Archive for category: Pet Market Distribution Channels

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

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

We begin with the Final Report for July and then move to the Advance Report for August. Our focus is comparing 2022 to 2021 but also YTD 2019. We’ll show both actual and the “real” change in $ as we factor inflation into the data.

Both reports include the following:

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

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

• Current Month change – % & $ vs previous month
• Current Month change – % & $ vs same month in 2021
  • Current Month Real change – % vs same month in 2021 factoring in inflation
• Current YTD change – % & $ vs 2021
  • Current YTD Real change – % vs 2021 factoring in inflation
• Current YTD change vs 2019 – % & $
  • Current Real change YTD vs 2019 – % factoring in inflation
• Monthly & YTD $ & CPIs which are targeted by channel will also be shown. (CPI details are at the end of the report)

First, the July Final. Total Sales turned down for the 2^nd straight month but the $ were up for July and YTD vs 2021. However, factoring inflation into the data, for the 4th straight month only Restaurants had increases in these measurements. Here is the July data for the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The July Final is $0.7B less than the Advance Report. Restaurants had the biggest change: -1.1B; Relevant Retail: +0.4B; Auto: -$0.4B; Gas Stations: +$0.4B. Sales are down again from last month in all but Restaurants, but consumers continue to spend more vs 2021, except for another dip in Auto. However, the “real” numbers tell a different story. All but Restaurants are again really down in all measurements vs 2021. Restaurants had a late recovery and half of the inflation in this group came before 2022. The inflation impact on Relevant Retail is especially significant as their Real YTD sales vs 2021 are again negative. They do have the best performance since 2019 as 64.4% of their 31.7% growth is “Real”.

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

Overall – 6 of 11 were down vs June. Vs July 2021, 10 reported more $ but only 3 were really up. In YTD vs 2021, 9 reported increases but only 4 were real. Vs 2019, only Office/Gift/Souvenir & Discount Dept Stores were “really” down.

• Building Material Stores – Their Spring lift has ended and was not as strong as last year. YTD Home Ctr/Hdwe is up 6.8% vs 21 but Farm stores are only +2.2%. The Bldg/Matl group has an inflation rate of 10.8% which produced all negative real numbers. The pandemic caused consumers to focus on their homes which produced sales growth over 36% since 2019 in both channels. Importantly, 61.1% of this lift was real, primarily because the bulk of the lift came from 20>21, prior to the inflation wave. Avg Growth Rate: HomeCtr/Hdwe: 10.9%, Real: 6.7%; Farm: 11.4, Real: 7.3%
• Food & Drug – Both channels are truly essential. Except for the pandemic food binge buying, they tend to have smaller fluctuations in $. However, they are radically different in inflation. The YTD rate for Grocery products is 4 times higher than for Drugs/Med products. Drug Store $ are down from June but up vs 21. Real sales are down vs July 2021 but 88% of their growth since 2019 is real. The Real Sales for Supermarkets are down for the month & YTD. Also, only 19.8% of their growth since 2019 is real. Avg Growth Rate: Supermarkets: +6.5%, Real: +1.4%; Drug Stores: +4.4%, Real: +3.9%.
• Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Their Spring lift seems to be over and 2022 YTD sales are essentially equal to 2021. Their current inflation rate is 5.2% which is down from 7.5% in April but YTD it is still 6.7%. It was also high in 20>21, +4.8%. However, 72% of their 48% lift since 2019 is real. Their Avg Growth Rate was: +14.0%; Real: +10.4%.
• Gen Mdse Stores – Sales were up for all but $/Valu vs June. Discount Dept stores are down for the month and YTD vs 2021. All other groups are up for both. All real measurements vs 2021 are negative for all channels. Disc. Dept Stores were hurting before COVID and now their sales are “really” down from 2019. The other channels have 41% real growth. Avg Growth Rate: SupCtr/Club: 5.7%, Real: 2.2%; $/Value Strs: +7.6%, Real: +4.3%; Disc. Dept.: +2.6%, Real: -0.001%
• Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are up across the board vs June & 2021. The growth vs 2021 has been strong enough that it turned real YTD sales positive vs 2021. However, their real sales vs 2019 are still down -1.9%. Their true recovery is still a ways off. Avg Growth Rate: +1.9%, Real: -0.6%
• Internet/Mail Order – The growth of the “hero” of the Pandemic is slowing. July Sales are up vs June and 2021 but their YTD growth rate is only half of their average since 2019. However, 92% of their 79.0% growth since 2019 is real. Their Avg Growth Rates is: +21.4%, Real: +19.6%. As expected, they are by far the growth leaders since 2019.
• A/O Miscellaneous – This is a group of specialty retailers. Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level by December 2021 as annual sales reached $100B for the first time. In 2022, they are by far the Sales increase leaders over 2021. Their sales dipped in January from December and again in July but all measurements have been positive for every other month. Plus, 87% of their 59.4% growth since 2019 is real. Average Growth Rate is: +16.8%, Real: +14.9%. They are 2^nd in growth since 2019 to the internet. I’m sure Pet Stores are helping.

There is no doubt that high inflation is an important factor in Retail. In actual $, 10 of 11 channels reported increases in monthly  and YTD sales over 2021. When you factor in inflation, the number with any “real” growth falls to 4 for YTD & 3 for monthly. This is a very clear indication of the strong impact of inflation at the retail channel level. Recent data indicates that Inflation again slowed a little. Let’s look at the impact on the Advance Retail Sales numbers for August.

We have had memorable times since 2019. Some big negatives, including the 2 biggest monthly drops in history but a lot of positives in the Pandemic recovery. Total Retail reached $600B in a month for the first time and broke the $7 Trillion barrier in 2021.  Relevant Retail was also strong as annual sales reached $4T and all big groups set annual $ales records in 2021. Now, radical inflation is a big factor with the largest increase in 40 years. At first this reduces the amount of product sold but not $ spent. This was evident again in August Relevant Retail $. There was a small overall sales increase from July and $ were up vs July 2021 for all. However, in Relevant Retail the actual amount of product sold vs 2021 fell.

Overall – Inflation Reality is still here. The monthly increase vs 2021 continues to be lower than the inflation rate. The still recovering Restaurants and Gas Stations are up double digits vs 2021 and Auto $ turned positive again. August set a new monthly $ record, but the real YTD sales vs 2021 for all but restaurants are down for the 5th straight month.

Total Retail – Every month in 2022 has set a monthly sales record. August $ are $699B, the 3rd largest of all time. 2022 has become somewhat normal as sales have stayed near the current level for 4 months. We should now expect a slight dip in September. August $ are +1.3% vs July and are up 10.4% vs August 2021 and 10.3% vs YTD 2021. However, when you factor in double digit inflation, both measurements are down for the 6th consecutive month and only 39.9% of the 31.6% growth since 2019 is real. The Avg Growth Rate is: +9.6%, Real: +4.0%. The impact of Inflation continues.

Restaurants – They were hit hard by the pandemic and didn’t truly start to recover until March 2021. Sales in the last 9 months of 2021 exceeded $70B and 2021 was the biggest year in history, $876B. January sales fell from December but then turned up, setting new all-time monthly records in March>May. $ fell in June, set a new record in July and then fell again in August. They are the only big group that is positive in all measurements vs 2021 & 2019. Inflation is high at 7.9% for August and 7.1% YTD but it is the lowest of any big group. 58.7% of their 31.0% growth since 2019 is real. Their Avg Growth Rate: +9.4%, Real: +5.7%. They only account for 12.6% of Total Retail $ales, but their strong performance helps to improve the overall retail numbers.

