Archive for category: Pet Market Distribution Channels

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

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

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

In December 2021 The Relative Importance was

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Both reports include the following:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Retail market hit bottom in April 2020 then began its recovery. The journey has been long and complex and Consumer spending behavior continues to evolve. Amazingly, we have not beaten the virus yet so we will continue to track any impact on the retail marketplace with data from two reports provided by the U.S. Census Bureau.

The Reports are the Monthly Retail Sales Report and the Advance Retail Sales Report. 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 Final Retail Report for November and then move to the Advance Report for December, giving us a first look at year-end 2021. The retail impact of the pandemic began in March 2020, peaked in April, then recovery started in May. We will compare 2021 to both 2020 and 2019 to document the progress of the retail market to a full recovery.

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
• Current YTD change – % & $ vs 2020 and 2019
• Monthly and Year To Date $ will also be shown for each group/channel

First, the November Final. Retail hit bottom in April 2020 but began recovery, hitting record $ in December. $ fell in January/February but set a new $ records in March and then again in May. Sales declined through September but turned up again in October & November. Here are the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The final total is $0.6B more than the Advance report projected a month ago. 2 groups were up and 2 were down. The specifics were: Auto: +$0.8B; Gas Stations: +$0.2B; Restaurants: -$0.2B; Relevant Retail: -$0.1B. Sales vs October were down for all groups but Relevant Retail. Total Retail $ales broke $600B for the 1st time in December. November $ales beat that number and in fact, set a new all time record. Auto continues to have the strongest recovery with an annual YTD growth rate since 2019 of +11.4%. A $ dip in November is normal for all but Relevant Retail as we start the holiday season. Importantly, for the 6th consecutive month, all groups were positive in all measurements vs 2020 or 2019.

Now, let’s see how some Key Pet Relevant channels were doing in November.

• Overall – 4 were down vs last month. Drug & Supermarket drops were minor while the Farm dip was normal. Office/Gift/Souvenir $ were down vs October & YTD vs 2019. November set a 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 has 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, hit a record peak in December and continued strong into 2021, peaking in March. $ slowed a little through October but set a new record in November. YTD they are +47.6% vs 2019, a Growth Rate of 21.5%!
• Food & Drug – Supermarkets were +$77.7B in 2020. $ are down vs October but +7.3% vs November 2020. YTD $ are on par with the 2020 binge and +15.5% vs 2019. Drug Stores were +$17B (+5.7%) for 2020. They had a record March. Sales have been relatively stable since then. Their YTD $ are +7.4%.
• General Merchandise Stores – $ in all channels fell in Jan & Feb then spiked in March. Monthly sales by channel have been up or down since then but GM set a new non-December sales record in November. 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 4.9%.
• Office, Gift & Souvenir Stores– $ are down sharply from October (normal) but were +24.3% vs November 2020. COVID hit them hard. They are still down YTD vs 2019 but getting a little better. Recovery will take more time.
• Internet/Mail Order – Their sales were +19.3% from October as we move into the holidays. Their COVID fueled growth continues. In November 2019, their avg annual growth rate was +12.9%. Now, it is +19.6% – up 51.9%
• A/O Miscellaneous – This is a group of specialty retailers – chains and indies. It includes Florists, Art Stores and Pet Stores (22>24% of total $). Pet Stores were usually essential, but most stores were not. In May 2020 they began their recovery. Their 2020 sales were up +12.1%. November 2021 was their 7^th consecutive month over $10B and set a new record, $11.0B. YTD $ are +27.5% vs 2020 and +41.0% vs 2019. Avg Growth: 18.7% – 3rd Best

Relevant Retail began recovery in May and hit record $ in December. $ fell in Jan & Feb, turned up again in March and began a monthly up/down rollercoaster. November $ set a record and all channels but 1 are ahead of all 2020 & 2019 $. The big drivers are the Internet, SuperCtrs/Clubs/$ Stores and Hdwe/Farm. Now, the Advance numbers for December.

2020 was a memorable year. In April & May we experienced the 2 biggest retail spending drops in history, but the problems actually began in March. Retail sales began to recover in June and in October, YTD Total Retail turned positive for the 1^st time since February. In December, Total Retail broke the $600B barrier – a historic first. Sales fell in both January and February but still set monthly sales records. Then they took off again in March, setting a new monthly sales record. April sales were down slightly but they spiked again in May to set yet another spending record. June>Sept $ fell but then came back in October>December. November & December set new records with December reaching $715B. Only Gas Stations were down vs November, but all were positive in all other measurements for the 7th straight month. 2021 is also memorable. All big groups set $ records. Total Retail broke the $7T barrier and Relevant Retail passed $4T. Other areas of the economy are still suffering and inflation has become a bigger factor in increases. However, consumers continue to spend “big bucks”, especially in Relevant Retail, and the overall Retail market continues its strong recovery.

