% of their 95% growth since 2019 is real. Avg Growth: +18.2%, Real: +15.1%. 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, then rose in Sep. All measurements but real YTD vs 2022 are positive. They fell to 2^nd place in the % increase vs 2021 but 72% of their 54.8% growth since 2019 is real. Average 19>23 Growth: +11.5%, Real: +8.6%. They also dropped from 2^nd to 3^rd in growth since 2019, behind the Internet & Farm Stores.

Inflation remains an important factor in Retail. In actual $, 7 channels reported increases in sales vs 2022 and 10 vs 2021. When you factor in inflation, the number with “real” growth drops to 5 vs 2022 and 6 vs 2021. Inflation’s impact may be slowing but it is still lowering sales increases. The September lift vs 2022 was less than 50% of Jan/Feb. The impact is also visible in specific retail channels. The CPI fell in October. Let’s look for any impact in the Advance Retail $ales

The big change from September is that all but Auto and 3 small channels are up from last month. In September, all were down. Actually, this is truly the norm. 2009 is the only year since 1992 in which Total Retail sales fell Sep>Oct. The average increase is 3.4% so the 2.3% lift in 2023 is considerably smaller. On the plus side, all actual $ measurements are again positive vs 22, 21 & 19 for all big groups but Gas Stations. However, you will also see that the lifts vs 2022 are still low. Inflation is a big factor. However, the national CPI slowed from 3.7% to 3.2% and the all commodities rate, which is the best pricing measure for Retail, fell from 1.4% to 0.4%. There is some significant “real” good news. The big groups have 20 “real” sales measurements vs 22 & 21. In September and again in October, only 6 were negative and 4 of those came from Gas Stations. Relevant Retail’s real monthly sales vs 22 have now been positive for 4 straight months. Note: The monthly % lift vs 22 for Relevant & Total Retail is still less than half of Jan & Feb levels

Overall – Inflation Reality – Gas prices fell, and Auto prices are still down vs 22. For Total Retail, the rate was again below the sales lift and all real sales are positive. For Restaurants, inflation remains high, +5.4% but they are still really positive vs 22 & 21. Monthly real sales for Relative Retail vs last 22 are positive again. That’s 5 of the last 6 months but only 5 of the last 20. Also, again only their Ytd Real sales vs 2022 are down. They continue to make slow progress.

Total Retail – Since June 2020, every month but April 23 has set a monthly sales record. December 22 $ were $748.9B, a new all-time record. Sales have been on a rollercoaster. Up in July & Aug, down in September, then up in October. Inflation is only 0.4% but sales growth is still low. Sales are up 2.7% vs last year. That’s only 34% of their average 19>23 growth. All real sales measurements are again positive but only 35% of the 19>23 growth is real. Inflation in Total Retail has radically slowed vs 2022 but we still see its cumulative impact. Avg 2019>23 Growth: +7.9%, 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, setting an all-time monthly record of $91B in December and exceeding $1T in 2022 for the 1^st time. They have the biggest increases vs 22, 21 & 19 and all real sales are positive. Inflation slowed to 5.4% from 6.0% last month but is still +14.3% vs 21 and +22.1% vs 19. 37.7% of their 40.9% growth since 19 is real but they remain 2^nd in performance behind Relevant Retail. Recovery started late but inflation started early. Avg 2019>23 Growth: +8.9%, Real: +3.6%. They just account for 13.2% 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 real 22 sales numbers were much worse, down -8.2% vs 2021 and -8.9% vs 2019. 2023 is a true rollercoaster. $ grew in Jan>Feb, fell Mar>Apr, grew in May, fell Jun>Jul, grew in Aug, fell in Sep, then grew in Oct. Only Ytd real sales vs 21 are down. Prices vs 22 are -2.1% monthly & -1.6% Ytd. Only 6% of 19>23 growth is real. Avg 2019>23 Growth: +6.7%, Real: +0.5%.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and need less gas. They started recovery in March 2021 and inflation began. Sales got on a rollercoaster in 2022 but reached a record $583B. Inflation started to slow in August and prices slightly deflated in Dec & Feb 23, strongly dropped in Mar>Jul to -20.2%. In August they turned up to -3.7%. In Sep they were +2.7% but fell to -5.6% in Oct. Pricing is a big factor in the monthly & Ytd sales drops vs 22. Real sales vs 22, 21 & 19 are down both monthly & YTD.  Avg 2019>23 Growth: +6.6%, Real: -1.3%. The numbers show the cumulative impact of inflation and demonstrate how strong deflation can be both a positive and a negative.

Relevant Retail – Less Auto, Gas and Restaurants – They account for 60+% of Total Retail $ in a variety of channels, so they took many different paths through the pandemic. However, their only down month was April 2020, and they led the way in Total Retail’s recovery. Sales got on a roller coaster in 2022 but all months in 2022 set new records with December reaching a new all-time high, $481B, and an annual record of $4.81T. In 2023, Jan & Feb had normal drops then grew in March, starting another roller coaster. Sales fell in Jun>Jul, turned up in Aug, fell in Sep, then grew in Oct. Actual sales are up vs 22, 21 & 19. Real sales are only down Ytd vs 22. Monthly Real sales vs last year are again up. That’s 5 of the last 6 months, but only 5 of the last 20. 48% of their 19>23 growth is real – #1 in performance. Avg 2019>23 Growth is: +8.3%, Real: +4.2%. This group is where America shops. Another month of positive real sales is a good sign.