Auto (Motor Vehicle & Parts Dealers) – This group actively worked to overcome the stay-at-home attitude with great deals and a lot of advertising. They finished 2020 up 1% vs 2019 and hit a record $1.48T in 2021. In 2022 sales got on a rollercoaster – Jan down, Feb/Mar up, Apr>May down, June up, July down, August up. The August lift was strong, +9.5%. Their 4 down months are the only reported sales negatives by any big group vs 2021. This is bad but their real YTD sales numbers are much worse. Extremely high inflation has pushed their real YTD sales down -12.4% vs 2021, the worst of any group. Plus, their 24.3% growth since 2019 is really down -10.7%. Their Avg Growth Rate: +7.5%, Real: -3.7%. Inflation has slowed in the last 3 months. It is likely that the 4 drops in $ales vs 2021 were tied to higher inflation.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and obviously need less gas. This group started recovery in March 2021 and reached a record $584B for the year. Sales fell in Jan>Feb turned up in Mar>Jun then fell in Jul>Aug. They have the biggest increases vs 2021 and 2019 but it is not reality. Gasoline inflation has slowed so August $ are really up vs 2021. Inflation is still 26.2% and 43.9% YTD, by far the highest of any expenditure category. It has even caused consumers to buy 5.1% less than they did in 2019. Avg Growth Rate: +14.7%, Real: -1.7%. The YTD numbers show a big impact of inflation. Consumers spend more but buy less, even less than they bought 3 years ago.

Relevant Retail – Less Auto, Gas and Restaurants – This the “core” of U.S. retail and accounts for 60+% of Total Retail Spending. There are a variety of channels in this group, so they took a number of different paths through the pandemic. However, their only down month was April 2020. They finished 2020, up +7.1% and 2021 got even better as they reached a record $4.50T. They have led the way in Total Retail’s recovery which became widespread across the channels. Sales fell in Jan>Feb, then went on an up/down roller coaster from Mar>Aug with August up 1.9%. All months in 2022 set new records but their YTD increase is 18% below their 9.6% avg growth since 2019. Now, we’ll look at the impact of inflation. 62.9% of their 31.5% growth since 2019 is real. However real sales vs 2021 are down -1.2% for the month and -0.8% YTD. This shows that inflation is only a 2022 problem. Their Avg Growth Rate: +9.6%, Real: +6.2%. The performance of this huge group is critically important. This is where America shops. Real YTD sales are down almost 1% so the amount of products that consumers bought in 2022 is less than in 2021. They just paid more. That’s not good.

The impact of inflation is slowing slightly. All groups but Restaurants have no YTD real growth vs 2021 but only Relevant Retail is really down for the month. Auto & Gas Stations are still “really down” vs YTD 2019. We’ve now had 6 straight months of real monthly and YTD drops for Total Retail so we are still in Phase II of inflation. Consumer spending grows but the amount bought declines. With actual sales in 4 of the last 6 months down vs 2021, the Auto Group is close to Phase III, when consumers actually cut back on spending. If inflation continues, Phase III could become a reality.

• Relevant Retail: Avg Growth Rate: +9.6%, Real: +6.2%. 9 channels were up vs July and 10 vs August 2021, producing an August $ales record. 10 were up YTD vs 2021. The negative impact of inflation is less but still there in the “real” data.
• All Dept Stores – This group was struggling before COVID, and the pandemic hit them hard. They began to recover in March 2020 and have continued to grow in 2022. Their YTD numbers have been positive vs 2019 since April but in August they are still down in “real” terms in all measurements vs both 2019 & 2021. Avg Growth: +0.06%, Real: -2.7%.
• Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. Inflation is a big factor in their current numbers. Sales are down from July but up vs August 2021 and YTD. Their real numbers are down vs 2021 and only 38.4% of their 18.5% lift from 2019 is real. Avg Growth: +5.8%, Real: +2.3%.
• Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Inflation has hit them hard. $ are down from July. Monthly & YTD increases vs 2021 are strong but inflation is stronger. Real sales are down and only 16.0% of the growth since 2019 is real. Avg Growth: +6.5%, Real: +1.1%.
• Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. After a dip in June, sales turned up in Jul>Aug and are ahead of 2021. However, real sales vs August 21 are down. Their inflation rate is low so 89% of their 14.7% growth from 2019 is real. Their Avg Growth is: +4.7%, Real: +4.2%.
• Clothing and Accessories – They were nonessential, and clothes mattered less when you stayed home. That changed in March 2021 and resulted in explosive growth which continued through May 2022. August sales are up +3.7% from 21 but real sales are -1.3%. YTD $ are up 7.9%% and 87% of their growth from 2019 is real. Avg Growth: 4.8%, Real: 4.1%.
• Home Furnishings – They were also less impacted by COVID. Sales dipped Mar>May in 2020. Then as consumers’ focus turned to their homes, furniture became a priority. Inflation is high. Sales are up from July and vs 2021 but all of their real numbers vs 2021 are negative. Only 18.4% of their growth since 2019 is real. Avg Growth: +6.3%, Real: +1.2%.
• Electronic & Appliances – This channel has problems beyond the pandemic. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. Sales are up from July but are down vs 2021. The July lift was not enough to keep sales positive vs 2019 but deflation kept “real” sales up for the month & YTD vs 2019. Avg Growth: -0.08%, Real: +0.3%.
• Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. This year’s spring lift ended in May as Sales dropped in Jun>Jul. However, they turned sharply up in August. Monthly & YTD sales are up vs 2021, but when you factor in strong, double-digit inflation, the amount sold YTD vs 2021 is still down -3.8%. However, 59.0% of their strong 36.6% sales growth since 2019 is real. Their Avg Growth is: +11.0%, Real: +6.7%.
• 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. August sales grew 10.7% from July and are still ahead of 2021, monthly & YTD. However, real YTD $ are still down vs 2021. Inflation in this group is lower than most groups and most comes from Sporting Goods. 79% of their 37.6% growth since 2019 is real. Avg Growth is: +11.2%, Real: +9.0%.
• All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 +0.9% but sales took off in March 21. They set a new monthly $ales record in December. Sales are up 3.6% from July and since April they have held the top spot in YTD increase vs 2021. Their YTD growth since 2019 is 2^nd only to NonStore. Plus, 82.2% of the 45.6% growth since 2019 is real. Their Avg Growth is: +13.3%, Real: +11.2%.
• NonStore Retailers – 90% of their volume comes from Internet/Mail Order/TV. The pandemic accelerated online spending. They ended 2020 +21.4%. The growth continued in 2021. In December monthly sales exceeded $100B for the 1^st time and they broke the $1 Trillion barrier for the year. Their YTD Growth has slowed significantly in 2022 but all measurements are positive. 88.4% of their 73.2% increase since 2019 is real. Their Avg Growth is: +20.1%, Real: +18.1%.

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. While the timing varied between channels, by the end of 2021 it had become very widespread. In late 2021 and now in 2022, a new challenge came to the forefront – extreme inflation. It isn’t the worst in history, but it is the biggest increase in prices in 40 years. Overall, it slowed in Jul>Aug but for Relevant Retail it got worse. On the surface, the impact is almost invisible. Sales in the total market and in the Relevant Retail group continue to grow but the growth rate has markedly slowed compared to last year. Overall, the market is generally in phase II of strong inflation – spending grows but the amount purchased falls. The channels in the graph illustrate this perfectly and show how widespread that it has become. 10 of 11 channels are up vs August & YTD 2021 However, when you factor in inflation, only 5 are up for August and 4 for YTD. Inflation is real and there are real and even worse consequences if it 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 these specially created aggregates are 100% accurate but they are much closer than the overall CPI or available aggregates.

Monthly CPI changes of 0.2% or more are highlighted.

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.

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

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

We begin with the Final Report for June and then move to the Advance Report for July. Our focus is comparing 2022 to 2021 but also YTD 2019. We’ll show both actual and the “real” change in $ as we factor inflation into the data.

Both reports include the following:

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

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

• Current Month change – % & $ vs previous month
• Current Month change – % & $ vs same month in 2021
  • Current Month Real change – % vs same month in 2021 factoring in inflation
• Current YTD change – % & $ vs 2021
  • Current YTD Real change – % vs 2021 factoring in inflation
• Current YTD change vs 2019 – % & $
  • Current Real change YTD vs 2019 – % factoring in inflation
• Monthly & YTD $ & CPIs which are targeted by channel will also be shown. (CPI details are at the end of the report)

First, the June Final. Driven by Relevant Retail & Restaurants, Sales turned down in June. The $ were up for June and YTD vs 2021. However, factoring inflation into the data, for the 3rd straight month only Restaurants had increases in these measurements. Here is the June data for the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The June Final is $0.6B more than the Advance Report. Only Gas Stations were down. Relevant Retail: +1.5B; Auto: +$0.3B; Restaurants: N/C; Gas Stations: -$1.0B. Total Sales are down slightly from May, but consumers continue to spend more vs 2021. However, the “real” numbers give you a different view. All but Restaurants are again really down in all measurements vs 2021. Restaurants are strong due to a late recovery but also note that half of the inflation in this group came before 2022. The inflation impact on Relevant Retail is especially significant as their Real YTD sales vs 2021 are again negative. Relevant Retail does have the best performance since 2019 as 65.4% of their 31.8% growth is “Real”.