Total Retail – In March and May Total Retail set new sales records. From June>Sept sales dipped slightly. October through year-end saw a resurgence with November & December setting all time records. December $ reached $715B and 2021 numbers totaled $7.4T, both barrier breakers. Sales finished +19.3% vs 2020 with an average annual sales growth rate since 2019 of 9.5%. The previous highest growth rate ever in records going back to 1992 was 8.23% in 1993>1994. More History: Sales fell in both 2008 & 2009. Total drop: -8.4%. Recovery took 2 years. 2010 & 2011. Total increase was +13.1%. Net increase 2007>2011: +3.6%. Avg Growth: +0.9%. Inflation Note: Retail $ were +16.9% vs December 2020. Inflation was +7.0% so up to 41% of the lift came from higher prices. The “Real” increase was +9.9%. In December 2019 (pre-pandemic), Retail $ were +5.5% over 2018. Inflation was 2.3%, 42% of the lift. The “Real” increase was +3.2%. Long term, strong inflation can slow spending but right now, Retail is far outperforming pre-COVID 2019.

Restaurants – This group has no negative measurements vs 2020 or 2019 for 7 straight months. February 2020 YTD sales were up 8.1% vs 2019. In March Restaurants started to close or cease in person dining and sales fell -$33.3B (-52.5%) vs 2019. Sales hit bottom in April at $30.1B, the lowest April $ since 2003. Sales started to slowly increase in May but never reached a level higher than 88% vs the previous year. 2021 started off slowly. Through February, YTD sales were -16.7% from pre-pandemic 2020 and -10.0% from 2019. In March sales took off and hit a record $76.5B in July. 7 of the last 8 months in 2021 exceeded $70B which produced a record year, $821B. +32.1% vs 2020 and +6.1% vs 2019. Avg Growth since 2019 = +3.0%

Auto (Motor Vehicle & Parts Dealers) – Staying home causes your car to be less of a focus in your life. Sales began to fall in March and hit bottom in April. Auto Dealers began combating this “stay at home” attitude with fantastic deals and a lot of advertising. It worked. They finished 2020 up 1% vs 2019 and have returned to a strong positive pattern in 2021. The “attitude” grew amazingly positive in a record March and slowed only slightly from April>December as sales exceeded $119.8B in all 10 months – the 10 biggest months in history. Their campaign was amazingly effective in recovering the business in 2020 and generated a record $1.54T in 2021, up 23.6% vs 2020. Their Year-end Avg Annual Growth Since 2019 = +11.4% – the best performance of any big group.

Gas Stations – Gas Station $ales have been mixed. If you drive less, you need less gas. Sales turned down in March 2020 and reached their low point in April. They moved up but generally stayed about 15% below 2019 levels for the rest of 2020. In February they were still behind 2020 in monthly and YTD $ but ahead of 2019 in both measurements. In March, sales skyrocketed and continued to grow to a record level in July. They fell in Aug/Sept but reached a record $55.3B in October. Sales fell in Nov/Dec, but they have been positive in all measurements vs 2019 & 2020 since March. This produced a record $588B for 2021, +36.6%. However, inflation comes to the forefront in this channel. Gas prices can be volatile. They dipped in the first 2 months of the pandemic but returned to more normal levels for the balance of 2020. Strong inflation began in 2021. In fact, December prices were 49.6% above 2020. That means that the 41.4% year over year $ lift in December was actually a decrease in the amount of gas sold. Year-end Growth Rate Since 2019 = +7.1%

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. In looking at the individual channels in this group, we have seen a variety of results due to many factors, like non-essential closures, binge buying, online shopping and a consumer focus on “home”. However, overall, April 2020 was the only month in which spending in this group was down vs 2019. Monthly $ales exceeded $400B for the first time ever in December. They finished 2020 up $260B, +7.1%. Their performance was the only reason that Total Retail was able to finish 2020 with positive numbers, +0.5%. Sales fell in January and February 2021 but set monthly records. In March they turned sharply up and then began an up/down $ roller coaster ride. Sales turned up in October and set a record in November which was blown away by $461B in December. March>December are 10 of the 12 highest $ months of all time and helped generate a record $4.47T in 2021, +14.1%. Relevant Retail has exceeded $361B in monthly sales 12 times. 11 of those have occurred since the onset of the pandemic. It is also very important that the Relevant Retail group has posted positive numbers versus last year and YTD for every month since April 2020 and their average YTD growth rate since 2019 is +10.5%. The recovery has become widespread as all channels have been positive in all measurements vs both 2020 and 2019 for 5 consecutive months. The primary recovery drivers were and continue to be Nonstore, Grocery, SuperCenters/Clubs/$ Stores plus a never ending “spring lift” from Hardware/Farm and Sporting Goods and growing help from Miscellaneous Stores (includes Pet).

Now let’s look at what is happening in the individual retail channels to see where the $ are coming from. December $ were up 13.3% from November and an increase occurred in 12 of 13 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.