Inflation is still low but the cumulative impact is still there. Sales increases are still small, but the fact that 88% of all Non-Gas Station real sales numbers vs 22 & 21 are still positive is a good sign. Restaurants are still doing well, and Auto is improving. Inflation/Deflation has caused a drop in Gas Stations’ actual sales. Our biggest concern is Relevant Retail. Their situation is improving. Ytd real sales vs 22 are still negative, which shows the impact of cumulative inflation, but monthly real sales vs 22 have now been positive in 5 of the last 6 months. The slow turnaround continues.

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

• Relevant Retail: Avg Growth Rate: +8.3%, Real: +4.2%. 8 of 11 were up from September but only 7 were up vs 22 & vs 21. Only 4 had a “real” increase vs 22 & 3 vs 21. Inflation continues to slow sales increases.
• All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Their Actual $ are up from September but down for all comparisons but Ytd vs 21 & 19. Their real sales are down in all measurements, even vs 2019. Avg 2019>23 Growth: +0.2%, Real: -2.5%.
• Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. $ales are up from September and in all other measurements. Their real sales are down monthly vs 22 and Ytd vs 22 & 21. Only 36% of their 28.4% 19>23 lift is real – the impact of inflation. Avg Growth: +6.5%, Real: +2.5%.
• Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. $ are up from September and in all measurements vs 22, 21 & 19. However, inflation hit them hard. Real sales are down for all but Ytd vs 2019 and only 5.9% of the growth since 2019 is real. Avg Growth: +6.2%, Real: +0.4%.
• Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. Sales are up from September and positive in all other measurements, actual and real vs 22, 21 & 19. Inflation has been relatively low so 72% of their 25.4% growth from 2019 is real. Avg 2019>23 Growth: +5.8%, Real: +4.3%.
• Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Actual $ales are up from September and only down vs Oct 22. Their real sales are now down monthly and Ytd vs 22 & 21. However, 64% of their 19>23 growth is real. Avg 2019>23 Growth: +3.9%, Real:+2.5%
• Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices are now deflating but they were high in 2022. Sales are down from September and negative in all other measurements but actual Ytd vs 2019. Their real sales are even down -3.6% vs 2019. Avg 2019>23 Growth: +3.0%, Real: -0.9%.
• Electronic & Appliances – This channel has many problems. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. $ales are down from September and in all measurements but vs Oct 22 and Ytd vs 19. However, consistent deflation has caused real sales to be up in all measurements. Avg 2019>23 Growth: +0.6%, Real: +2.7%.
• 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. Inflation is still high at 4.2%. Sales are up from September, but they are again all negative vs 2022. They have the 2^nd highest Inflation of any channel so real sales are negative in all but Ytd vs 2019. Also, just 20% of their sales growth since 2019 is real. Avg 2019>23 Growth is: +7.7%, Real: +1.7%.
• 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 $ales are down from September, but positive for all but vs Oct 22 & 21. Real sales are down for all but YTD vs 22 & 19. Prices deflated again and their inflation rate has been lower than most groups so 66.2% of their 29.3% growth since 2019 is real. Avg 2019>23 Growth: +6.6%, Real: +4.5%.
• 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 up vs September and positive in all measurements. Real sales are only down vs Oct & Ytd 22. They are 2^nd to NonStore in increases vs 21 & 19. 65% of their 41.1% 19>23 growth and 46% of their 21>23 growth is real. Their Avg 19>23 Growth is: 9.0%, Real: 6.1%.
• NonStore Retailers – 90% of their volume comes from Internet/Mail Order/TV. The pandemic accelerated online spending. They ended 2020 +21.4%. The growth continued in 2021 as sales exceeded $100B for the 1^st time and they broke the $1 Trillion barrier. Their growth slowed significantly in 2022 and now 2023. $ are up from September and in all other measurements. 78% of their 86.5% growth since 2019 is real. Their Avg Growth: +16.9%, Real: +13.7%.

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 peak in June 2022, which should help the Retail Situation. Sales were up from September for all big groups & most channels. Inflation is slowing in many channels and even deflating in a few. However, some channels like Gas Stations, Grocery and Bldg Material stores still have high cumulative inflation rates so they are still struggling. Only a few channels are doing well. The new problem is that the sales increase rate vs 2022 for many channels has slowed and is even below the lower inflation rate. Real monthly sales for Relevant Retail have been positive vs 22 for 5 of the last 6 months but are still negative for 7 of 11 channels. The turnaround for Relevant retail is not widespread. It is primarily being driven by NonStore with a little help from Health Care. October was again a mixed bag of pluses and minuses. We still have a long way to go for a full recovery from the inflation tsunami.

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 from 2021 to 2023 to show cumulative inflation.

Monthly 22>23 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.