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

Overall – 9 of 11 were down vs May. Vs June 2021, 10 reported more $ but only 3 were really up. In YTD vs 2021, 9 reported increases but only 4 were real. Vs 2019, only the Office/Gift/Souvenir channel was “really” down.

• Building Material Stores – Their Spring lift is ending and was not as strong as last year. Home Ctr/Hdwe is up 7.1% vs 21 but Farm stores are only +1.2% YTD. The Bldg/Matl group has an inflation rate of 10.5+% which produced all negative real numbers. The pandemic caused consumers to focus on their homes which produced sales growth over 37% since 2019 in both channels. Importantly, 61.4% of this lift was real, primarily because the bulk of the lift came from 20>21, prior to the inflation wave. Avg Growth Rate: HomeCtr/Hdwe: 11.3%, Real: 7.2%; Farm: 11.4, Real: 7.4%
• Food & Drug – Both channels are truly essential. Except for the food binge buying in the pandemic, they tend to have smaller fluctuations in $. However, they are radically different in inflation. The rate for Grocery products is 4 times higher than for Drugs/Med products. Drug Store $ up from May but real sales are down vs June 2021. However, 89% of their growth since 2019 is real. The Real Sales for Supermarkets are down for the month and YTD. Also, only 22.2% of their growth since 2019 is real. Avg Growth Rate: Supermarkets: +6.4%, Real: +1.5%; Drug Stores: +4.3%, Real: +3.9%.
• Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Their Spring lift seems to be kicking in again after stabilizing in April/May at a level below 2021. Their current inflation rate is 5.3% which is down from 7.5% in April but YTD it is still 6.9%. It was also high in 20>21, +4.8%. However, 72% of their 49% lift since 2019 is real. Their Avg Growth Rate was: +14.2%; Real: +10.6%.
• Gen Mdse Stores – Sales were down for all vs May. Discount Dept stores are down for the month and YTD vs 2021. All other groups are up for both. All real measurements vs 2021 are negative for all channels. Disc. Dept Stores were hurting before COVID and only 0.4% of their 7.8% growth since 2019 is real. For the other channels, it averages 41%. Average Growth Rate: SupCtr/Club: 5.2%, Real: 1.9%; $/Value Strs: +7.5%, Real: +4.3%; Disc. Dept.: +2.5%, Real: 0.01%
• Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are down from May but up vs 2021. The growth vs 2021 has been strong enough that it turned real YTD sales positive vs 2021. However, their real sales vs 2019 are still down -2.6%. Their true recovery is still a ways off. Avg Growth Rate: +1.7%, Real: -0.9%
• Internet/Mail Order – The growth of the “hero” of the Pandemic is slowing. Sales are down vs May but up vs 2021. Also, their YTD growth rate is only half of their average since 2019, but 90% of their 80.3% growth since 2019 is real. Their Avg Growth Rates is: +21.7%, Real: +19.9%. As expected, they are by far the growth leaders since 2019.
• A/O Miscellaneous – This is a group of specialty retailers. Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level by December 2021 as annual sales reached $100B for the first time. In 2022, they are by far the Sales increase leaders over 2021. As expected, their sales dipped in January from December, but all measurements have been positive every month since then. Plus, 87% of their 60.1% growth since 2019 is real. Their Avg Growth Rate is: +17.0%, Real: +15.1%. They are 2^nd in growth since 2019 to the internet. I’m sure Pet Stores are helping.

There is no doubt that high inflation is an important factor in Retail. In actual $, 9 channels reported increases in YTD sales over 2021 and 10 are up for the month. When you factor in inflation, the number with any “real” growth falls to 4 for YTD & 3 for monthly. This is a very clear indication of the strong impact of inflation at the retail channel level. Recent data indicates that Inflation slowed a little. Let’s look at the impact on the Advance Retail Sales numbers for July.

We have had memorable times since 2019. Some big negatives, including the 2 biggest monthly drops in history but a lot of positives in the Pandemic recovery. Total Retail reached $600B in a month for the first time and broke the $7 Trillion barrier in 2021.  Relevant Retail was also strong as annual sales reached $4T and all big groups set annual $ales records in 2021. Now, radical inflation is a big factor with the largest increase in 40 years. At first this reduces the amount of product sold but not $ spent. This was evident again in July. There was a small overall sales decrease from June but $ were up vs July 2021 for all but Auto. However, the actual amount of product sold vs 2021 fell in all but Restaurants.

Overall – Inflation Reality is here. The monthly increase vs 2021 continues to be lower than the inflation rate. The still recovering Restaurants and Gas Stations are up double digits vs 2021 but Auto $ are down again. July set a new $ record for the month, but the real monthly and YTD sales vs 2021 for all but restaurants are down for the 4^th straight month.

Total Retail – Every month in 2022 has set a monthly sales record. July $ are $691B, the 4th largest of all time. In a normal year, sales should stay at or near this level until dipping slightly in September. However, 2022 is not normal. Sales are -0.6% vs June but are still up 8.6% vs July 2021 and 10.2% vs YTD 2021. However, when you factor in 12+% inflation, both measurements are down for the 5th consecutive month and only 41.1% of the 31.9% growth since 2019 is real. The Avg Growth Rate is: +9.7%, Real: +4.2%. The impact of Inflation continues to grow.

Restaurants – They were hit hard by the pandemic and didn’t truly start to recover until March 2021. Sales in the last 9 months of 2021 exceeded $70B and 2021 was the biggest year in history, $876B. January sales fell from December but then turned up, setting new all-time monthly records in March>May. $ fell in June but set a new record in July. They are the only big group that is positive in all measurements. Inflation is high at 7.5% for June and 7.0% YTD but it is the lowest of any big group. 60.8% of their 31.6% growth since 2019 is real. The May>July % is up 50% from Jan>April, showing the growing appeal of “eating out” after months of cooking at home. Their Avg Growth Rate: +9.6%, Real: +6.0%. They only account for 12.6% of Total Retail $ales, but their strong performance helps to improve the overall retail numbers.

Auto (Motor Vehicle & Parts Dealers) – This group actively worked to overcome the stay-at-home attitude with great deals and a lot of advertising. They finished 2020 up 1% vs 2019 and hit a record $1.48T in 2021. In 2022 sales got on a rollercoaster – Jan down, Feb/Mar up, Apr>May down, June up & July down. Except for a tiny lift in June their monthly sales have been below 2021 since March. These are the only reported sales negatives by any group vs 2021. This is bad but their real sales numbers are much worse. Extremely high inflation has pushed their real sales down -9+% in all measurements vs 2021, the worst numbers of any group. Plus, their 25.3% growth since 2019 is really down -3.4%. Their Avg Growth Rate: +7.8%, Real: -1.2%. It is likely that the drops in the reported $ales vs 2021 are tied to high inflation.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and obviously need less gas. This group started recovery in March 2021 and reached a record $584B for the year. Sales fell in Jan>Feb turned up in Mar>Jun then fell in July. They have the biggest increases vs 2021 and 2019 but it is not reality. Gasoline inflation slowed a bit in July but at 44.5%, it is still by far the highest of any expenditure category. It is 46.7% YTD vs 2021 and has even caused consumers to buy 5.9% less than they did in 2019. Avg Growth Rate: +14.7%, Real: -2.0%. It’s a textbook example of the initial impact of inflation. Consumers are spending more but buying less, even less than they bought 3 years ago.