Sales in 12 of 13 channels were up vs November but all were up vs December 2020, vs December 2019 and YE (Year-end) vs 2020 and 2019. (Relevant Retail Avg Annual Growth Rate since 2019 = +10.5%)

After hitting bottom in April 2020, Relevant Retail has beat the previous year’s $ for 20 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 all-time record of $461.0B in December & YE: $4.47T. Essential channels were consistent drivers:

• Nonstore Retailers – The biggest driver. Online shopping continues to grow in # of households and in $.
• Food & Beverage – Grocery– Restaurant $ have come back but consumers continue to eat & drink more at home.
• Bldg Materials/Garden/Farm– Their “Spring” lift may be ending but consumers are still focused on their homes.
• SuperCtrs/Club/Value/$ Strs – They kept the GM channel strongly positive. Value is still a big consumer priority.

Regarding the Individual Large Channels (Includes YE Actual increase vs 2020 & Avg Annual Growth Rate since 2019)

General Merchandise Stores – Sales increased for all channels vs November and all other numbers were also positive. Even Department Stores $ are growing increasingly positive. After dipping to +7.5% in February, the avg growth rate by Club/SuperCtr/$ stores has stabilized at about 8.9% ever since. These stores are still the key to this channel.

• All GM: +12.1%, Avg = +7.6%; Dept Stores: 21.7%, Avg = +1.5%; Club/SuprCtr/$: +10.2%, Avg = +8.9%

Food and Beverage, plus Health & Personal Care Stores – Sales in Grocery were down in March>May from 2020 – No surprise, as these were 2020 binge months. In Jun>Dec they beat 2020 $. Health/Personal Care finished 2020 at +1.8% but 2021 has been better. December was up 15.1% from November and YE $ are +9.5%% vs 2020 and +11.4% vs 2019.

• Food & Bev: +4.2%, Avg = +7.9%; Grocery: +3.7%, Avg = +7.6%; Health/Drug Stores: +9.5%, Avg = +5.6%

Clothing and Accessories; Electronic & Appliances; Home Furnishings – March > Dec have been spectacular for all these channels. The increase in Clothing vs November was an incredible +41.0%. All were up vs last month, remained positive in all measurements vs 2020 or 2019 for the 10th consecutive month and ended 2021 at least 25% ahead of 2020.

• Clothing: +48.4%, Avg = +6.2%; Electronic/Appliance: +25.2%, Avg = +3.0%; Furniture: +26.4%, Avg = +10.1%

Building Material, Farm & Garden & Hardware – The lift that began in 2020 has slowed but they have benefited from consumers focusing on their home needs. They ended 2020 +53B (+14.3%). Sales took off in March, set a record in April, but have slowed and stabilized around $39B, including the only Nov>Dec channel $ drop. 2021: +13.5%. Avg = +13.9%

Sporting Goods, Hobby and Book Stores – Book & Hobby stores are open but Sporting Goods stores have driven the lift in this group. Consumers turned their attention to personal recreation and sales in Sporting Goods outlets took off. The group ended 2020 +7.0% vs 2019. The growth accelerated in 2021 ending with a huge lift in December, up 30.7% from November to $13.5B, by far their biggest month ever. At year-end they were +28.6%. Avg Annual Growth = +17.3%

All Miscellaneous Stores – Pet Stores were deemed essential but most other stores were not, so closures hit this group particularly hard. Sales hit bottom at -$3.8B in April then began to rebound. They finished with a strong December and ended 2020 +$1.2B, +0.9%. In March 2021 sales took off and reached the $14+B level in May. They have stayed there and set a record of $15.3B in October. Sales spiked spectacularly in December, setting a new monthly record of $17.1. At  year-end they were +27.3% with an Avg Growth = +13.3% (4^th Best). Their recovery is very real.

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV. The pandemic accelerated the movement to online retail. In February 2020 NonStore $ were +8.6% YTD. In December monthly sales exceeded $100B for the 1^st time. They ended 2020 at +21.4%, +$162.9B. This was 63% of the total $ increase for Relevant Retail Channels. Their 2020 performance made them the largest channel and every month in 2021 has produced record $. December set a new all-time monthly record of $115.4B and Year-end 2021 $ exceeded $1 Trillion, +13.6%. Avg Annual Growth= +17.4%

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

Recap – 2020 was quite a year. April & May had the 2 biggest YOY sales decreases in history while December sales broke $600B for the first time. 2021 may be even more memorable. With a strong December, Total Retail and all major groups had a record year. Total Retail broke $7T for the 1^st time. The Relevant Retail group began their recovery in May 2020 and kept Total Retail positive in 2020. They continued to grow in 2021 to a record $4.47T. The recovery was widespread. A few small channels are still struggling but all groups in the December chart, but Dept & Electronics Stores set sales records in 2021. FYI: Nonstore reached $1 Trillion and is the largest channel for the second consecutive year, with 23.5% of Relevant Retail $. The Holiday season also set records. It likely began early with a record October but Nov/Dec still “rule”. In 2021, Nov/Dec Relevant Retail $ were a record $868B, +14.0% from 2020. Some Services Outlets are still suffering but almost all Retail Channels have recovered. While some Consumer retail spending behaviors may have changed, the U.S. Retail Market is the strongest in history.

