Archive for category: Pet Market Distribution Channels

The U.S. Retail market reached $7.44 Trillion in 2021 from all channels – Auto Dealers, Supermarkets, Restaurants, Online retailers and even Pet Stores. Thanks to a strong, widespread pandemic recovery, this year’s increase of $1.22T (+19.8%) was far above last year’s increase of $44.6B (+0.7%). In 2020 the Total Retail Market was massively negatively impacted by COVID related closures and restrictions and only eked out a positive number because of increased spending in the Relevant Retail Segment. In 2021 there was a stronger and more balanced resurgence. (Data courtesy of the Census Bureau’s monthly retail trade report.)

In this report we will focus on the top 100 Retailers in the U.S. Market. The base data on the Top 100 comes from Kantar Research and was published by the National Retail Federation (NRF). In 2020, Restaurants were removed from the list and only Gas Stations with Convenience stores were included. To allow continued comparisons to pre-pandemic 2019, I used the data to create a revised “Restaurant Free” 2019 list. The Top 100 are the retail elite and still account for 35.8% of the total market, which is down from a record 39.0% in 2020. The vast majority of the group also stock and sell a lot of Pet Products. Let’s get started in our analysis. The report does contain a lot of data, but we’ll break it up into smaller pieces to make it more digestible.

In past years we have begun our report with a brief overview chart of this year’s sales vs the previous year’s numbers. However, the pandemic effect on the retail trade has indicated that we should look a little deeper. The U.S. Retail market has had a strong recovery from the 2020 trauma and the resurgence has become widespread across most channels. We have seen in our regular retail sales reports that different defined retail channels often took a different path from 2019 to 2021. The Top 100 report allows us to see if the company revenue size was also a factor in their journey. The following chart is definitely an overview, but it is far more detailed than past years. It also covers the pandemic period from 2019 to 2021, including both $ and market share changes for large retail subgroups of the Relevant Retail Segment based upon the amount of annual revenue.

• The total Retail Market grew $1.2T, +19.6% in 2021. That is far greater than the $45B, +0.7% in 2020. The average growth rate since 2019 is 9.8%. That is more than double the rate of recent years: 2019, 3.6%; 2018, 4.9%; 2017, 4.3%. You can clearly see the strength of the recovery.
• The “Non-Relevant” Retail Group (Restaurants, Auto Dlrs, Gas Stations) was hit hardest by the pandemic, with sales falling $240B, -9.9% in 2020. However, they had an incredibly strong recovery in 2021 as sales grew $640B, +29.3%. They gives them an average annual growth rate of 7.9% since 2019.
• Relevant Retail was the hero of the pandemic. Their $284B increase in 2020 kept Total Retail positive for the year. Their sales surged even stronger in 2021 as they were up $582B, +14.4% producing an average growth rate since 2019 of +11.0%. However, their share of Total Retail fell 2.3% after peaking in 2020. As you can see, the story is a bit more complex. Let’s drill a little deeper.
• The Top 100 Retailers make up about 60% of the Relevant Retail Market. They have shown consistent growth since 2019 with a surge of $236B, +9.9% in 2021. Their average growth since 2019 is +7.2%, which is good but not good enough. They have lost considerable share in both Total and Relevant Retail. Let’s drill even deeper.
• The biggest subgroup in the Top 100 is the Top 10 which accounts for 55+% of the Top 100’s revenue. This group has been unchanged since 2015 and consists of Amazon, plus truly essential brick ‘n mortar retailers. Their biggest sales surge occurred in 2020. Sales grew 9.0% in 2021 but their share of revenue decreased in Total and Relevant Retail. Their average growth rate since 2019 is +10.6% which did produce a 3.6% share gain in Top 100 $.
• The Retailers ranked from #11 to #100 changes slightly every year. Their sales in 2021 ranged from $3.5 to $65B and they accounted for 41% of the Top 100’s revenue. They have an unusual sales pattern in that their $46B decrease in 2020 is the only negative sales on the chart outside of the big drop by Rest/Auto/Gas. They did have a strong 10.7% increase in 2021 which generated an average annual gain of +2.9%. However, they have lost significant share in Total & Relevant Retail. These companies are a major part of U.S. Retail. They can have big gains but also big losses.
• The Relevant Retailers outside of the Top 100 don’t get a lot of “press” but maybe they should. They currently account for 42% of Relevant Retail $ and 26% of Total Retail. Their 12.1% increase in 2020 was only slightly behind the Top 10 and their 21.6% increase in 2021 was more than double that of any other Relevant Retail subgroup. Their avg. increase since 2019 is +16.9%, the best of any group on the chart. While this performance is amazing, perhaps the most important fact is that they delivered 60% of Relevant Retail’s sales increase in 2020 AND from 2019>2021.

I hope that you now see why I chose to expand my overview. There is no doubt that the big retailers are critical to the success of the U.S. Retail Market. However, there are sometimes “hidden heroes” that should be noted.

The Top 100 outperformed the overall market in 2020 but not in 2021. In fact, the sales growth since 2019 trails Total Retail, Relevant Retail and even Rest/Auto/Gas. It still accounts for 35.8% of Total U.S. Retail $ so it is still critically important. We also should remember that the Top 100 is really a contest with a changing list of winners. Companies drop out and new ones are added. This can be the result of mergers, acquisitions, surging or slumping sales or even a corporate restructuring. In 2021, Speedway was acquired by 7-Eleven but 7 other companies dropped off the list.

• Guitar Ctr • GameStop    • UNFI (Suprmkt)   • Grocery Outlet (Suprmkt)    • Belk (Dept Str)   • Sears    • AMPM (Conv)

On the plus side, PetSmart split into 2 separate companies – Chewy & PetSmart. L Brands also split as they now have separate listings for Bath & Body Works and Victoria’s Secret. Also, 6 new companies were added.

• Harbor Freight (Hdwe) • Hudson’s Bay (Dept Str)   • Tapestry (Home Gds)   • RH (Restoration Hdwe) (Home Gds)
• Urban Outfitters (Apparel) • Barnes & Noble (Books)

I think that we now have a good overview of U.S. Retail and the Top 100 so let’s ask and answer a very relevant question. How many Top 100 companies are buying and selling Pet Products? This will reinforce that Pets have become an integral part of the American Household and how fierce that the competition for the Pet Parents’ $ has become.

• We should note that the data in the chart reflects the performance of the companies in the 2021 list since 2019 and is not being compared to the Top 100 list of companies from prior years
• 85 are selling some Pet Products in stores and/or online. 2 of the companies added pet products to their offerings for the 1^st time in 2021. Plus, 85 is 4 more companies than the 2020 list.
  • Their Total Retail Sales of all products is $2.56 Trillion which is…
    • 0% of the total business for the Top 100
    • 4% of the Total Retail market and 55.4% of Relevant Retail – from 85 Companies who sell Pet Products.
  • 72 Cos., with $2.39T sales sell pet products off the retail shelf in 162,495 stores – 9,000 more than 2020.
    • As you can see by the growth in both sales and store count since 2019, “in store” is still the best way to sell pet.
  • Online only is another story and the story gets complicated.
    • Amazon includes Whole Foods, which has stores so the Amazon $ are in the “Pet in Store” numbers.
    • 2 Retailers in the 2021 list added pet products to their offerings. This group had decreased sales and closed stores in 2020. Fortunately, 2021 brought a rebound in both areas, but especially in $ales.
  • The group not selling pet products, led by electronics retailers like AT&T and Dell as well as specialty retailers like Signet Jewelers and Lulumon have had extraordinarily strong pandemic sales growth, especially in 2021. However, overall, the group continues to close stores. Perhaps, more of them with see Pet as a new growth opportunity.

Pet products are an integral part of the strongest retailers and are widespread across the entire U.S. marketplace. Of the Top 100, 162,495 stores carry at least some pet items at retail. However, there are thousands of additional “pet” outlets including 15,000 Grocery Stores, 9,000 Pet Stores, 16,000 Vet Clinics, 5,000 Pet Services businesses and more. Pet Products are on the shelf in over 210,000 U.S. brick ‘n mortar stores… plus the internet.