Relevant Retail – Less Auto, Gas and Restaurants – This the “core” of U.S. retail and accounts for 60+% of Total Retail Spending. There are a variety of channels in this group, so they took a number of different paths through the pandemic. However, their only down month was April 2020. They finished 2020, up +7.1% and 2021 got even better as they reached a record $4.50T. They have led the way in Total Retail’s recovery which became widespread across the channels. Sales fell in Jan>Feb, went on an up/down roller coaster from Mar>June but fell again in July. All months in 2022 set new records but their YTD increase is now 25% below their 9.6% avg growth since 2019. Now, we’ll look at the impact of inflation. 63.9% of their 31.6% growth since 2019 is real. However real sales vs 2021 are down -2.0% for the month and -0.8% YTD. This shows that inflation is only a 2022 problem. Their Avg Growth Rate: +9.6%, Real: +6.3%. The performance of this huge group is critically important. This is where America shops. Real YTD sales are down almost 1% so the amount of products that consumers bought in 2022 is less than in 2021. They just paid more. That’s not good.

The impact of inflation is becoming even more apparent. All groups but Restaurants have had no monthly or YTD real growth vs 2021 for 4 consecutive months. Both Auto & Gas Stations are even “really down” vs YTD 2019. Added together, this has produced 5 straight months of real monthly and YTD drops for Total Retail. We are in Phase II of inflation. Consumer spending grows but the amount bought declines. With 4 of the last 5 months down vs 2021, the Auto Group is likely in Phase III, when consumers actually cut back on spending. If inflation continues, this worsening situation will become more widespread.

• Relevant Retail: Avg Growth Rate: +9.6%, Real: +6.3%. 5 channels were up vs June but 8 vs July 2021, producing a July $ales record. 10 were up YTD vs 2021 but you will see the negative impact of inflation in the real numbers.
• All Dept Stores – This group was struggling before COVID, and the pandemic hit them hard. They began to recover in March 2020 and have continued to grow in 2022. Their YTD numbers have been positive vs 2019 since April but in July they are still down in “real” terms in all measurements vs both 2019 & 2021. Avg Growth: +0.07%, Real: -2.6%.
• Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. Inflation is a big factor in their current numbers. July sales are down from June but up vs July 2021 and YTD. Their real numbers are down and only 36.2% of their 17.4% lift from 2019 is real. Avg Growth: +5.5%, Real: +2.1%.
• Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Inflation has hit them hard. $ are up from June. Monthly & YTD increases vs 2021 are strong but inflation is stronger. Real sales are down and only 19.4% of the growth since 2019 is real. Avg Growth: +6.4%, Real = +1.3%.
• Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. After a dip in June, sales turned up in July and are ahead of 2021. However, real sales vs July 2021 are down. Their inflation rate is low so 89% of their 14.4% growth from 2019 is real. Their Avg Growth is: +4.6%, Real: +4.1%.
• Clothing and Accessories – They were nonessential, and clothes mattered less when you stayed home. That changed in March 2021 and resulted in explosive growth which continued through May 2022. July sales are only +0.2% from 2021 and real sales are -4.9%. YTD $ are up 8.7%% and 88% of their growth from 2019 is real. Avg Growth: 5.1%, Real: 4.5%.
• Home Furnishings – They were also less impacted by COVID. Sales dipped Mar>May in 2020. Then as consumers’ focus turned to their homes, furniture became a priority. Inflation is high. Sales are up from June, but down vs July 21 and all their real numbers vs 2021 are negative. Only 24.9% of their growth since 2019 is real. Avg Growth: +6.7%, Real: +1.7%.
• Electronic & Appliances – This channel has problems beyond the pandemic. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. Sales are up minimally from June but are down across the board vs 2021. The increase from June and deflation kept sales positive vs 2019 but only +0.01%. Avg Growth: +0.005%, Real: +0.22%.
• Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. This year’s spring lift ended in May as Sales dropped -3.8% in June and -9.3% in July. July & YTD sales are up vs 2021, but when you factor in strong, double-digit inflation, the amount sold vs 2021 is significantly lower for both. However, 59.6% of their strong 36.4% sales growth since 2019 is real. Their Avg Growth is: +10.9%, Real: +6.8%.
• 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. July sales fell -0.7% from June but were still up vs July 2021 & YTD. However, all real measurements are down vs 2021. Inflation in this group is lower than most groups and most comes from Sporting Goods. 79% of their 38.2% growth since 2019 is real. Avg Growth is: +11.4%, Real: +9.2%.
• All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 +0.9% but sales took off in March 21. They set a new monthly $ales record in December. Sales are down -2.1% from June but from April>July they have held the top spot in YTD increase vs 2021. Their YTD growth since 2019 is 2^nd only to NonStore. Plus, 82.9% of the 46.2% growth since 2019 is real. Their Avg Growth is: +13.5%, Real: +11.4%.
• NonStore Retailers – 90% of their volume comes from Internet/Mail Order/TV. The pandemic accelerated online spending. They ended 2020 +21.4%. The growth continued in 2021. In December monthly sales exceeded $100B for the 1^st time and they broke the $1 Trillion barrier for the year. Their Growth has slowed significantly in 2022 but all measurements are positive. 88.7% of their 73.6% increase since 2019 is real. Their Avg Growth is: +20.2%, Real: +18.2%.

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. While the timing varied between channels, by the end of 2021 it had become very widespread. In late 2021 and now in 2022, a new challenge came to the forefront – extreme inflation. It isn’t the worst in history, but it is the biggest increase in prices in 40 years. Overall, it slowed in July but for Relevant Retail it got worse. On the surface, the impact is almost invisible. Sales in the total market and in the Relevant Retail group continue to grow but the growth has slowed markedly. Overall, the market is generally in phase II of strong inflation – spending grows but the amount purchased falls. The channels in the graph above illustrate this perfectly and show how widespread that it has become. 8 of 11 channels are up vs July 2021 and 10 are up YTD. However, when you factor in inflation, only 2 are up for July and 4 for YTD. Inflation is real and there are real and even worse consequences if it continues. To see an example of this, take a look at what is happening in the Auto Group.

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 these specially created aggregates are 100% accurate but they are much closer than the overall CPI or available aggregates.

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 mix of actual products is substantially different.

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

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

We begin with the Final Report for April and then move to the Advance Report for May. Our focus is comparing 2022 to 2021 but also YTD 2019. We’ll show both actual and the “real” change in $ as we factor inflation into the data.

Both reports include the following:

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

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

• Current Month change – % & $ vs previous month
• Current Month change – % & $ vs same month in 2021
  • Current Month Real change – % vs same month in 2021 factoring in inflation
• Current YTD change – % & $ vs 2021
  • Current YTD Real change – % vs 2021 factoring in inflation
• Current YTD change vs 2019 – % & $
  • Current Real change YTD vs 2019 – % factoring in inflation
• Monthly & YTD $ & CPIs which are targeted by channel will also be shown. (CPI details are at the end of the report)

First, the April Final. After an uptick in March, sales generally turned down slightly in April. The $ were up for April and YTD vs 2021 for all groups but Auto. However, when you factor in inflation, only Restaurants had increases in these measurements. Here is the April data for the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The April Final is $2.6B less than the Advance Report. The drop was driven by Relevant Retail: -3.6B; Auto: -$0.1B; Restaurants: +$0.7B; Gas Stations: +$0.4B. Total Sales are down slightly from March, but consumers continue to spend more vs 2021 in all but Auto. However, the “real” numbers give you a different view. All but Restaurants are really down in all measurements. Restaurants are strong due to a late recovery but also note that half of the inflation in this group came before 2022. The inflation impact on Relevant Retail is especially significant as their Real YTD sales vs 2021 are now negative. Relevant Retail does have the best performance since 2019 as 67.9% of their 31.8% growth is “Real”.

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

Overall – Only 6 of 11 were up vs March. Vs April 2021, 9 reported more $ but only 2 were really up. In YTD vs 2021, 9 reported increases but only 4 were real. Vs 2019, only the Office/Gift/Souvenir channel was “really” down.