The Retail market hit bottom in April 2020 then began its recovery. The journey has been long and complex and Consumer spending behavior continues to evolve. We have not beaten the virus yet so we will continue to track the ongoing recovery of the retail marketplace with data from two reports provided by the U.S. Census Bureau.

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

We will begin with the Final Retail Report for October and then move to the Advance Report for November. Remember, the retail impact of the pandemic began in March 2020, peaked in April, then recovery started in May. We will compare 2021 to both 2020 and 2019 to document the progress that the retail market has made towards a full recovery.

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
• Current YTD change – % & $ vs 2020 and 2019
• Monthly and Year To Date $ will also be shown for each group/channel

First, the October Final. Retail hit bottom in April 2020 but began recovery, hitting record $ in December. $ fell in January/February but set a new $ records in March and then again in May. Sales declined through September but turned up in October. Here are the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The final total is $0.7B less than the Advance report projected a month ago. All groups but Restaurants were down slightly. The specifics were: Relevant Retail: -$0.8B; Gas Stations: -$0.1B; Auto: -$0.3B; Restaurants: +$0.5B. Sales vs September were up in all groups. Total Retail $ales broke $600B for the 1st time in December. October sales beat that number and in fact were the 4^th highest of all time. Auto continues to have the strongest recovery with an annual YTD growth rate since 2019 of +11.6%. While a spending dip in September is the “norm” in U.S. Retail, so is an October rebound. Importantly, for the 5th consecutive month, all groups were positive in all measurements vs 2020 or 2019.

Now, let’s see how some Key Pet Relevant channels were doing in October.

• Overall – No channels were down vs last month, a big change from 10 in September. In fact, the only negative was Office/Gift/Souvenir YTD $ vs 2019. October was the 2nd biggest month in history for Relevant Retail.
• Building Material Stores – Their amazing lift has slowed a little. The surge came as a result of pandemic spending patterns developed in 2020. Consumers began focusing on their homes. Their Spring lift has 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, hit a record peak in December and continued strong into 2021, peaking in March. $ slowed but have now stabilized after a big drop in September. YTD they are +47.4% vs 2019, a Growth Rate of 21.4%!
• Food & Drug – Supermarkets were +$77.7B in 2020. $ are up vs September and +8.3% vs October 2020. YTD $ are on par with the 2020 binge and +15.4% vs 2019. Drug Stores were +$17B (+5.7%) for 2020. They had a record March. Sales have been relatively stable since then. Their YTD $ are +7.2%.
• General Merchandise Stores – $ in all channels fell in Jan & Feb then spiked in March. Monthly sales by channel have been up or down since then but all were strong in October, +10.1% vs September. Clubs/SuprCtrs & $ Stores are leading the way with a combined annual growth rate of +8.9%. These channels promote value. Their success reinforces its importance to consumers. Disc. Dept. Strs are now rebounding with all positive numbers.
• Office, Gift & Souvenir Stores– $ are up from September and were +15.1% vs October 2020. The pandemic hit them hard. They are still down YTD vs 2019. Recovery will take more time, but their situation is improving.
• Internet/Mail Order – Their sales rebounded after dipping in September. The pandemic continues to fuel this channel’s growth. In October 2019, their avg annual growth rate was +14.1%. Now, it is +19.4% – up 37.6%
• A/O Miscellaneous – This is a group of small to midsized specialty retailers – chains and independents. It includes Florists, Art Stores and Pet Stores (22>24% of total $). Pet Stores were usually essential, but most stores were not. In May 2020 they began their recovery. Their 2020 sales were up +12.1%. October 2021 was their 6^th consecutive month over $10B and their 2^nd biggest month ever. YTD $ are +27.4% vs 2020 and +40.9% vs 2019.

Relevant Retail began recovery in May and set a $ record in December. $ fell in Jan & Feb, turned up again in March and began a monthly up/down rollercoaster. October $ were up for all and all but 1 channel are ahead of all 2020 & 2019 $. The key drivers are the Internet, SuperCtrs/Clubs/$ Stores and Hdwe/Farm. Now, the Advance numbers for November.

2020 was a memorable year for both its traumas and triumphs. In April & May we experienced the 2 biggest retail spending drops in history, but the problems actually began in March. Retail sales began to recover in June and in October, YTD Total Retail turned positive for the 1^st time since February. In December, Total Retail broke the $600B barrier – a historic first. Sales fell in both January and February but still set monthly sales records. Then they took off again in March, setting a new monthly sales record of $633B. April sales were down slightly but they took off again in May to set yet another spending record, $643.1B. June>Sept $ fell but then came back in October & November with November setting a new record of $649.3B. Only Relevant Retail was up vs October, but all were positive in all other measurements for the 6th straight month. Some other areas of the economy are still suffering, some spending behavior has changed, and inflation has become a bigger factor in increases. However, consumers continue to spend “big bucks”, especially in Relevant Retail, and the overall Retail marketplace continues its strong recovery.