Before we analyze the whole Top 100 list in greater detail let’s take a quick look at the Top 10 retailers in the U.S.

Although the rankings often change due to the current market factors, this group has been incredibly stable. The list is unchanged since 2013, with one slight qualification. In 2015 Albertsons purchased Safeway. The new Albertsons/Safeway group replaced the stand-alone Safeway company in the list. Now let’s get into the numbers.

• Their Total Retail Sales were $1.56 Trillion which is:
  • 6% of Top 100 $ales, down from the 2020 peak (58.9%) but up considerably from 2019 (55.0%).
  • 8% of Relevant Retail, down from 35.5% in 2020 but about the same as 2019 (34.0%).
  • 0% of Total U.S. Retail $, down from 23.0% in 2020 but again about the same as 2019 (20.8%).
• 2 Companies swapped rank – Costco & Kroger
• Amazon leads the way but sales are up for all, with the biggest growth coming in 2020 for all but Costco & Drug Strs.
• Store count was down for both years and -1.8% since 2019 – Driven by Kroger and the big Drug Chains.

These stores are truly essential to U.S. Consumers so it is no surprise that their influence peaked during the COVID crisis.

Now we will look at the detailed list of the top 100. We’ll sort it by retail channel with subtotals in key columns. For some channels there will be 2 subtotals. The subtotal in Blue compares the data history for just the 2021 list. The Black subtotal compares this year’s totals to those from previous year’s lists. We’ll then break it into smaller sections for comments. I have not done a lot of highlighting however:

• Pet Columns ’21 & ‘20 – a “1” with an orange highlight indicates that products are only sold online
• Rank Columns – 2021 changes in rank from the 2020 list are highlighted as follows:
  • Up 4-5 spots = Lt Blue; Up 6 or more = Green
  • Down 4-5 Spots = Yellow; Down 6 or more = Pink

Let’s get started. Remember, online $ are included in the sales of all companies.

Also Note:(*) in the 2019 columns of some previously unranked companies means the 2019 base was estimated from other data sources.

Observations

• Alcohol Retailers first made the list in 2020 as consumers started dining at home. The behavior is continuing.
• Apparel – They were hit hard by the pandemic but had a strong recovery in 2021. L Brands is now reported as 2 separate companies and Urban Outfitters was added. The overall loss of stores is coming from only 3 companies. BTW – The 2 companies that added Pet Products in 2021 are in the Apparel group – Ulta and Sephora
• Auto – Growth in both years with the biggest lift in 2021. The only negative is that Advance Auto is closing stores.
• Book Stores are back! Barnes & Noble made the list for the first time since 2015.
• Commissary/Exchanges – They put outlet changes on hold, and they are losing revenue, especially in 2021.
• Convenience Stores – 2020 & 2021 haven’t been very good for Convenience stores, especially those closely tied to Gas Stations. Speedway was acquired by 7-Eleven, but the combination has negative numbers across the board. AMPM dropped off the list. The only gains are coming from Casey’s, Circle K and Shell.
• The decline in Department Stores was accelerated by the pandemic. Sales rebounded in 2021 but only Dillard’s is ahead of 2019. Two chains dropped off the list, Belk and Sears. Sears has been a fixture in U.S. Retail since they began a mail order catalog in 1893. Now, their demise seems to be getting closer. There is some good news as Hudson’s Bay made it back to the Top 100. By the way, Kohl’s is the only company increasing their number of stores.
• Drug Stores – This group is essential but because visit frequency is low, changes in sales are generally small. The biggest lifts happened in 2021. Good Neighbor Pharmacy is the only group with a sales decrease since 2019. This was largely due to a reduction in stores. This trend is almost universal in the category as only Rite Aid added stores.

Observations

• Electronics/Entertainment – Strong growth in 2020 which continued in 2021. Overall store count declined in both years. Gamestop dropped out in 2021 and Amazon Web Services revenue was removed from their Retail $ in 2020.
  • Amazon Retail growth was strong in 2021, +16.3% but it was only half of the +33.7% in 2020. In terms of brick ‘n mortar, their Whole Foods division continues to add stores.
  • The sales pattern was different for the others on the list. The 2021 lift generally exceed the increase in 2020. Only Qurate had a sales decrease in 2021 but they are still up vs 2019. Only Verizon sold less in 2021 than in 2019.
  • Regarding store count, Best Buy, AT&T and Verizon reduced their number of stores in both 2020 and 2021.
• Farm – Tractor Supply continues their strong pandemic sales growth and is opening new stores at a steady rate.
• Hobby & Crafts – Quite frankly, Hobby Lobby is the story in this group. While both companies are up in sales vs 2020 & 2019. The vast majority of the $ increase and 100% of the lift in store count were driven by Hobby Lobby.
• Home Improvement/Hardware – This group is incredibly positive as the only negative on the chart comes from True Value closing a few stores. The data reinforces that consumers focused on their homes, especially in 2020.
  • Harbor Freight is growing fast and in 2021 earned a spot in the Top 100.
  • Sales were up vs 2020 across the board with the biggest $ lifts coming from the 3 biggest guys & the newcomer.
  • We should also note that the biggest % increases in $ since 2019 came from the same group.
  • It is also a very healthy sign when 6 of 7 companies are adding more stores.
• Jewelry – Consumers obviously turned their attention to looking good, especially in 2021. However, if they bought from Signet, they had fewer brick ‘n mortar outlets available.
• Mass Merchants have 3 of the 7 largest volume retailers in America – Wal-Mart, Costco and Target. Prior to the pandemic Wal-Mart & Costco usually drove the growth in this channel. In 2021 we need to add Target to this group.
  • In 2021 Wal-Mart had a 6.9% increase in sales, which is by far the lowest of the Big 3 and about the same as 2020. Their SuperCenter business was essential, so store sales increased, and their online sales took off. However, “regular” Discount Department Stores are losing market share. This impacts both Wal-Mart and Target so many outlets are adding more fresh groceries. They closed 100 stores in 2020. They opened 75 in 2021
  • Costco had a strong increase in growth, +15.8% compared to +9.3% in 2020. They are also regularly opening more new stores, +3.5% since 2019.
  • Target posted a 5^th consecutive sales increase in 2021, +13.3%. This was down from +19.8% in 2020 but it pushed their lift from 2019 up to +35.6%, the largest in the entire group. They are also opening new stores and rapidly adding more fresh groceries to their Discount stores to enhance their consumer appeal.
  • Meijer has the lowest growth in sales since 2019, 13.3% but the highest rate of store growth, +5.3%. Most of the growth in $ and stores occurred in 2020.
  • BJ’s sales were up +8.0% in 2021. This is less than half of the +17.0% in 2020 but it was the 4^th consecutive increase after a string of annual declines from 2013 to 2017. They also continue to strongly add more stores.