• Building Material Stores – Their Spring lift has started but it is not as strong as last year. Home Ctr/Hdwe is up vs 21 but Farm stores are down for the month & YTD. The Bldg/Matl group has an inflation rate over 11% which produced all negative real numbers. The pandemic caused consumers to focus on their homes which produced sales growth over 30% since 2019 in both channels. Importantly, 67.9% of this lift was real, primarily because the bulk of the lift came from 20>21, prior to the inflation wave. Avg Growth Rate: HomeCtr/Hdwe: 11.3%, Real: 7.5%; Farm: 10.5, Real: 6.6%
• Food & Drug – Both channels are truly essential. Except for the food binge buying in the pandemic, they tend to have smaller fluctuations in $. However, they are radically different in inflation. The rate for Grocery products is 5 times higher than for Drugs/Med products. Sales for Drug Stores are flat vs March 2021 but 90% of their growth since 2019 is real. The Real Sales for Supermarkets are down for the month and YTD. Also, only 28.5% of their growth since 2019 is real. Avg Growth Rate: Supermarkets: +6.3%, Real: +1.9%; Drug Stores: +4.1%, Real: +3.7%.
• Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Their normal Spring lift started in March then stabilized in April at a level considerably below 2021. Their current inflation rate is 7.5% but it was also high in 20>21, +4.8%. However, 73% of their 48.8% lift since 2019 is real. Their Avg Growth Rate was: +14.2%; Real: +10.7%.
• Gen Mdse Stores – Sales in SupCtr/Clubs fell vs March and all channels are up only slightly for the month and YTD vs 2021. All real measurements vs 2021 are negative for all channels. Disc. Dept Stores were struggling before COVID and only 17% of their 8% growth since 2019 is real. For the other channels, it averages 45%. Avg Growth Rate: SupCtr/Club: 5.6%, Real: 2.5%; $/Value Strs: +6.6%, Real: +3.5%; Disc. Dept.: +2.9%, Real: +0.5%
• Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are down vs March but up vs 2021. The growth vs 2021 has been strong enough that it turned real YTD sales positive vs 2021. However, their real sales vs 2019 are still down -4.3%. Their true recovery is still a long way off. Avg Growth Rate: +1.0%, Real: -1.5%
• Internet/Mail Order – The growth of the “hero” of the Pandemic is slowing. April sales are up in all measurements, but the YTD growth rate is less than half of the average since 2019. However, 91% of their 81.8% growth since 2019 is real. Their Avg Growth Rates is: +22.1%, Real: +20.4%. As expected, they are by far the growth leaders since 2019.
• A/O Miscellaneous – This is a group of specialty retailers. Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level by December 2021 as annual sales reached $100B for the first time. In 2022, they are the Sales increase leaders over 2021. As expected, their sales dipped in January from December but all measurements have been positive every month since then. Plus, 88% of their 62.9% growth since 2019 is real. Their Avg Growth Rate is: +17.7%, Real: +15.8%. They are 2^nd in growth since 2019 to the internet, which is somewhat surprising.

There is no doubt that high inflation is an important factor in Retail. In actual $, 9 channels reported increases in YTD sales over 2021 and 9 are up for the month. When you factor in inflation, the number with any “real” growth falls to 4 YTD & 2 monthly. This is a very clear indication of the growing impact of inflation at the retail channel level. Recent data showed that Inflation continues to grow. Let’s look at the impact on the Advance Retail Sales numbers for May.

We have had memorable times since 2019. Some big negatives, including the 2 biggest monthly drops in history but a lot of positives in the Pandemic recovery. Total Retail reached $600B in a month for the first time and broke the $7 Trillion barrier in 2021.  Relevant Retail was also strong as annual sales reached $4T and all big groups set annual $ales records in 2021. Now radical inflation has entered the game with the largest increase in 40 years. At first this reduces the amount of product sold but not $ spent. In May there was a  small overall increase from April, but the amount sold again fell in all but Restaurants. If it continues, it can reduce consumer spending. This has happened in Auto in April & May.

Overall – Inflation Reality is setting in. The monthly increase vs the previous year continues to be smaller than it has been. The still recovering Restaurants and Gas Stations are up double digits vs 2021 but Auto $ are down again. May set a new $ record for the month, but the real monthly and YTD sales vs 2021 for all but restaurants are down.

Total Retail – Every month in 2022 has set a monthly sales record. May $ are $698B, second only in $ to December 2021. In a normal year, sales should stay at or near this level until dipping slightly in September. However, 2022 is not normal. Sales are +2.4% vs April but are still up 8.2% vs May 2021 and 10.6% vs YTD 2021. However, when you factor in 13+% inflation, both measurements are down for the 3rd consecutive month and only 43.6% of the 31.2% growth since 2019 is real. The Avg Growth Rate is: +9.5%, Real: +4.3%. The impact of Inflation is growing.

Restaurants – They were hit hard by the pandemic and didn’t truly start to recover until March 2021. Sales in the last 9 months of 2021 exceeded $70B and 2021 was the biggest year in history, $876B. January sales fell from December but have turned up since then setting new all-time monthly records in March, April and now May ($90.2B). They are the only big group that is positive in all measurements. Their inflation is high at 7.3% for May and 6.8% YTD but it is the lowest of any big group. 61.6% of their 30.2% growth since 2019 is real. This is up from 51% in April which shows the appeal of “eating out” after months of cooking at home. Their Avg Growth Rate: +9.2%, Real: +5.8%. Although they only account for 12.9% of Total Retail sales, their positive performance significantly helps to improve the overall retail numbers.

Auto (Motor Vehicle & Parts Dealers) – This group actively worked to overcome the stay-at-home attitude with great deals and a lot of advertising. They finished 2020 up 1% vs 2019 and hit a record $1.48T in 2021. In 2022 sales fell in January, turned up in Feb/Mar then fell again in April/May. They are unique in that their March, April and May sales are below 2021. These are the only reported sales negatives by any group vs 2021. This is bad but their real sales numbers are much worse. Extraordinarily high inflation has pushed their real sales down -16+% in all measurements vs 2021, the worst performance of any group. Plus, their 26.7% growth since 2019 is really down -1.4%. Their Avg Growth Rate: +8.2%, Real: -0.5%. It is very likely that the drops in the reported $ales in March>May are tied to extreme inflation.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and obviously need less gas. This group started recovery in March 2021 and reached a record $584B for the year. Sales fell in January and February then turned up in March>May. They have the biggest increases vs 2021 and 2019 but it is not reality. Gasoline inflation is in all of the headlines and is by far the highest of any expenditure category. It is over 44% for 2022 vs 2021 and has even caused consumers to buy 6% less than they did in 2019. Avg Growth Rate: +13.2%, Real: -2.0%. It’s a textbook example of the initial impact of inflation. Consumers are spending more but buying less, even less than they bought 3 years ago.

Relevant Retail – Less Auto, Gas and Restaurants – This the “core” of U.S. retail and accounts for 60+% of Total Retail Spending. There are a variety of channels in this group, so they took a number of different paths through the pandemic. However, their only down month was April 2020. They finished 2020, up +7.1% and 2021 got even better as they reached a record $4.50T. They have led the way in Total Retail’s recovery which became widespread across the channels. Sales fell in January and February, turned up in March, flattened in April, then grew in May. All months in 2022 set new records but their YTD increase is now 23.4% below their 9.4% avg growth since 2019. Now, we’ll look at the impact of inflation. 65.8% of their 31% growth since 2019 is real. However real sales vs 2021 are down -1.8% for the month and -0.4% YTD. This shows that inflation is only a 2022 problem. Their Avg Growth Rate: +9.4%, Real: +6.4%. The performance of this huge group is critically important. This is where America shops. Real YTD sales are down 0.4% so the amount of products that consumers bought in 2022 is actually less than in 2021. They just paid more. That’s not good.

The impact of inflation is truly beginning to Hit home. All groups but Restaurants now have no monthly or YTD real growth vs 2021. Both Auto & Gas Stations are even “really down” vs YTD 2019. Added together, this has produced 3 straight months of real monthly and YTD drops for Total Retail. We are now in Phase II of inflation. Consumer spending increases but the amount bought declines. With 3 straight down months, the Auto Group is likely in Phase III, when consumers actually cut back on spending. If inflation continues, this worsening situation will become more widespread.