Total Retail – In March and then in May Total Retail set new sales records. From June>Sept sales dipped slightly but stayed above $600B. October brought a resurgence and in November sales continued to grow, setting another all time record with monthly sales of $649.3B. Relevant Retail deserves most of the credit for the record as sales for the other groups were down vs October. The current YTD average annual sales growth rate since 2019 for Total Retail is 9.4%, the highest ever in records going back to 1992. Inflation Note: Retail $ were +19.5% vs November 2020. Inflation was +6.8% so up to 35% of the lift came just from higher prices. The “Real” increase was +12.7%. In November 2019 (pre-pandemic) Retail $ were +2.6% over 2018. Inflation was 2.0%, 78% of the lift. The “Real” increase was +0.6%. Long term, strong inflation can slow spending but right now, Retail is far outperforming pre-COVID 2019.

Restaurants – This group has no negative measurements vs 2020 or 2019 for 6 straight months. February 2020 YTD sales were up 8.1% vs 2019. The Pandemic changed that. Restaurants started to close or cease in person dining in March and sales fell -$33.3B (-52.5%) compared to March 2019. Sales bottomed out in April at $30.1B, the lowest April sales since 2003. Sales started to slowly increase in May but never reached a level higher than 88% compared to the previous year. 2021 started off slowly. Through February, YTD sales were down -16.7% from pre-pandemic 2020 and -10.0% from 2019. In March sales took off and grew steadily from April through July. Sales dipped in August/September came back strong in October then fell in November. YTD their $ are +31.7% vs 2020 and +5.2% vs 2019. Their recovery is getting stronger.

Auto (Motor Vehicle & Parts Dealers) – Staying home causes your car to be less of a focus in your life. Sales began to fall in March and hit bottom in April. Auto Dealers began combating this “stay at home” attitude with fantastic deals and a lot of advertising. It worked. They finished 2020 up 1% vs 2019 and have returned to a strong positive pattern in 2021. The “attitude” grew amazingly positive in March and has slowed only slightly from April>November as sales exceeded $119.8B in all 9 months – the 9 biggest months in history. To show the effectiveness of their campaign, just look at the data. This group has exceeded $110B in monthly sales only 18 times in history. 15 of those occurred after the onset of the pandemic.  YTD Avg Annual Growth Since 2019 = +11.3% – the best performance of any big group.

Gas Stations – Gas Station $ales have been a mixed bag. If you drive less, you visit the gas station less often. Sales turned down in March 2020 and reached their low point in April. They moved up but generally stayed about 15% below 2019 levels for the rest of 2020. In February they were still behind 2020 in monthly and YTD $ but ahead of 2019 in both measurements. In March, sales skyrocketed and continued to grow to a record level in July. They fell in Aug/Sept but hit a record $55.3B in October. Sales fell in November, but they have been positive in all measurements vs 2019 & 2020 since March. Their comeback continues but inflation comes to the forefront in this channel. Gas prices can be pretty volatile. They dipped in the first 2 months of the pandemic but returned to more normal levels for the balance of 2020. Strong inflation began in 2021. In fact, November prices were 58.1% above 2020. That means that the 53.0% year over year $ lift in November was actually a decrease in the amount of gas sold. YTD Annual Growth Rate Since 2019 = +6.6%

Relevant Retail – Less Auto, Gas and Restaurants – This is what we consider the “core” of U.S. retail and has traditionally accounted for about 60% of Total Retail Spending. In looking at the individual channels in this group, we have seen a variety of results due to many factors, like non-essential closures, binge buying, online shopping and a consumer focus on “home”. However, overall, April 2020 was the only month in which spending in this group was down vs 2019. Monthly $ales exceeded $400B for the first time ever in December. They finished 2020 up $260B, +7.1%. Their performance was the only reason that Total Retail was able to finish 2020 with positive numbers, +0.5%. Sales fell in January and February 2021 but set monthly records. In March they turned sharply up and then began an up/down $ roller coaster ride. In October they reached the 2^nd highest amount on record but November took over the top spot with $407.1B. March>November are 9 of the 11 highest $ months of all time. Relevant Retail has exceeded $361B in monthly sales 11 times in history. 10 of those have occurred since the onset of the pandemic. It is also very important that the Relevant Retail group has posted positive numbers versus last year and YTD for every month since April 2020 and their average YTD growth rate since 2019 is +10.5%. The recovery has become widespread as all channels have been positive in all measurements vs both 2020 and 2019 for 4 consecutive months. However, the primary drivers throughout the pandemic were and continue to be Nonstore, Grocery, SuperCenters/Clubs/$ Stores plus a seemingly never ending  2020 “spring lift” from Hardware/Farm and Sporting Goods.

Now let’s look at what is happening in the individual retail channels to see where the $ are coming from. November $ were up 7.4% from October and an increase occurred in 9 of 13 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.