Observations

• Office Supply Stores – This channel continues its consistent decline as Consumers maintain their move to online ordering of these products. The drop in store count is also regular but even more severe, -13.0% since 2019.
• Pet Stores showed even stronger growth in 2021. Sales were up $4.0B (+22.3%) from 2020 and +35.6% from 2019. Most of the growth appears to be coming from online sales.
  • In this year’s report, the sales from Chewy and PetSmart are reported individually as they are now separate companies. I included a PetSmart/Chewy listing to show the total sales for the “group” from 2019 to 2021.
  • With the strong consumer movement to online purchasing, Chewy is the big story in this channel. Their growth got even stronger in 2021, +24.4% producing a net gain of 44.8% from 2019.
  • PetSmart’s growth is getting stronger, +23.1% in 2021, almost matching Chewy. They are also expanding their retail footprint, with a 2.9% increase in stores since 2019.
  • Petco’s growth since 2019, +30.5% is slightly ahead of PetSmart. Although the biggest lift came in 2021, +17.6% the growth is slightly more balanced. The big difference is that Petco cut back on their retail stores, especially in 2020. Their 2021 store count is down -7.9% from 2019.
• Small Format Value Stores – These stores offer both value and convenience, but their appeal peaked in 2020.
  • Their sales increase fell to +2.0% from +15.5% in 2020 but the store count continues to grow, +8.6% from 2019.
  • Dollar General’s sales growth, slowed from +21.6% to +1.5% but store growth stayed at 6%.
  • Dollar Tree led in $ growth, +3.1% & added 3.1% more stores. But their growth since 2019 is ½ Dollar General’s
  • Big Lots’ $ fell slightly from 2020, -0.8% but are still +15.6% from 2019. They added stores in both 2020 & 2021.
• Sporting Goods – The rates were mixed but all companies increased sales in both 2020 and 2021. The overall store count also grew in both years but the biggest increase in both areas came in 2021.
  • The biggest sales lifts in 2021 and since 2019 came from Dick’s and Academy.
  • Camping World finished 3^rd in sales growth from 2019 but led the way in store openings.
  • The only 2 negatives came in store count – Bass Pro in 2020, producing a 3% drop since 2019 and Dick’s in 2021.
• Supermarkets – The food “binge buying” was over so the 2021 sales increase fell to +1.6% from +10.6% and 2 companies dropped off the list – UNFI and Grocery Outlet. However, there are still 22 Supermarkets in the Top 100.
  • In 2020 only Southeastern sold less. In 2021 there were 6 companies with decreased sales.
  • 6 companies also cut back on stores producing a net drop of 650 stores from the 2020 list.
  • With $490B in sales from 16,621 stores, all carrying Pet Products on their shelves, this group is truly essential – both to the overall U.S. Retail Market and the Pet Products Industry.

Wrapping it up!

This report is focused on 2021 but we can also see the evolving impact of the pandemic. In 2020 it caused trauma for many retailers as non-essential stores were hit with restrictions and closures. On the plus side, consumers turned their focus to essentials and their homes. This helped drive incredible growth in many retail channels.

In 2021 the Total Retail market moved into a full recovery with spectacular growth. Many channels showed a strong sales rebound from 2020. Others built upon their pandemic success while many returned to a more normal growth pattern. However, a few continued to decline. The Top 100 companies had participants in all of these patterns.

The Top 100 is a contest with the winners changing slightly every year. It is a critical part of the U.S. Market, accounting for about 60% of Relevant Retail Revenue and almost 40% of the Total Retail Market. However, the pandemic also impacted the overall influence of the group in the marketplace.

Sales increased annually but the Top 100’s share of Total Retail peaked in 2020 and has steadily declined in Relevant Retail. It turned out that the Top 10 (Consistent annual growth) and #11>100 (Down in 2020, up in 2021) have radically different sales patterns. We also found a new hero – Relevant Retail not in the Top 100. The small guys can also lead.

Pet Products are an important part of the success of the Top 100. 85 companies on the list sell Pet Products in 162,495 stores and/or online. The 72 companies that stock pet products in their stores generated $2.39T in total sales. How much was from pet? Let’s “Do the math”. If we take out the $22B done by PetSmart & Petco, and the remaining companies generated only 1.7% of their sales from Pet, we’re looking at $36.9B in Pet Products sales from only 69 “non-pet” sources! (The 1.7% share for Pet is an estimate based on the last Economic Census.) If you add Pet Stores back in, Total Pet Products sales for the Top 100 are $57.5B. The APPA reported $78B in Pet Products sales for 2021. That means 69 mass market retailers accounted for 47.3% of all the Pet Products sold in the U.S. and 72 Top 100 companies generated 73.8%. Pet Products are widespread in the retail marketplace but the $ are concentrated. All Pet Industry participants should monitor the Top 100 group.

Retail sales $ are increasing in 2022 but runaway inflation has now become a major factor. We’ll see what changes that this unexpected situation brings to the retail market and the Top 100.

The Top 100 is an important part of U.S. Retail I hope that this detailed look help put this group into better perspective.

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 May and then move to the Advance Report for June. 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 May Final. After a slight downturn in April sales generally grew slightly in May. The $ were up for May and YTD vs 2021 for all but Auto. However, when you factor in inflation, for the 2^nd straight month only Restaurants had increases in these measurements. Here is the May data for the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The May Final is $0.5B more than the Advance Report. All but Relevant Retail were up. Relevant Retail: -1.5B; Auto: +$0.6B; Restaurants: +$0.1B; Gas Stations: +$1.4B. Total Sales are up slightly from April, as consumers continue to spend more vs 2021 in all but Auto. However, the “real” numbers give you a different view. All but Restaurants are again 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 again negative. Relevant Retail does have the best performance since 2019 as 65.7% of their 30.9% growth is “Real”.

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

Overall – 10 of 11 were up vs April. Vs May 2021, 9 reported more $ but only 4 were really up. In YTD vs 2021, 9 reported increases but again 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 YTD. The Bldg/Matl group has an inflation rate of 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, 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: 11.0%, Real: 7.0%; Farm: 10.7, Real: 6.7%
• 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 positive in all measurements and 89% of their growth since 2019 is real. The Real Sales for Supermarkets are down for the month and YTD. Also, only 24.1% of their growth since 2019 is real. Avg Growth Rate: Supermarkets: +6.2%, Real: +1.6%; Drug Stores: +3.9%, Real: +3.5%.
• 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/May at a level below 2021. Their current inflation rate is 5.7% which is down from 7.5% in April but YTD it is 7.3%. It was also high in 20>21, +4.8%. However, 71% of their 48.1% lift since 2019 is real. Their Avg Growth Rate was: +14.0%; Real: +10.4%.
• Gen Mdse Stores – Sales in all channels were up vs April. Discount Dept stores are down for the month vs 2021. All other groups are up slightly for May and YTD vs 2021. All real measurements vs 2021 are negative for all channels. Disc. Dept Stores were struggling before COVID and only 1% of their 7.7% growth since 2019 is real. For the other channels, it averages 46%. Avg Growth Rate: SupCtr/Club: 4.4%, Real: 2.1%; $/Value Strs: +7.1%, Real: +4.0%; Disc. Dept.: +2.5%, Real: 0.04%
• Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are up vs April and 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 -3.7%. Their true recovery is still a ways off. Avg Growth Rate: +1.3%, Real: -1.2%
• Internet/Mail Order – The growth of the “hero” of the Pandemic is slowing. Sales are down vs April but up vs 2021. Also, their YTD growth rate is less than half of the average since 2019, but 90% of their 78.1% growth since 2019 is real. Their Avg Growth Rates is: +21.2%, Real: +19.5%. 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 58.8% growth since 2019 is real. Their Avg Growth Rate is: +16.7%, Real: +14.8%. 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 9 are up for the month. When you factor in inflation, the number with any “real” growth falls to 4 for YTD & 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 June.

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 very evident in June. There was a small overall sales decrease from May but $ were up vs June 2021 for all but Auto. However, the actual amount of product sold vs 2021 fell in all but Restaurants.

Overall – Inflation Reality is setting in. The monthly increase vs the previous year 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. June 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. June $ are $695B, the 3^rd 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 -0.4% vs May but are still up 8.9% vs June 2021 and 10.3% vs YTD 2021. However, when you factor in 13+% inflation, both measurements are down for the 4th consecutive month and only 42.3% of the 31.9% growth since 2019 is real. The Avg Growth Rate is: +9.7%, Real: +4.3%. 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 have turned up since then setting new all-time monthly records in March>May. $ fell -2.5% in June but they are the only big group that is positive in all other measurements. Inflation is high at 7.5% for June and 6.9% YTD but it is the lowest of any big group. 60.9% of their 30.7% growth since 2019 is real. The May/June % is up 50% from April, showing the appeal of “eating out” after months of cooking at home. Their Avg Growth Rate: +9.3%, Real: +5.9%. They only account for 12.7% of Total Retail sales, but 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, fell April>May and were +0.4% in June. They are unique in that their Mar>June monthly 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. Extremely high inflation has pushed their real sales down -9+% in all measurements vs 2021, the worst overall numbers of any group. Plus, their 26.7% growth since 2019 is really down -2.3%. Their Avg Growth Rate: +8.2%, Real: -0.8%. It is likely that the drops in the reported $ales in March>June 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 January and February then turned up in March>June. 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 47% YTD for 2022 vs 2021 and has even caused consumers to buy 5.7% less than they did in 2019. Avg Growth Rate: +14.5%, Real: -1.9%. 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, then went on an up/down roller coaster from Mar>June. All months in 2022 set new records but their YTD increase is now 22.7% below their 10.1% avg growth since 2019. Now, we’ll look at the impact of inflation. 64.2% of their 31.3% growth since 2019 is real. However real sales vs 2021 are down -3.8% for the month and -1.0% YTD. This shows that inflation is only a 2022 problem. Their Avg Growth Rate: +10.1%, Real: +6.4%. The performance of this huge group is critically important. This is where America shops. Real YTD sales are down 1.0% 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 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 4 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 straight down months 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.