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

• Relevant Retail: Avg Growth Rate: +9.4%, Real: +6.4%. 9 channels were up vs April and vs May 2021. This was enough to set a May $ales record. 10 were up YTD vs 2021 but you will see the negative impact of inflation in the real numbers.
• All Dept Stores – This group was struggling before COVID, and the pandemic hit them hard. They began to recover in March 2020 and have continued to grow in 2022. Their YTD numbers turned positive vs 2019 in April but in May they are still down in real terms in all measurements vs both 2019 & 2021. Avg Growth: +0.04%, Real: -2.6%.
• Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. Inflation is a big factor in their current numbers. While May sales are up from April and vs May 2021 and YTD, their real numbers are down and only 41.2% of their 17.7% lift from 2019 is real. Avg Growth: +5.6%, Real: +2.4%.
• Grocery – These essential stores depend on frequent purchases, so except for the binge buying in 2020, their changes are generally less radical. Inflation has hit Groceries hard. Monthly and YTD increases vs 2021 are strong but inflation is stronger. Real sales are down and only 24.5% of the growth since 2019 is real. Avg Growth: +6.3%, Real: +1.6%.
• Health/Drug Stores – At least the drug stores in this group are essential, but consumers visit far less frequently than Grocery stores. Most of their COVID ride has been rather calm. Their inflation rate is low and sales are positive in all measurements. Plus, 90% of their 13.3% growth from 2019 is real. Their Avg Growth is: +4.2%, Real: +3.8%.
• Clothing and Accessories – They were nonessential, and clothes mattered less when you stayed home. That changed in March 2021 and resulted in explosive growth which has continued through 2022. $ are up 5.9% from April and they’re positive in all measurements. Also, 89% of their growth from 2019 is real. Avg Growth: 5.1%, Real: 4.6%.
• Home Furnishings – They were also less impacted by COVID. Sales dipped Mar>May in 2020. Then as consumers’ focus turned to their homes, furniture became a priority. Inflation on Furniture is very high, so growth is slowing and their real numbers vs 2021 are negative. Only 32.4% of their growth since 2019 is real. Avg Growth: +6.9%, Real: +2.4%.
• Electronic & Appliances – Look at the graph. This channel has problems beyond the pandemic. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. Sales are up from April but are down across the board vs 2021. The increase from April and deflation has turned sales positive vs 2019 but only +0.9%. Avg Growth: +0.30%, Real: +0.26%.
• Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. After slowing in April, this year’s spring lift is restarting but at a lower level than 2021. When you factor in strong, double-digit inflation, the amount sold vs 2021 is significantly lower for both May and YTD. 61.5% of their strong 36.6% sales growth since 2019 is real. Their Avg Growth is: +11.0%, Real: +7.0%.
• 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. Sales were up in May which made the month and YTD $ up vs 2021. However, all “real” measurements are down vs 2021. Inflation in this group is lower than most groups and most comes from Sporting Goods. 79% of their 36.8% growth since 2019 is real. Their Avg Growth is: +11.0%, Real: +8.8%.
• All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 +0.9% but sales took off in March 21. They set a new monthly $ales record in December. In April & now May, they moved to the top spot in both monthly & YTD lifts vs 2021. Their YTD growth since 2019 is 2^nd only to NonStore. Plus, 83% of the 44.8% growth since 2019 is real. Their Avg Growth is: +13.1%, Real: +11.1%.
• 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. In December monthly sales exceeded $100B for the 1^st time and they broke the $1 Trillion barrier for the year. Their Growth has slowed significantly in 2022 but all measurements are positive. 89% of their 71.6% increase since 2019 is real. Their Avg Growth is: +19.7%, Real: +17.8%.

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. While the timing varied between channels, by the end of 2021 it had become very widespread. In late 2021 and now in 2022, a new challenge came to the forefront – extreme inflation. It isn’t the worst in history, but it is the biggest increase in prices in 40 years. Moreover, each month it is getting worse. On the surface, the impact is almost invisible. Sales in the total market and in the Relevant Retail group continue to grow but the growth has slowed markedly. Overall, the market is generally in phase II of strong inflation – spending grows but the amount purchased falls. The channels in the graph above illustrate this perfectly and show how widespread that it has become. 8 of 11 channels are up vs May 2021 and 9 are up YTD. However, when you factor in inflation, only 4 are up for May and 4 for YTD. Inflation is real and there are real and even worse consequences if it continues. To see an example of this, take a look at what is happening in the Auto Group.

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 these specially created aggregates are 100% accurate but they are much closer than the overall CPI or available aggregates.

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 mix of actual products is substantially different.

Inflation continues to make headlines as the prices for many products have risen over 2021 at the highest rate in 40 years. In recent years, the year over year inflation rate has hovered at about 2%. That’s why the March inflation number of 8.5% over 2021 has gotten so much attention.

It got my attention too. I decided to look a little closer at the expenditure categories and the methodology used by the US Bureau of Labor Statistics to compute the CPI (Inflation). I am also enamored by the Monthly Retail Sales report produced by the Census Bureau. This is the most accurate and timely measurement of the sales in the U.S. Retail market. However, we must note that the data only comes from outlets classified as retailers or restaurants & bars. Outlets whose primary business is Services, from Movie Theaters to Hair Salons, are not included. They have their own report. The outlets in the Monthly Retail report are “all about” products. A few of these channels may provide a small number of services but in the overall scheme of things the $ are inconsequential. Pet Stores are one of the retail outlets included in the report and they offer Pet Services. However, according to the most recent Economic Census, Pet Services only account for 6% of Total Pet Stores’ sales. The vast majority of true Retail outlets offer no services.

So how is the CPI market basket divided between Commodities (Products) and Services? The relative importance of expenditures is validated from data gathered in the annual Consumer Expenditure Survey, which is managed by the US BLS but executed by Census Bureau personnel. The base relative importance is updated every 2 years in December of odd numbered years. It is revised monthly, but the base is the key starting point.

In December 2021 The Relative Importance was

      Total CPI: 100;  Services: 60.9;  Commodities: 39.1

I was taken by surprise by these numbers. I had no idea that Services were 50% more important than Commodities in measuring inflation. Let’s look at the March 2022 year over year inflation numbers again:

     Total CPI: +8.54%;  Services: +5.12%;  Commodities: +14.17%

Obviously, for those involved in the retail trade, inflation is significantly worse than even what is being trumpeted in the headlines. Much has been said about overall inflation being the worst in 40 years. I downloaded the CPI data for Commodities. They have monthly numbers going back to 1956. The 14.17% YOY inflation rate in March was the highest for any month in the entire 66-year database. Another thing is very clear. Just using the overall CPI rate for retail is not accurate. I researched commodities and it turns out that the All Commodities aggregate accurately reflects Total Retail. At the end of the report, I have a condensed listing of CPI expenditure categories so that you can check my reasoning.

But now let’s take a look at 2022 Total Retail Sales, including the 4 Major Groups – Restaurants, Auto, Gas Stations and Relevant Retail. We show the sales change from 2021 for each month and YTD.

As we hear in all the news flashes. Despite inflation, sales are up. The gains by Gas Stations and Restaurants are spectacular but remember they were the hardest hit by the pandemic and recovery came late. You can also see that the overall increase slowed significantly in March. Gas Stations maintained their rate of increase but Auto actually had a slight decrease in Sales. The YTD numbers look good for all.

Now let’s see what inflation looks like so far this year.

Before we get into the numbers, let’s talk about the expenditure categories that I used. We talked about All Commodities being a match for Total Retail. There are also 2 existing indexes that match 2 of the big groups. Motor Vehicles & Parts is a perfect match for Auto and Gas Stations are all about Motor Fuel Sales. The other 2 aggregates were created by me with the detailed help, guidance and approval of a great person at the US BLS. For Restaurants, I aggregated Food & Alcohol away from home. For Relevant Retail I removed the categories linked to Restaurants, Auto and Gas Stations from the All Commodities Group.

The numbers are concerning. Inflation in the Services segment is high, but nothing compared to Auto & Gas. Relevant Retail is much better than All Commodities but about equal to the national numbers which are so scary. Now, let’s apply inflation to the sales numbers. This will give us a measurement of the amount of product sold, not just $.

I can’t recall ever seeing such a radical difference. It’s hard to believe that we are talking about the same products being sold in the same outlets over the same period of time. March 2022 was the worst monthly Commodity inflation in history…or at least in the last 66 years. The impact is very clear across the board but anything to do with cars has been down in the amount sold every month this year. Restaurants is the only group doing well but they’re still recovering. For Relevant Retail, the March price explosion turned real sales negative for March and dropped the YTD sales increase down to +1.2%. March Real sales for Total U.S. Retail were also down but YTD actually turned negative too. I don’t know what to say but whatever that can be done, needs to be done … right now!