Sales in 9 of 13 channels were up vs October but all were up vs November 2020, vs November 2019 and YTD vs 2020 and 2019. (Relevant Retail YTD Avg Annual Growth Rate since 2019 = +10.5%)

After hitting bottom in April 2020, Relevant Retail has now beaten the previous year’s $ for 19 consecutive months. The group set an all-time record of $406.8B in December and finished 2020 +$260B vs 2019. 2021 started strong, with record sales in every month, including a new all-time record of $407.1B in November. Essential channels are still the big drivers:

• Nonstore Retailers – The biggest driver. Online shopping continues to grow in # of households and in $.
• Food & Beverage – Grocery– Restaurant $ are improving but consumers continue to eat & drink more at home.
• Bldg Materials/Garden/Farm– Their “Spring” lift may be ending but consumers are still focused on their homes.
• SuperCtrs/Club/Value/$ Strs – They kept the GM channel strongly positive. Value is still a big consumer priority.

Regarding the Individual Large Channels (Includes YTD Avg Annual Growth Rate since 2019)

General Merchandise Stores – Sales increased for all channels vs October and all other numbers were also positive. Even Department Stores $ are growing increasingly positive. After dipping to +7.5% in February, the growth rate by Club/SuperCtr/$ stores has stabilized at about 8.8% ever since. These stores are still the key to this channel.

• YTD Avg Annual Growth: All GM = +7.6%; Dept Stores = +1.7%; Club/SuprCtr/$ = +8.9%

Food and Beverage, plus Health & Personal Care Stores – Sales in Grocery were down in March>May from 2020 – No surprise, as these were 2020 binge months. In Jun>Nov they beat 2020 $. Health/Personal Care finished 2020 at +1.8% but 2021 has been better. November was down 2.7% from October but YTD $ are +9.4%% vs 2020 and +10.8% vs 2019.

• YTD Avg Annual Growth: Grocery = +7.5%; Health/Drug Stores = +5.3%

Clothing and Accessories; Electronic & Appliances; Home Furnishings – March > Nov have been spectacular for all these channels. The increase in Clothing vs November 2020 was less than usual but was still +35.3%. All were up vs October and also remained positive in all measurements vs 2020 or 2019 for the 9th consecutive month.

• YTD Avg Annual Growth: Clothing = +5.6%; Electronic/Appliance = +3.6%; Furniture = +10.1%

Building Material, Farm & Garden & Hardware – Their “Spring” lift which began in 2020 has slowed but they have greatly benefited from consumers focusing on their home needs. They finished 2020 +53B (+13.8%). Sales took off in March, set a record in April, but have since slowed and stabilized. They are still +13.4% YTD. Avg Annual Growth = +13.6%

Sporting Goods, Hobby and Book Stores – Book & Hobby stores are open but Sporting Goods stores have driven the lift in this group. Consumers turned their attention to personal recreation and sales in Sporting Goods outlets took off. The group ended 2020 +5.5% vs 2019. The growth accelerated in 2021 with a strong spike in November, up 15.8% from October to $10.2B, the 2^nd biggest month ever. November YTD they are +29.9% vs 2020. Avg Annual Growth = +17.1%

All Miscellaneous Stores – Pet Stores were deemed essential but most other stores were not, so closures hit this group particularly hard. Sales hit bottom at -$3.8B in April then began to rebound. They finished with a strong December and ended 2020 -$1.0B, -0.7%. In March 2021 sales took off and reached the $14+B level in May. They have stayed there and set a record of $15.3B in October. Sales fell to $15.0B in November, but it is still #2 of all time. YTD sales are now +27.5% vs 2020 +26.9% vs 2019. Their recovery is very real. YTD Avg Annual Growth = +12.7% (4^th Best)

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV. The pandemic accelerated the movement to online retail. In February 2020 NonStore $ were +8.6% YTD. In December monthly sales exceeded $100B for the 1^st time. They ended 2020 at +21.4%, +$162.9B. This was 63% of the total $ increase for Relevant Retail Channels. Their 2020 performance beat the 12.9% increase in 2019 and every month in 2021 has produced record $. November was +19.9% vs October and set a new record of $105.4B. YTD $ are +14.4%. YTD Avg Annual Growth= +18.1%

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

Recap – 2020 was quite a year. April & May had the 2 biggest year over year sales decreases in history while December sales broke $600B for the first time. 2021 may become even more memorable. November set a new $ record. Mar>Nov are 9 of the 10 biggest $ months in history with the 9 largest year over year sales increases ever. The total increase was +$1.05T, which is over 6 times the -$174B decrease from March>May 2020 which caused so much concern. At yearend 2020, Restaurants and Gas Stations were still struggling but Auto had largely recovered. Relevant retail had segments that also struggled but they still led the way for Total Spending to finish the year +0.5% vs 2019. 2021 has been even better. In Jun>Nov all major groups were positive vs both 2020 and 2019. The recovery has also become real for virtually all channels and monthly sales continue to set records. In fact, the current annual growth rates of +9.4% for Total retail and +10.5% for Relevant Retail are the best ever. Retail has recovered and continues to grow but we’ll keep checking.

In May 2020, the Retail market began its recovery after hitting bottom in April. The road back has been long and complex and Consumer spending behavior continues to evolve. We have not beaten the virus yet so we will continue to track the ongoing recovery of the retail marketplace with data from two reports provided by the U.S. Census Bureau.