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

• Relevant Retail: Avg Growth Rate: +9.5%, Real: +6.4%. 4 channels were up vs May but 8 vs June 2021, producing a June $ales record. 10 were up YTD vs 2021 but you will see the negative impact of inflation in the real numbers.
• All Dept Stores – This group was struggling before COVID, and the pandemic hit them hard. They began to recover in March 2020 and have continued to grow in 2022. Their YTD numbers have been positive vs 2019 since April but in June they are still down in real terms in all measurements vs both 2019 & 2021. Avg Growth: +0.1%, Real: -2.5%.
• Club/SuprCtr/$ – 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. June sales are down from May but up vs June 2021 and YTD. Their real numbers are down and only 38.9% of their 17.5% lift from 2019 is real. Avg Growth: +5.5%, Real: +2.2%.
• 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 May. Monthly & YTD increases vs 2021 are strong but inflation is stronger. Real sales are down and only 21.8% of the growth since 2019 is real. Avg Growth: +6.3%, Real = +1.4%.
• 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. However, sales turned down in June vs May and 2021. Their inflation rate is low so 89% of their 13.7% growth from 2019 is real. Their Avg Growth is: +4.4%, Real: +3.9%.
• 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 until June 2022. $ are down 8.1% from May and only +0.2% from 2021. YTD $ are still up 10.1% and 88% of their growth from 2019 is real. Avg Growth: 5.0%, Real: 4.4%.
• 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. They are up from May, but growth is slowing and all their real numbers vs 2021 are negative. Only 30.4% of their growth since 2019 is real. Avg Growth: +6.9%, Real: +2.0%.
• 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 May but are down across the board vs 2021. The increase from May and deflation kept sales positive vs 2019 but only +1.1%. Avg Growth: +0.35%, Real: +0.44%.
• Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. This year’s spring lift is somewhat inconsistent as $ fell 4.2% from May. June & 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, 61.3% of their strong 37.5% sales growth since 2019 is real. Their Avg Growth is: +11.2%, Real: +7.1%.
• 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 5.7% from May which kept the month & 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 37.7% growth since 2019 is real. Avg Growth is: +11.3%, Real: +9.1%.
• 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. $ are -4.4% from May but from April>June they have held the top spot in both monthly & YTD lifts vs 2021. Their YTD growth since 2019 is 2^nd only to NonStore. Plus, 82.8% 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. 88.7% of their 72.6% increase since 2019 is real. Their Avg Growth is: +20.0%, Real: +18.0%.

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

Recap – The Retail recovery from the pandemic was largely driven by Relevant Retail. 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 June 2021 and 10 are up YTD. However, when you factor in inflation, only 2 are up for June 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.

The pandemic started in March 2020. In the Retail sector, we have seen both record drops and record highs. The market has generally recovered but now we are being hit by extreme inflation. 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 March and then move to the Advance Report for April. 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 March Final. February is the normal Retail $ bottom for the year and sales turned up in March. Overall, the growth is slowing, and Auto sales actually dropped vs March 2021. Obviously, factoring in inflation paints a different picture of the situation. Here are the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The March Final is $4.2B more than the Advance Report. All but Auto were up. Restaurants: +$6.3B; Auto: -$5.5B; Gas Stations: +$0.4B; Relevant Retail: +$3.0B. All groups are up from the February bottom. Growth is slowing but all but Auto are up vs 2021 & 2019. When you look at the “real” numbers you get a different view. The Auto/Gas groups 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. Total and Relevant Retail are starting to see the impact of inflation as Real sales are down or flat vs 2021. Relevant Retail has the best performance since 2019 as 69% of their 31% growth is “Real”.

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

Overall – All 11 were up vs February. Vs March 2021, 6 reported more $ but only A/O Misc. was really up. In YTD, 7 reported increases but only 4 were real. Vs 2019, Only Office/Gift was “really” down, the only decrease vs 2019.

• 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 10% 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, 2/3rds of this lift was real. The chart shows that almost all of the lift came from 20>21, prior to the inflation wave. Avg Growth Rate: HomeCtr/Hdwe: 11.8%, Real: 8.0%; Farm: 10.3, 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 4 times higher than for Drugs/Med products. Sales for Drug Stores are down vs March 2021 but 84% of their growth since 2019 is real. The Real Sales for Supermarkets are down for the month and YTD. Also, only 31% of their growth since 2019 is real. Avg Growth Rate: Supermarkets: +6.1%, Real: +2.0%; Drug Stores: +4.2%, Real: +3.7%.
• Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Their Spring lift has started but it’s not as strong as last year. Their current inflation rate is almost 8% but it was also high in 20>21, +4.8%. However, 73% of their 48.9% lift since 2019 is real. Their Avg Growth Rate was: +14.2%; Real: +10.7%.
• Gen Mdse Stores – All channels had strong growth out of the February “bottom” but vs 2021 they don’t look good. Clubs/SupCtrs & $/Value stores are up slightly YTD vs 2021 but all other measurements vs 2021 – published or real, are negative. Disc. Dept Stores were struggling before COVID and only 9% of their 8% growth since 2019 is real. For the other channels, it averages 47%. Avg Growth Rate: SupCtr/Club: 5.7%, Real: 2.8%; $/Value Strs: +6.1%, Real: +3.2%; Disc. Dept.: +2.6%, Real: 0.2%
• Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are up vs 2021, but real sales are flat or down, including a real 6.6% drop from 2019. Their true recovery is still a long way off. Avg Growth Rate: +0.2%, Real: -2.3%
• Internet/Mail Order – The sales growth of the “hero” of the Pandemic is slowing. Real March sales vs 2021 are even down. However, 91% of their 81.9% 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. Sales continue exceptionally strong in 2022. In fact, they are the only channel on the chart with all positive measurements. Plus, 88% of their 61.6% growth since 2019 is real. Their Avg Growth Rate is: +17.3%, Real: +15.6%. 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 $, 8 channels are up in YTD sales over 2021 but only 5 are up for the month. When you factor in inflation, the number with any “real” growth falls to 4 YTD & 1 monthly. Inflation is starting to have a growing impact at the channel level. Now, the Advance numbers for April.

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 but in fact, all big groups set annual sales records in 2021. Now radical inflation has entered the game with the largest increase in 40 years. This can first reduce the amount of product sold but not $ spent. In April there was a  small overall increase from March, but the amount sold fell in all but Restaurants. If it continues, it can actually reduce consumer spending which is now happening in Auto.

Overall – Inflation Reality is starting to set in. The monthly increase vs the previous year is much smaller than it has been. The still recovering Restaurants and Gas Stations are up double digits but Auto $ are actually down. Although April set a new $ record for the month, the real monthly and YTD sales vs 2021 for all but restaurants are down or flat.

Total Retail – Every month in 2022 has set a monthly sales record. April $ are $684B. In a normal year, sales should stay at or near that level until dipping slightly in September. However, 2022 is not normal. Sales are flat vs March but are still up 8.7% vs April 2021 and 11.3% vs YTD 2021. When you factor in 13% inflation, both measurements are down for the 2^nd consecutive month and only 46.4% of the 32.1% growth since 2019 is real. The Avg Growth Rate is: +9.7%, Real: +4.7%. Inflation is making an impact.