There is one faint glimmer of hope. In my research, I found that the months with the 3 worst average YOY Commodity inflation rates are March, February & January, in that order. An immediate turn around won’t happen but hopefully, the worst is over.

Now, as promised here is a condensed list of CPI Expenditure Categories. The highlighting shows how I matched the commodity categories with the big groups. If you look very closely, you will see fuel oil as a category is included in both Total & Relevant Retail. That might raise some questions. However, if you look at the NAICS codes for Retail Businesses, you’ll see that the company that delivers propane to your farm is classified as a Non-Store Retailer, just like internet businesses.

Take a look. Let me know if you see any expenditure categories that if aggregated, would be a better CPI match for an important retail channel.

The Retail recovery has been generally successful, but now, our attention has turned to an unexpected factor also attributed to the pandemic – extreme inflation. Since this can affect retail sales, we will continue to track the retail market with data from two reports provided by the Census Bureau and factor in the CPI from US BLS.

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

We begin with the Final Retail Report for January and then move to the Advance Report for February.  We will now compare 2022 to 2021, 2020 and 2019. In both reports we will show both the actual and the “real” change in $ as we factor inflation into the data.

Both reports include the following:

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

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

• Current Month change – % & $ vs previous month
• Current Month change – % & $ vs same month in 2021, 2020 and 2019.
• Current YTD change – % & $ vs 2021, 2020 and 2019 (In the Jan. Final, YTD is unnecessary, so we add the Avg chge)
• Monthly and Year To Date $ will also be shown for each group/channel

First, the January Final. Retail hit bottom in April 2020 but began recovery. The recovery strengthened in 2021 and became widespread. Total Retail $ broke the $700B barrier for the 1^st time in December. As usual, $ dropped from December but 2022 started strong. Here are the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The January Final is $5.5B more than the Advance Report. Only 1 group was down. Specifically: Restaurants: -$0.3B; Auto: +$1.7B; Gas Stations: +$0.2B; Relevant Retail: +$3.9B. The normal big drop in retail sales from December is readily apparent but it is less than in past years. The recovery for Restaurants and Gas Stations is late and still surging. All groups have now been positive vs past years for 8 consecutive months. Now, let’s look at the “Real” January lift, factoring in inflation. The Jan 22 to Jan 21 inflation was 7.5% overall. That would put the “real” increase for Total Retail at +5.9% (44% of 13.4%); Restaurants – Inflation = 6.4%. Real Increase: 18.0% (73.8%); Auto – New & Used Vehicle Inflation = 23.1%. It’s likely that sales were down as much as -10%; Gas Stations – Gasoline Inflation = 40.0%. Real Change: -6.7%. Relevant Retail – Inflation = 7.5%. Real Increase: 1.9% (20.2%). Inflation is a major problem.

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

Overall – You see the importance of the holiday buying surge to these channels as all were down vs December and only the most essential channels – Supermarkets and Drug Stores had less than double digit decreases.

• Building Material Stores – Their amazing lift has slowed in the winter months, especially in Farm Stores, which had the only decrease vs January 2021. Most of the increase from 2019 for both Home Ctr/Hdwe and Farm Stores came from the 20>21 lift. Home Ctr/Hdwe $ continued to grow but Farm Stores just held their ground. The January YOY inflation for Tools, Hdwe, Outdoor Equip/Supp was 10.7% That makes the January “real” numbers:

Home Ctr/Hdwe: +10.9%, Real: +0.2%; Farm Stores: -0.05%, Real: -10.8%

• Food & Drug – Both of these channels are truly essential. Except for the food binge buying in the early part of the pandemic, they tend to have smaller fluctuations in $. Supermarkets have had stronger growth since 2019. Much of that is due to more families choosing to cook at home. Here are the real January numbers which may be a surprise. The inflation rate for Food at Home in January was 7.4%. Prices for Drugs (Rx & OTC) were up only 1.3%. The YOY growth was

Supermarkets: +7.8%, Real: +0.4%; Drug Stores: +9.1%, Real: +7.8%

• Sporting Goods Stores – Like Hardware/Farm stores, they benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. They had a huge drop from December but managed to stay at the extraordinarily high 2021 level. The high demand has pushed the inflation rate for Sporting Goods to 8.2%. There was literally no $ growth from January 2021 to 2022. Considering inflation, that equates to an -8.2% drop in sales.
• General Merchandise Stores – $ in all channels fell substantially from December but were up slightly from January 2021. SuperCtrs/Clubs have a higher percentage of groceries which makes for more frequent visits and generally higher numbers, including growth rate. Discount Dept Stores were struggling before COVID but had a strong 2021. Using the overall inflation rate of 7.5%, here are the January numbers

SupCtr/Club: +4.5%, Real: -3.0%; $/Value Strs: +2.5%, Real: -5.0%; Disc. Dept. Strs: +1.8%, Real: -5.7%

• Office, Gift & Souvenir Stores – These non-essential stores started to recover in the spring of 2021, but they are still not there yet. Sales are up vs January 2021, but every other measurement is negative, including vs 2019. The available inflation number most appropriate for them is “limited” as it cuts out food, energy, shelter and used vehicles – +5.1%. Their sales were +3.1% so real sales were actually down -2.0%.
• Internet/Mail Order – The sales growth of the undisputed “hero” of the Pandemic is slowing as they were up 13.6% from 2021, slightly slower than their average growth rate of 17.3%. With inflation at 7.5%, their real growth is 6.1%.
• A/O Miscellaneous – This is a group of specialty retailers. Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level by December 2021 as annual sales reached $100B for the first time. January $ are up 22.4% from 2021. Using the 5.1% “limited” inflation rate, their real sales are +17.3%. However, by any measure, they are the percentage leader in January growth. Take note: In January 2022, this group, of which Pet Stores are an important and growing segment, beat the growth rate of Internet/Mail Order over both last year and since 2019.

Inflation is an important factor. In actual $, 9 of 11 channels increased sales over January 2021. However, when you factor in inflation, including the rate most in tune with each Channel’s offerings, the number with any “real” growth falls to 5. Until things change, inflation will be a big part of retail sales discussions. Now, the Advance numbers for February.

We have had 2 straight memorable years. 2020 saw the 2 biggest monthly drops in history but Total Retail finished by reaching $600B for the first time in December. In 2021, the recovery strengthened with all big groups positive in all measurements vs 2019 & 2020 for the final 7 months. Total Retail reached $713B in December and broke the $7T barrier for the year. Relevant Retail was also strong as annual sales reached $4T but in fact, all big groups set annual sales records in 2021. As usual, sales fell in January from their December peak and driven down by Relevant Retail, Total Retail $ continued to decline in February. In virtually every year, February is the low point for retail sales.

Overall – The only negative numbers are vs January and not for all groups. We should also note that the February sales patterns since 2019 look normal for Total Retail, Relevant Retail and Auto with annual increases. Remember, February 2020 was pre-pandemic and by February 2021, only Restaurants and Gas Stations had not begun a strong recovery.

Total Retail – January Sales set a record beating the 2021 record by 13.4%. February was even better, breaking the $500M barrier for the 1^st time and beating the 2021 record by 17.7%. YTD numbers are up 15.5%, with an annual growth rate since 2019 of 9.0%. However, 59% of the growth since 2019 occurred from 2021 to 2022 which brings inflation into the conversation. The inflation rate for February 2022 vs 2021 was 7.9%, even higher than January. YTD prices are up 7.7%. Here are the numbers. February: +17.7%, Real: +9.8% (55.4%); YTD: +15.5%, Real: +7.8% (50.3%). Inflation is a big factor, but real growth is still strong.