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

We will begin with the Final Retail Report for August and then move to the Advance Report for September. Remember, the retail impact of the pandemic began in March 2020, peaked in April, then recovery started in May. We will compare 2021 to both 2020 and 2019 to document the progress that the retail market has made towards a full recovery.

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
• Current YTD change – % & $ vs 2020 and 2019
• Monthly and Year To Date $ will also be shown for each group/channel

First, the August Final. Retail hit bottom in April 2020 but began recovery, hitting record $ in December. $ fell in January & February but set a new all time $ record in March. In April $ fell but they rebounded in May to another record high. Sales have slowly declined through August. Here are the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The final total is $2.0B more than the Advance report projected a month ago. All groups were up slightly. The specifics were: Relevant Retail: +$0.7B; Gas Stations: +$0.6B; Auto: +$0.4B: Restaurants: +$0.3B. Sales vs July were down in all but Relevant Retail. Total Retail $ were the 8th highest month of all time. Total $ales broke $600B for the 1st time in December and has now done it 8 times. Auto still has the strongest recovery and is in fact prospering – annual YTD growth rate since 2019 is +11.9%. There were spending dips vs the previous month but for the third consecutive month, all groups were positive in all other measurements.

Now, let’s see how some Key Pet Relevant channels were doing in August.

• Overall– 5 of 11 channels were down vs July but all were up vs August 2020 and 10 vs August 2019. In YTD $, all were up vs 2020 and 10 vs 2019. August was the 4th biggest month in history for Relevant Retail.
• Building Material Stores – Their amazing lift may finally be slowing. The surge came as a result of pandemic spending patterns developed in 2020. Consumers began focusing on their homes. Their Spring lift has slowed in 2021 but Building and Farm stores are still going strong. Sporting Goods stores have a similar spending pattern. Sales took off in May 2020, hit a record peak in December and continued strong into 2021, peaking in March. After slowing in July, the $ increased in August. YTD they are +47.4% vs 2019, an Annual Growth Rate of 21.4%!
• Food & Drug – Supermarkets were +$77.7B in 2020. $ are down vs July but YTD are on par with the 2020 binge. They are up 14% vs August 2019 and 14.3% vs YTD 2019. Drug Stores were +$17B (+5.7%) for 2020. They had a record March. Sales have been stable since then, but all other measurements are positive and YTD $ are +7.6%.
• General Merchandise Stores – $ in all channels fell in Jan & Feb then spiked in March. Monthly sales by channel have been slightly up or down since then but GM has been strong, +14% YTD. $ Stores & Clubs/SuperCtrs are leading the way with a combined growth rate of +8.5%. These channels promote value. Their success reinforces its importance to consumers. Also, Discount Dept Stores are again back in the game.
• Office, Gift & Souvenir Stores– $ increased slightly from July and were +20.5% vs August 2020. The pandemic hit them hard. They are still down vs 2019 – monthly and YTD. Recovery is a long way off, but things are improving.
• Internet/Mail Order – Their $ were up vs July as the pandemic continues to foster this channel’s growth. In August of 2019, their YTD growth was +13.9%. Now, their avg growth rate is +19.6% – a 41.0% increase.
• A/O Miscellaneous – This is a group of small to midsized specialty retailers – chains and independents. It includes Florists, Art Stores and Pet Stores (22>24% of total $). Pet Stores were usually essential, but most stores were not. In May 2020 they began their recovery. Their 2020 total sales were up +11.6%. Their August $ were down slightly from July but still #4 of all time. YTD sales are +27.5% vs 2020 and +39.3% vs 2019. Very strong!

Relevant Retail began recovery in May and reached a record level in December. $ fell in Jan & Feb, turned up again in March and began a monthly up/down rollercoaster. August $ are up and all channels but 1 are ahead of 2019 & 2020. The key drivers are the Internet, SuperCtrs/Clubs/$ Stores and Hdwe/Farm. Now, the Advance numbers for September.

2020 was a memorable year for both its traumas and triumphs. In April & May we experienced the 2 biggest retail spending drops in history, but the problems actually began in March. Retail sales began to recover in June and in October, YTD Total Retail turned positive for the 1^st time since February. In December, Total Retail broke the $600B barrier – a historic first. Sales fell from their December peak in both January and February but still set monthly sales records. Then they took off again in March, setting a new monthly sales record of $633B. April sales were down slightly but they took off again in May to set yet another spending record, $643.1B. June>Sept $ fell but September was still the 8th biggest $ month in history. All major groups were down from August, but were positive in all other measurements for the fourth straight month. Some other areas of the economy are still suffering, some spending behavior has changed, and inflation has become a bigger factor in some increases. However, consumers continue to spend “big bucks”, especially in Relevant Retail, and the overall Retail marketplace continues its strong recovery.