Restaurants – They were hit hard by the pandemic and didn’t truly start to recover until March 2021. Sales in the last 9 months of 2021 exceeded $70B and 2021 was the biggest year in history, $876B. January sales fell from December but have turned up since then setting new all-time monthly records in March and now April ($86.4B). They are the only big group that is positive in all measurements. Their inflation is high at 7.1% for April and 6.7% YTD but it is the lowest of any big group. Also, only 51.4% of their 29.0% growth since 2019 is real. This is due to the fact that inflation started earlier in this group, +5.9% in 2021. Here is their Avg Growth Rate: +8.9%, Real: +4.7%. Although they only account for 12.6% 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. They are unique in that their March and now April 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 -15+% in all measurements vs 2021, the worst performance of any group. Plus, only 16% of their 29.4% growth since 2019 is real. Their Avg Growth Rate: +9.0%, Real: +1.5%. It is very likely that the drops in the reported $ales in March & April 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 & April. 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 42% for 2022 vs 2021 and has even caused consumers to buy less than they did in 2019. Avg Growth Rate: +12.7%, Real: -2.4%. 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, but were basically flat in April. All months in 2022 set new records but their YTD numbers are now below their 9.7% avg growth. Now, we’ll look at the impact of inflation. 68.2% of their 32.1% growth since 2019 is real. However real sales vs 2021 are down -1.6% for the month and flat YTD. This shows that inflation is only a 2022 problem. Their Avg Growth Rate: +9.7%, Real: +6.8%. The performance of this huge group is critically important. This is where Retail America shops. Real YTD sales are up only 0.2% but the amount of products that consumers bought in March & April was actually less than 2021. They just paid more. That’s not good.

The impact of inflation is truly beginning to Hit home. Auto and Gas Stations have no monthly or YTD real growth. Relevant Retail is really down for the 2^nd straight month and basically flat YTD. Restaurants have the only positive real numbers. This adds up to 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 2 straight down months, the Auto Group may be moving into Phase III, when consumers actually cut back on spending. If inflation continues, the situation will only get worse.

• Relevant Retail: Avg Growth Rate: +9.7%, Real: +6.8%. Only 5 channels were up vs March but 8 were up vs April 2021. This was enough to set an April $ales record but you see the negative impact of inflation in the “real” numbers.
• All Dept Stores – This group was struggling before COVID, and the pandemic hit them hard. They began to recover in March 2020 and have continued to grow through April 2022. Their YTD numbers turned positive vs 2019 in April but are still down in real terms vs both 2019 & 2021. Avg Growth: +0.3%, Real: -2.3%.
• Club/SuprCtr/$ – 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 April Sales are up vs 2021 and YTD, their real numbers are down and only 46.5% of their 18.7% lift from 2019 is real. Avg Growth: +5.9%, Real: +2.8%.
• Grocery – These stores are essential and depend on frequent purchases, so except for the binge buying in 2020, their changes are generally less pronounced. Inflation has hit Groceries hard. Monthly and YTD increases vs 2021 are strong but real sales are actually down and only 28.5% of the growth since 2019 is real. Avg Growth: +6.3%, Real = +1.9%.
• 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 but enough to push April sales down vs 2021. However, 89% of their small 13.5% growth from 2019 is real. Their Avg Growth is: +4.3%, 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 only slightly from March but they’re positive in all measurements and 92% of growth from 2019 is real. Avg Growth: 4.8%, 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 on Furniture is extremely high so all of the real numbers for 2022 are negative and only 36% of their growth since 2019 is real. Avg Growth: +7.2%, Real: +2.7%.
• 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. Their sales are down across the board vs 2021. April deflation did help turn their sales positive vs 2019 but only 11% is real. Avg Growth: +0.3%, Real: +0.03%.
• Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. This year’s spring lift looks to be lower than 2021 and when you factor in strong, double-digit inflation, the amount sold is significantly lower for both April and YTD. 63.6% of their 37.1% sales growth since 2019 is real. Their Avg Growth is: +11.1%, Real: +7.3%.
• 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. YTD sales are up 0.4% but all other measurements are down vs 2021 and last month. Inflation in this group is lower than most groups and most of it comes from Sporting Goods. 78% of their 36.2% growth since 2019 is real. Their Avg Growth is: +10.9%, Real: +8.7%.
• 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 and now in April. They are #1 in April & YTD lifts vs 2021 and their YTD growth since 2019 is 2^nd only to NonStore. Plus, 84% of the 46.1% growth since 2019 is real. Their Avg Growth is: +13.5%, Real: +11.5%.
• NonStore Retailers – 90% of their volume comes from Internet/Mail Order/TV. The pandemic accelerated the online spending movement. 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 in 2022 but all measurements are positive. 90% of their 76% increase since 2019 is real. Their Avg Growth is: +20.7%, Real: +18.9%.

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 in April. In our summary of the big groups, we said that the market had entered 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 April 2021 and 10 are up YTD. However, when you factor in inflation, only 4 are up for April and 4 for YTD. Inflation is real and there are real and even worse consequences if it continues.

Finally, here are the details of the specific 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?
   • 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?
   • 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.
   • 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?
   • 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.
   • 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?
   • 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.

The pandemic started in March 2020. Since then, in the Retail sector, we have seen both record drops and record highs. The market has generally recovered but now we are being hit by extreme inflation. 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 February and then move to the Advance Report for March.  We’ll compare 2022 to 2021, 2020 and 2019. 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
• Monthly and Year To Date $ will also be shown for each group/channel

First, the February Final. February is the normal Retail $ bottom for the year. The drop from January was minor and only happened in Relevant Retail but it drove Total Retail down. Sales vs 2021 remain strong with double digit increases in both monthly and YTD for all groups. Here are the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The February Final is $2.6B more than the Advance Report. All groups were up. Restaurants: +$0.6B; Auto: +$0.7B; Gas Stations: +$0.4B; Relevant Retail: +$0.9B. The normal drop in retail sales from January only happened in Relevant Retail and is less than in past years. The late recovery for Restaurants and Gas Stations is still surging. All groups have now been positive vs past years for 9 consecutive months. Now, let’s look at the “Real” February lift vs 2021, factoring in inflation. Here are the numbers:

• Total Retail: National CPI: 7.9%, YTD: 7.7%; Sales Feb: +18.2% , Real: 10.3% (56.6%); YTD: 15.7%, Real: 8.0% (51.0%)
• Restaurants: Food away from home CPI: 6.8%; YTD: 6.4%; Sales Feb: 34.3%, Real: 27.5% (80.2%); YTD: 29.1%, Real: 22.7% (78.0%)
• Auto: New & Used Vehicles CPI: 23.5%, YTD: 23.1%; Sales Feb: 18.3%, Real: -5.2%; YTD: 15.7%, Real: -7.4% 
• Gas Stations: Gasoline CPI: 38.0%, YTD: 40.0%; Sales Feb: 37.7%, Real: -0.3%; YTD: 35.4%, Real: -4.6%
• Relevant Rtl: National CPI: 7.9%, YTD: 7.7%; Sales Feb: 13.1%, Real: 5.2% (46.8%); YTD: 11.2%, Real: 3.5% (31.3%)

Inflation is becoming a big factor in all but Restaurants.

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

Overall – You see the normal February drop as 7 of 11 were down vs January. However, only one channel, Office, Gift & Souvenir Stores is down in any other measurement. Evidence of a strong recovery by Relevant Retail.