Restaurants – They were hit hard by the pandemic and didn’t truly start to recover until March 2021. However, sales in 7 of the last 8 months of 2021 exceeded $70B and 2021 was the biggest year in history, $821B. January sales fell from December but turned up in February. This happens about half of the time as these 2 months compete for the low point in Restaurant sales. Their February sales pattern clearly reflects their late recovery, especially from a $12B drop in 2021. YTD sales are up an average of 5.1% since 2019, becoming more normal. Inflation for Food away from home in February was 6.8%. YTD, it is 6.6%. Here is real growth. February: +33.0%, Real: +26.2% (79.4%); YTD: +28.6%, Real: +22.0% (76.9%) This is by far the best performance of any group and significantly improves the Total Retail numbers.

Auto (Motor Vehicle & Parts Dealers) – This group actively worked to overcome the stay-at-home attitude with great deals and a lot of advertising. They finished 2020 up 1% vs 2019 and hit a record $1.54T in 2021. In January, sales fell but then turned up in February, the usual pattern in a normal year. Their YTD growth rate since 2019 is 10.4%, the highest of any big group. But what about inflation? The overall inflation rates of Feb: 7.9% and YTD: 7.7% would produce real increases of Feb: +9.7%; YTD: +7.7%. However, the inflation rates for new & used vehicles, which account for most of the sales in this group, were Feb: +23.5%, YTD: +23.3%. This would create a real drop in sales of Feb: -5.9%, YTD: -8.0%. It seems likely that there is an ongoing drop in the actual amount sold in this group which is tied to extreme inflation.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and obviously need less gas. This group started recovery in March 2021 and reached a record $588B for the year. January sales fell -5.1% from December and February sales also dropped slightly. However, they were up 36.6% vs 2021. Gasoline inflation is in all the headlines so let’s get right to the numbers. Gasoline inflation vs 2021 for February is 38% and YTD is 39% which generates the following. February: +36.6%, Real: -1.4%; YTD: +34.9%, Real: -4.1%. While the gap is narrowing, extraordinarily high prices are hindering growth. People are ready to get out and about, but high gas prices are causing them to reconsider.

Relevant Retail – Less Auto, Gas and Restaurants – This the “core” of U.S. retail and accounts for 60+% of Total Retail Spending. There are a variety of channels in this group so they took a number of different paths through the pandemic. However, their only down month was April 2020. They finished 2020, up +7.1% and 2021 got even better as they reached a record $4.47T. They have led the way in Total Retail’s recovery which became widespread across the channels. In January and February sales fell from the previous month but this is the normal pattern. Sales hit bottom in February then begin a Spring lift. Both January & February set new monthly $ records and the YTD annual growth rate is 9.0% with a relatively normal growth pattern. Although over 40% of the increase since 2019 occurred this year. That says we should look at the impact of inflation. We’ll use the overall inflation rates: February: 7.9%, YTD: 7.7%. February: +12.8%, Real: +4.9% (38.3%); YTD: +11.1%, Real: +3.1% (27.9%). Although this is significantly better than January when real growth was only 0.7%, it is still concerning when only 1/3 of the growth in this big group is real.

Gas Stations are unquestionably the inflation loser but now Relative Retail and Auto, which had the strongest recovery from COVID are starting to feel the effect of strong inflation. Next, we’ll drill down to look at what is happening in the individual retail channels. Remember, the channels in the chart are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets.

• Relevant Retail: Feb: +12.8%, Real: +4.9%; YTD: +11.1%, Real: +3.4%. 9 of 11 channels were down vs January but all were up vs February 2021. In fact, 10 of 11 were up in all measurements vs 2019>2021. It was a record month.
• All Dept Stores – This group was struggling before COVID, and the pandemic hit them hard. They began to recover in March 2020, and they have continued to grow through February. The most appropriate inflation rate to use for them is less Food, Energy, Shelter & used vehicles which are Feb: 5.3%, YTD: 5.1%. That puts their numbers at Feb: +22.4%, Real: +17.1%; YTD: +16.3%, Real: +11.2%. Their recovery is getting stronger by any measure.
• Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. Inflation is a big factor in their current numbers as their lift has slowed at least temporarily. Using the national CPI, Feb: +10.9%, Real = +3.0%, YTD: +7.4%, Real: -0.3%
• Grocery – These stores are the most essential and depend on frequent purchases so except for the binge buying in 2020, their changes are generally less pronounced. However, inflation has also hit Groceries, 8.6% in February and 8.0% YTD. This is the biggest increase since 1981. February: +8.4%, Real = -0.2%; YTD: 8.0%, Real: 0.0% – No Change
• Health/Drug Stores – At least the drug stores in this group are essential, but consumers visit far less frequently than Grocery stores. Their February sales actually dropped in 20>21 but most of their COVID ride has been rather calm. Using the CPI for Rx & OTC drugs (Feb: 2.5%, YTD: 1.9%) their numbers are: Feb: +8.7%, Real: +6.2%; YTD: +8.8%, Real: +6.9%
• Clothing and Accessories – They were also nonessential and what you were wearing didn’t matter when you stayed home. That changed in March 2021 and consumers’ pent-up needs caused explosive growth which has continued through February. Apparel inflation is Feb: 6.6%, YTD: 6.0%. Their $ are Feb: +31.0%, Real: +24.4%; YTD: +25.8%, Real: +19.8%
• Home Furnishings – They were also less impacted by COVID. Sales dipped Mar>May in 2020. Then as consumers’ focus turned to their homes, furniture became a priority. Inflation on Furniture is extremely high, 17.1% for both February and YTD. That causes a big turnaround in their numbers. Feb: +7.4%, Real: -9.7%; YTD: +4.4%, Real: -12.7%
• Electronic & Appliances – Look at the graph. This channel has problems beyond the pandemic. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. Right now, their sales are stagnated. We’ll wait and see if they have a yearend lift. We’ll use the “limited” CPI: Feb: 5.3%, YTD: 5.1%. Feb: +2.6%, Real: -2.7%; YTD: -0.4%, Real: -5.5%.
• Building Material, Farm & Garden & Hardware –They truly benefitted from the consumers’ focus on home. Their spring lift has become almost year-round and it’s ready to start again. The CPI for Hdwe & Outdoor is Feb: 10.6% YTD: 10.7%. Here are their February numbers. Feb: +14.9%, Real: +4.3%; YTD: +12.0%, Real: +1.3%.
• Sporting Goods, Hobby and Book Stores – Consumers turned their attention to personal recreation and sales in Sporting Goods outlets took off. Book and Hobby Stores recovery was slower. It appears that the YTD lift has slowed in 2022. The product groups in these outlets have radically different CPIs so using the “limited” inflation version seems to be the best choice. Feb: 11.6%, Real: 5.3%; YTD: 5.7%, Real: 0.6%.
• All Miscellaneous Stores – Pet Stores have been a key part of the strong and still growing recovery of this group. They finished 2020 +0.9% but sales took off in March 21, setting a new monthly record in December. The growth continues in 2022 as they are 2^nd to Clothing in February & YTD lift. Since 2019 their growth is 2^nd to NonStore. The “limited” CPI also seems right for this group and generates these great numbers. Feb: +24.6%, Real: +19.3%; YTD: +21.2%, Real: +16.1%
• NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV. The pandemic accelerated the movement to online retail. They ended 2020 +21.4%. The growth continued in 2021 and in December monthly sales exceeded $100B for the 1^st time and they broke the $1 Trillion barrier in annual sales. Growth is a little slower in 2022 but still strong. Using the national CPI, their latest numbers are Feb: +13.9%, Real: +6.0%; YTD: +14.3%, Real: +6.7%

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

Recap – 2020 was quite a year, with the trauma of April & May followed by the triumph of breaking $600B for the first time in December. 2021 was even more memorable as it produced record sales for all major groups and Total Retail exceeded $7T for the 1^st time. Relevant Retail was the major driver in this recovery. Since May of 2020 their sales have exceeded past years in all measurements, and they reached $4.47T in 2021. The recovery was widespread as all but 2 groups on our Advance Chart set sales records in 2021. 2022 began pretty normally for Relevant Retail as sales fell from December but exceeded 2021. The big change was that inflation that began in late 2021 hit levels not seen in decades and came to the forefront of every conversation. As we saw in our analysis, it affected virtually every channel and even turned 4 channels from positive to negative. This will not go away quickly and if it continues or worsens it will ultimately result in consumers buying less, ending retail growth by any measurement. We will continue to monitor the situation.