• Building Material Stores – Their amazing lift has slowed in the winter months. Most of the increase from 2019 for both Home Ctr/Hdwe and Farm Stores came from the 20>21 lift. Home Ctr/Hdwe $ are starting to grow again but it’s still a little early in the year for the Farm Stores big lift. The February and YTD inflation rate for Tools, Hdwe, Outdoor Equip/Supp were both 10.7%. That makes the February numbers:
  • Home Ctr/Hdwe Feb: +16.0%, Real: +5.3%;YTD: +13.3%, Real: +2.6%
  • Farm Stores: Feb: +4.5%, Real:-6.2%; YTD: +2.2%, Real: -8.5% A big inflation impact!
• Food & Drug – Both channels are truly essential. Except for the food binge buying in the pandemic, they tend to have smaller fluctuations in $. Both had big drops from January but have had regular growth since 2019. Supermarkets’ growth has been stronger due to more families choosing to cook at home. Inflation for Food at Home was Feb: 8.6%, YTD: 8.0%. Drug Inflation (Rx & OTC): Feb: 2.5%. YTD: 1.9%. Growth was:
  • Supermarkets Feb: +8.4%, Real: -0.2%; YTD: +8.1, Real: +0.1% Grocery inflation had a big impact.
  • Drug Stores Feb: +9.1%, Real: +6.6%; YTD: +9.0%, Real: +7.1% 
• Sporting Goods Stores – Like Hardware/Farm stores, they benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up after a big drop in January, so they are positive in all measurements. The high demand has pushed the inflation rate for Sporting Goods to Feb: 7.1%. YTD: 7.6%. Sales growth was: Feb: +11.0%, Real: +3.9%; YTD: +5.4%, Real: -2.2%. Inflation kept real YTD sales negative.
• Gen Mdse Stores – $ in all channels fell from January but all were up from 2021. SuperCtrs/Clubs have a higher % of groceries which results in more frequent visits and generally higher growth numbers. Disc. Dept Stores were struggling before COVID but had a strong 2021. Using the overall CPI of 7.9%, YTD: 7.7%, sales growth was:
  • SupCtr/Club Feb: 11.3%, Real: +3.4%; YTD: +7.8%, Real: 0.1%
  • $/Value Strs Feb: +7.7%, Real: -0.2%; YTD: +3.5%, Real: -4.2% $ Stores focus on price, so it’s no surprise that inflation hit them hard.
  • Disc. Dept. Strs Feb: +10.0%, Real: 2.1%; YTD: 5.7%, Real: -2.0%. 
• Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021, but they are still not there yet. Sales are up vs 2021, but every other measurement is negative. The available inflation number most appropriate for them is “limited” as it cuts out food, energy, shelter and used vehicles. Feb: 5.5%.YTD: 5.3%. Sales are Feb: +12.0%, Real: +6.5%; YTD: +7.2%, Real: +1.9%.
• Internet/Mail Order – The sales growth of the “hero” of the Pandemic is slowing. With inflation at 7.9%, YTD: 7.6%. they were Feb: 14.2%, Real: 6.3%; YTD: +14.2%, Real: +6.6%. Their avg growth rate is 17.5%. Inflation widens the gap.
• 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. Using the 5.5%, YTD: 5.3% “limited” inflation, Sales were: Feb: +30.3%, Real: +24.8%; YTD: +26.5%, Real: +21.2%. By any measure and even factoring in high inflation, they are the percentage leader in 2022 growth. They are even beating the internet, which is to say the least, surprising.

There is no doubt that high inflation is an important factor in Retail. In actual $, all 11 channels increased monthly & YTD sales over 2021. However, when you factor in inflation, the number with any “real” growth falls to 8 monthly and 7 YTD. Until things change, inflation will be a big part of retail sales discussions. Now, the Advance numbers for March.

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 but in fact, all big groups set annual sales records in 2021. Now in late 2021 and continuing into 2022 radical inflation has entered the game. It’s not the biggest increase ever but it is the largest in 40 years. As we have learned in the past, this can first reduce the amount of product sold but not $ spent. However, if it continues, it can actually reduce consumer spending. This could reverse many gains.

Overall – The big change is that the monthly increase vs the previous year is much smaller than it has been. The still recovering Restaurants and Gas Stations are up double digits but Auto $ are actually down. Also, March 2020 was the start of the pandemic. March 2022 set a new record for the month. We have come a long way since those tough days.

Total Retail – Every month in 2022 has set a monthly sales record. March $ are $677B. History says that they should stay at or near that level until dipping slightly in September. March sales are up 7.0% over 2021. That’s significantly below the 9.6% average increase since 2019. The national inflation rate for March 2022 vs 2021 was 8.5%, even higher than February. YTD prices are up 8.0%. Let’s take a closer look at the sales numbers. March: +7.0%, Real: -1.5%; YTD: +12.4%, Real: +4.0% (32.3%).The amount sold in March was actually down from 2021 and only about 1/3 of YTD sales gain was real.

Restaurants – They were hit hard by the pandemic and didn’t truly start to recover until March 2021 with a $15B lift over February and an $18B increase over 2020. 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 have turned up since then setting a new all-time monthly record of $78.3B in March. March sales are up an average of 5.9% since 2019 and the YTD average is 5.4%. The channel is becoming more normal. Inflation for Food away from home in March was 6.9%. YTD, it is 6.7%. Here is the growth. March: +20.2%, Real: +13.3% (65.8%); YTD: +25.7%, Real: +19.0% (73.9%) This is by far the best real 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 & March. However, March $ are down vs 2021, the only negative on the chart and a huge change from their average March growth rate of 9.7% since 2019. Their YTD growth rate since 2019 is 10.2%, due to double digit increases in January & February. The inflation rates for new & used vehicles, which account for the vast majority of the sales in this group, were Mar: +21.7%, YTD: +22.8%. Sales were: Mar: -1.0%, Real: -22.7%; YTD: +8.8%, Real: -14.0%. It is very likely that the drop in the actual $ in March 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. Sales fell in January and February then turned up in March. However, they have the biggest monthly and YTD increases vs 2021. Gasoline inflation is in all the headlines so let’s get right to the numbers. Gasoline inflation vs 2021 for March is 48.0% and YTD is 42.3% which generates the following. March: +37.9%, Real: -10.1%; YTD: +36.4%, Real: -5.9%. It’s a textbook example of the initial impact of inflation. Consumers are spending more but buying less, especially with the huge price lift in March.

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 then turned up in March. All 3 months set new records but the March lift from 2021 is less than half of their 9.4% average. Their YTD numbers are better, only slightly below their 9.0% average. Now, we’ll look at the impact of inflation. We’ll use the overall inflation rates: March: 8.5%, YTD: 8.0%. Sales growth was: March: +4.0%, Real: -4.5%; YTD: +8.5%, Real: +0.5% (5.9%). With the huge size of this group, these results are critically important. This is where Retail America shops. YTD sales are truly up only a miniscule 0.5% but the amount of products that consumers bought in March was actually 4.5% less than 2021. They just paid more. That’s not good.

The impact of inflation is truly beginning to Hit home. Auto and Gas Stations have no monthly or YTD real growth. Relevant Retail is really down for the month and basically flat YTD. Restaurants have the only positive real numbers. This adds up to a real monthly drop for Total Retail and a minor YTD increase. We are now in Phase II of inflation. Consumer spending increases but the amount bought declines. The Auto Group may actually be moving into Phase III, when consumers actually cut back on spending. If inflation continues, the situation will only get worse.

Now the March numbers for some key retail channels.

• Relevant Retail: Mar: +4.0%, Real: -4.5%; YTD: +8.5%, Real: +0.5%. All channels were up vs the February “bottom” but 2 were down vs March 2021. It was a record month but you 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 they have continued to grow through March 2022. The most appropriate inflation rate to use for them is less Food, Energy, Shelter & used vehicles which are Mar: 5.8%, YTD: 5.5%. Their numbers are Mar: +3.3%, Real: -2.5%; YTD: +11.2%, Real: +5.7%. Their growth slowed in March and in “real” terms they actually lost ground due to inflation.
• 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 turned around, at least temporarily. Using the national CPI, Mar: +4.0%, Real: -4.5%, YTD: +6.0%, Real: -2.0%
• Grocery – These stores are 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, 10.0% in March and 8.7% YTD, the biggest increase since 1981 and produced negative real numbers Mar: +9.0%, Real = -1.0%; YTD: 8.5%, Real: -0.2%
• 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. Using the CPI for Rx & OTC drugs: Mar: 2.7%, YTD: 2.2% their sales are: Mar: +0.9%, Real: -1.8%; YTD: +6.2%, Real: +4.0% Even with lower inflation, their real sales were down.
• Clothing and Accessories – They were generally deemed 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 2022. Apparel inflation is Mar: 6.8%, YTD: 6.2%. Their $ are Mar: 7.5%, Real: 0.7%; YTD: 16.7%, Real: 10.5%
• 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 on Furniture is extremely high, 15.8% for March and 16.6% YTD. That causes a big turnaround in their numbers. Mar: +4.2%, Real: -11.6%; YTD: +5.5%, Real: -11.1%
• 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. Their sales are down across the board vs 2021. We’ll use the “limited” CPI: Mar: 5.8%, YTD: 5.5%. Sales: Mar: -9.6%, Real: -15.4%; YTD: -4.0%, Real: -9.5%.
• Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. Their spring lift became almost year-round. A big lift from February but little vs 2021. The CPI for Hdwe & Outdoor is Mar: 10.8% YTD: 10.7%. Here are their sales: Mar: +1.8%, Real: -9.0%; YTD: +7.6%, Real: -3.1%. An Inflation generated drop.
• 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. A big increase from February but March Sales are down vs 2021. The product groups in these outlets have radically different CPIs so using the “limited” inflation version seems to be the best choice. Mar: -5.7%, Real: -11.5%; YTD: 1.6%, Real: -3.9%. Inflation again hits hard.
• 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 now #1 in March & YTD lifts. Since 2019, their March growth is #1 and YTD is 2^nd to NonStore. The limited CPI seems right for them and generates strong numbers. Mar: +14.3%, Real: +8.5%; YTD: +18.9%, Real: +13.4%
• NonStore Retailers – 90% of their volume comes from Internet/Mail Order/TV. The pandemic accelerated the online spending movement. 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. Growth slowed markedly in March 2022. Using the national CPI, their sales are Mar: +2.6%, Real: -5.9%; YTD: +10.4%, Real: +2.4% Even the internet is not safe from inflation.

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. Admittedly, the growth rate has slowed in March, but sales are still up. In our summary of the big groups, we said that the market had entered 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. 9 of 11 channels are up vs March 2021 and 10 are up YTD. However, when you factor in inflation, only 2 are up for March and 5 for YTD. Inflation is real and there are real and even worse consequences if it continues.

The Retail recovery has been generally successful, but a long and complex journey. Now, we are seeing a new and largely unexpected factor also attributed to COVID – 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 add 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 December and then move to the Advance Report for January, giving us a final look at 2021 and a 1^st look at 2022. In the December Final we will compare 2021 to both 2020 and 2019. In the January Advance we will compare 2022 to the 3 prior years and add in the Avg Annual Change. Note: January Monthly $ = YTD.

Both reports include the following:

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

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

• Current Month change – % & $ vs previous month
• Current Month change – % & $ vs same month in 2020 and 2019 (In the Advance, we compare 2022 to 21,20 & 19)
• Current YTD change – % & $ vs 2020 and 2019 (In the Advance, YTD is unnecessary, so we add the Avg chge)
• Monthly and Year To Date $ will also be shown for each group/channel

First, the December Final. Retail hit bottom in April 2020 but began recovery, hitting record $ in December. $ fell in Jan>Feb but set a new $ records in March & May. Sales slowed through September but turned up in October, setting new records in November & December. Here are the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The final total is $2.3B less than the Advance report projected a month ago. 2 groups were up and 2 were down. The specifics were: Restaurants: +$0.7B; Gas Stations: +$0.5B; Auto: -$1.4B; Relevant Retail: -$2.0B. Sales vs November were up for all groups but Gas Stations. Total Retail $ales broke $600B for the 1st time in December 2020. December 2021 $ales broke the $700B barrier. Restaurants & Gas Stations had a truly strong December vs 2020 as their recovery strengthens. Auto had the strongest recovery with 23.5% growth in 2021 producing an annual YTD growth rate since 2019 of +11.3%. A slight $ dip in December is normal for Gas Stations but all groups contributed to setting a new $ record. Importantly, for the 7th consecutive month, all groups were positive in all measurements vs 2020 or 2019.

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

• Overall – 1 was down vs last month. A December dip in Home Ctr/Hrdwre is not unusual. Office/Gift/Souvenir $ had a strong month but are still down at yr-end vs 2019. December set another new $ record for Relevant Retail.
• Building Material Stores – Their amazing lift has slowed as we move into winter. The surge came from pandemic spending patterns developed in 2020. Consumers began focusing on their homes. Their Spring lift slowed in 2021 but Building and Farm stores are still going strong. Sporting Goods stores have a similar pattern. Sales took off in May 2020, set a record in December and continued strong in 2021. They slowed in the Spring/Summer but set a record in November, then exploded in December. Yr-end they are +47.3% vs 2019, a Growth Rate of 21.4%!
• Food & Drug – Supermarkets were +$77.7B in 2020. $ are up vs November and +9.6% vs December 2020. 2021 $ were +3.3% vs the 2020 binge and +16.0% vs 2019. Drug Stores were +$17B (+5.7%) for 2020. They had a record March. Sales then stabilized until hitting a new record in December. They finished 2021 at +7.7%.
• General Merchandise Stores – $ in all channels fell in Jan/Feb then spiked in March. Monthly sales by channel varied up/down until all stores turned up in October & set a new GM $ record in December. Clubs/SuprCtrs & $ Stores are leading the way with a combined annual growth rate of +8.9%. These channels promote value. Their success reinforces its consumer importance. Disc. Dept. Strs again show all positive numbers, growing at 4.3%.
• Office, Gift & Souvenir Stores– $ were up +31.7% vs November and they finished the year up 24.9% vs 2020. However, they were still down -1.7% vs 2019. Things have improved but full recovery is pushed into 2022.
• Internet/Mail Order – Their December sales broke the $100B for the first time and they finished the year +13.2% vs 2020. This comes on top of a 25.3% lift last year and generates an average growth rate of 19.1%
• A/O Miscellaneous – This is a group of specialty retailers which includes Florists, Art Stores and Pet Stores (22>24% of total $). In May 2020 they began their recovery. December 2021 was their 8^th consecutive month over $10B and set a new record, $11.5B. Yearend $ are +26.3% vs 2020 and +41.6% vs 2019. Avg Growth: 19.0% – 3^rd

Relevant Retail began recovery in May 2020 and hit record $ in December. In 2021 $ fell in Jan/Feb, turned up again in March and began a monthly up/down rollercoaster. December $ brought records for both monthly and annual sales. Moreover, all but 1 channel were ahead of all 2020 & 2019 measurements. The big drivers continue to be the Internet, SuperCtrs/Clubs/$ Stores and Hdwe/Farm. Now, the Advance numbers for January.

We have now 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. Some channels are still suffering but the Retail market made a widespread, strong recovery. That brings us to 2022. First, let me issue a warning. You will see universal drops in sales from December and some will be huge. This is to be expected and totally normal. Here is the average Dec>Jan $ drop for the 10 years prior to the pandemic:

Total Retail: -20.2%

Restaurants: -8.0%

Auto: -11.5%

Gas Stations: -4.1%

Relevant Retail: -26.5%

The other factor on everyone’s mind is inflation. We will address that issue, especially when we look at the change in sales vs January 2021. Now, let’s get started.

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

Total Retail – Sales in 2021 were up $1.2T (+19.4%) vs 2020, with an annual growth rate of 9.4% since 2019, the best in history. It took 2 years to recover from the Great Recession in 2009. This time it appears that we effectively accomplished it in 1 year. Annual inflation for 2021 vs 2020 was +4.7% so 75.8% of the 19.4% increase was real – 14.7%. In January, sales fell -18.5% from December, which is slightly less than a “normal” -20.2%. This is impressive since December sales reached an all-time high. However, January sales also set a record for the month, beating the previous best in 2021 by 12.3%. Although 2022 is the best performer, January sales for Total Retail have increased regularly since 2019 with an average annual lift of 8.4%. Jan 22 vs Jan 21 – Inflation = +7.5%. “Real” $ increase = +4.8% (39% of 12.3%) Inflation could be starting to have an impact.

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. December $ were a record for the month and 2021 was the biggest year in history, $821B. January sales fell 10.9% from December, a little higher than their usual 8.0%, but were up 24.9% from 2021. Their January sales pattern clearly reflects their late recovery as sales are only up an average of 4.9% since 2019. Jan 22 vs 21 – Inflation: Food away from home = +6.4%; “Real” $ increase = +18.5% (74.3%). Damn Good!

Auto (Motor Vehicle & Parts Dealers) – Staying at home causes your car to be less of a focus but this group actively worked to overcome this attitude with great deals and a lot of advertising. They finished 2020 up 1% vs 2019 and the last 10 months of 2021 were the biggest in history, generating a record $1.54T in 2021. Their growth rate from 2019>21 averaged +11.3%, the best of any big group. In January 2022, sales fell -11.3%, minimally better than their normal -11.5%. Sales increased 11.4% in January vs 2021. You an see that the biggest increases occurred in 2021 and 2022 but they also have a pretty normal January growth pattern, with an annual average increase of +9.7%. Jan 22 vs 21 – Inflation: Overall = +7.5%; New & Used Vehicles = +23.1%. This means that at best the Real $ increase was +3.9%. The worst and more likely case is that there was actually a decrease in the amount sold in the Auto group.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and obviously need less gas. This group truly started recovery in March 2021. They were positive vs 2019 & 2020 for the last 10 months of 2021 and reached a record $588B (+36.7%) for the year. January sales were down -5.6% from December, slightly more than their usual -4.1%. However, they were up 32.7% vs 2021. You can see that they have a January sales pattern that is similar to Restaurants but more extreme which is evident by their 10.7% 2019>22 growth rate, which is twice as high. Inflation comes to the forefront in this group because the spectacular rise in gasoline prices has generated a lot of headlines in the media. Jan 22 vs Jan 21 – Gasoline Inflation = +40.0%. “Real” $ change = -7.3%. Spend more but get less.

Relevant Retail – Less Auto, Gas and Restaurants – This is considered the “core” of U.S. retail and traditionally accounts for about 60+% of Total Retail Spending. The channels in this group took a variety of paths through the pandemic due to many factors, like closures, binge buying, online shopping and consumers’ focus on “home”. However, their only down month was April 2020. They finished 2020, up +7.1% and 2021 got even better. March>December were 10 of the 12 biggest months of all time and helped generate a record $4.47T, +14.1% in 2021. They have led the way in Total Retail’s recovery with an average annual growth rate from 2019 of +10.6%. The recovery was primarily driven by Nonstore, Grocery, SuperCtrs/Clubs/$ Stores and Hardware/Farm but it became widespread with help from channels like Sporting Goods and even Miscellaneous Stores (includes Pet). In January sales fell -23.9% from December but still set a record for the month. This looks like a big decrease but is actually less than the normal drop of -26.5%. It reinforces the importance of December holiday sales to this group. Sales in January were +8.2% vs 2021 and almost equal to their annual growth rate of +8.3% since 2019. Their January sales pattern shows regular growth since 2019 but the biggest lift occurred in 2021 as more channels became productive and they strongly kicked off what was to become a record year. Jan 22 vs Jan 21 – Inflation = +7.5%. “Real” $ increase = +0.7% (8.5% of 8.2%). This is concerning as inflation has stopped, at least temporarily, the real growth in this huge, segment that is critically important to the U.S. Retail Marketplace.

In the groups with the strongest recovery from COVID, Relative Retail and Auto, monthly increases are slowing so we are now starting to see the effect of strong inflation. Now, we’ll look at what is happening in the individual retail channels. Remember, the groups in the chart are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets. Also remember the 7.5% inflation rate to put the $ changes into better perspective.

Everyone was down vs December and the January Sales of Electronics & Appliance Stores have been slowly falling since 2019. Sporting Goods were down a little vs 2021 but all other channels showed increases vs every year.

After hitting bottom in April 2020, Relevant Retail has now beat the previous year’s $ for 21 consecutive months. They set an all-time record of $406.8B in December and finished 2020 +$260B vs 2019. 2021 was even stronger with record sales in every month and a new record of $461.0B in December & Yr-end, $4.47T. Essential channels were the drivers:

• Nonstore Retailers
• Food & Beverage – Grocery
• Bldg Materials/Garden/Farm
• SuperCtrs/Club/Value/$ Strs

That brings us to 2022. Relevant Retail was up 8.2% vs 2021 but inflation was 7.5%, so the real increase was about 0.7%. In fact, only 7 of 13 channels had a year over year sales increase over 7.5% and some were just barely over.

General Merchandise Stores – Sales fell sharply vs December, especially in Department Stores, -50.3%. In terms of increase vs 2021, they beat inflation with +10.3% but sales growth was strong because of 2 straight years of decline. Average growth is only 1.9%. Clubs/SuperCtrs/$ stores didn’t beat inflation, but their annual average growth rate is 8.1%. They are the key to the future of the GM channel. Here are the actual and “real” increases from 2021.

• All GM: +6.4%, Real = -1.1%; Dept Stores: +10.3%, Real = +2.8%; Club/SuprCtr/$: +5.8%, Real = -1.7%

Food and Beverage, plus Health & Personal Care Stores – These stores are more essential and depend on frequent purchases so the drop from December was less severe. They had similar January lifts but the average increase for Grocery/Food & Beverage, +7.0% is twice that of Health/Drug stores, +3.5%. (BTW: Grocery Inflation was +7.4% vs 2021)

• Food & Bev: +7.2%, Real = -0.2%; Grocery: +8.1%, Real = +0.7%; Health/Drug Stores: +7.7%, Real = +0.2%

Clothing and Accessories; Electronic & Appliances; Home Furnishings – A big drop from December, especially for Clothing but they have mostly recovered. The January order pattern and growth rate shows an earlier and stronger recovery for Furniture. Electronic/Appliance is just now back to 2019 $ and continued their pattern of January declines.

• Clothing: +19.1%, Real = +11.6%; Electronic/Appliance: -3.0%, Real = -10.5%; Furniture: +1.5%, Real = -6.0%

Building Material, Farm & Garden & Hardware –Their Dec>Jan drop was small, as expected. They have benefited from consumers focusing on their home needs. They ended 2020 (+14.3%) and 2021 (+13.5%) and continued strong into January with a 12.7% increase over 2021 so they’re still beating inflation 2022 = +12.7%, Real = +5.2%

Sporting Goods, Hobby and Book Stores – Consumers turned their attention to personal recreation and sales in Sporting Goods outlets took off. The group ended 2020 +7.0% vs 2019 and 2021 was up an incredible +28.6%. January was down -44.3% from December and even down -0.8% from 2021, reducing its avg growth from 14.5% to 9.2%. Their incredible record setting run may have come to an end and stabilized at a new, higher level. 2022 = -0.8%%, Real = -8.3%.

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 2021, hitting a record $17.1B in December. Sales fell an average amount in January but were still 13.2% ahead of 2021 which was the 2^nd best, behind Clothing Stores. This put their average January growth rate at +11.4%, second only to Nonstore Retailers. 2022 = +13.2%, Real = +5.7%

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%, +162.9B. This was 63% of the entire increase for Relevant Retail. Sales growth continued in 2021 and in December monthly sales exceeded $100B for the 1^st time. For the year, they finished +13.6% and also broke the $1 Trillion barrier. January sales fell -25.4% from December but were +8.9% vs 2021 and they maintained the highest average rate of increase, +13.6%. 2021 = +8.9%, Real = +1.4%

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

Recap – 2020 was quite a year, 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 2020 and 2019 in all measurements and reached $4.47T in 2021. The recovery was widespread as all but 2 groups on our Advance Chart set sales records in 2021. January began pretty normally for Relevant Retail with a -23.9% drop from December. This is slightly less than average and actually very good considering the record Holiday sales in 2021. With the strong retail recovery, another unexpected issue has come to the forefront, runaway inflation. The CPI is rising at year over year rates that haven’t been seen in decades. The retail recovery means a return to “normal” which includes smaller, more “normal” sales increases. Right now, sales continue to increase. Consumers often pay more but get less. As we’ve seen in the Pet Industry, strong inflation can severely reduce sales. We’ll keep tracking the retail market.