Total Retail – In March, Total Retail hit $633.1B, a record for the most spending in any month in any year. In April, $ales dipped to $625.5B but were still $218.3B more than April 2020 – a record increase that was more than double the size of last year’s record drop. In May, sales set another new record, $643.1B. June>Sept sales dipped slightly and September was the 3^rd smallest month this year, which is normal. However, at $606.8B, it was still the 8th biggest month in history. Moreover, the current YTD average annual sales growth rate since 2019 is 9.2%, the highest ever in records going back to 1992. Total Retail has not just recovered. It is stronger than ever.

Restaurants – This group has no negative measurements vs 2020 or 2019 for 4 straight months. Last February YTD sales were up 8.1% vs 2019. The Pandemic changed that. Restaurants started to close or cease in person dining in March and sales fell -$33.3B (-52.5%) compared to March 2019. Sales bottomed out in April at $30.1B, the lowest April sales since 2003. Sales started to slowly increase in May but never reached a level higher than 88% compared to the previous year. 2021 started off slowly. Through February, YTD sales were down -16.7% from pre-pandemic 2020 and -10.0% from 2019. In March sales took off and grew steadily from April Through July. Sales dipped slightly in August/September but were still strong vs 2019 & 2020. YTD their $ are plus 30.5% vs 2020 and +4.1% vs 2019. Their recovery is getting stronger.

Auto (Motor Vehicle & Parts Dealers) – Staying home causes your car to be less of a focus in your life. Sales began to fall in March and hit bottom in April. Auto Dealers began combating this “stay at home” attitude with fantastic deals and a lot of advertising. It worked. They finished 2020 up 1% vs 2019 and have returned to a strong positive pattern in 2021. The “attitude” grew amazingly positive in March and slowed only slightly in April>September as sales exceeded $122B in all 7 months – the 7 biggest months in history. To show how well consumers responded to their campaign you just need to look at the data. This group has exceeded $110B in monthly sales only 16 times in history. 13 of those occurred after the onset of the pandemic.  YTD Avg Annual Growth Since 2019 = +11.8% – the best performance of any big group.

Gas Stations – Gas Station $ales have been a mixed bag. If you drive less, you visit the gas station less often. Sales turned down in March 2020 and reached their low point in April. They moved up but generally stayed about 15% below 2019 levels for the rest of 2020. In February they were still behind 2020 in monthly and YTD $ but ahead of 2019 in both measurements. In March, sales skyrocketed and continued to grow to to a record $53.5B in July. They fell in Aug/Sept but are still +38% from 2020. They have been positive in all measurements vs 2019 & 2020 since March. Their comeback continues but there is another factor that must be considered – inflation. Gas prices can be pretty volatile. They dipped in the first 2 months of the pandemic but then returned to more normal levels for the balance of 2020. They began strongly inflating in 2021. In fact, September 2021 prices were 42.1% above 2020. That means that the 38.3% year over year $ lift in September was actually a decrease in the amount of gas sold. YTD Annual Growth Rate Since 2019 = +5.2%

Relevant Retail – Less Auto, Gas and Restaurants – This is what we consider the “core” of U.S. retail and has traditionally accounted for about 60% of Total Retail Spending. When you look at the individual channels in this group, you see a variety of results due to many factors – non-essential closures, binge buying, online shopping and a consumer focus on “home”. However, overall, April 2020 was the only month in which spending in this group was down vs 2019. Monthly $ales exceeded $400B for the first time ever in December ($407B). They finished 2020 up $260B, +7.1%. Their performance was the only reason that Total Retail was able to finish 2020 with positive numbers, +0.5%. Sales fell in January and February but set monthly records. In March they turned sharply up and then down in April. They bounced back in May then fell in June & July. In August sales rose again but fell in September. However, we should note that while December 2020 is still #1, March > September are 7 of the 9 highest $ months of all time. The Relevant Retail Market has exceeded $361B in monthly sales 9 tImes in history. 7 of those have occurred since the onset of the pandemic. It is also very important that the Relevant Retail group has posted positive numbers versus last year and YTD for every month since April 2020 and their average YTD growth rate since 2019 now stands at +10.4%. The recovery has become widespread as all channels have been positive in all measurements vs both 2020 and 2019 for 2 consecutive months. However, the primary drivers throughout the pandemic were and continue to be Nonstore, Grocery, SuperCenters/Clubs/$ Stores plus an exceptionally long 2020 “spring lift” from Hardware/Farm and Sporting Goods.

Now let’s look at what is happening in the individual retail channels to see where the $ are coming from. September $ were down 3.6% from August and the drop was widespread. However, a dip in September $ is normal and at -3.6% it was less than half of the -8% drop in 2019. 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.

Sales in 12 of 13 channels were down vs August but all were up vs September 2020, vs September 2019 and YTD vs 2020 and 2019. (Relevant Retail YTD Avg Annual Growth Rate since 2019 = +10.4%)

After hitting bottom in April 2020, Relevant Retail has now beaten the previous year’s $ for 17 consecutive months. The group set an all-time record of $407B in December and finished 2020 +$260B vs 2019. 2021 started strong, with record sales in every month. March > Sept. were 7 of the 9 biggest of all time. Essential channels are still the primary drivers:

• Nonstore Retailers – The biggest driver. Online shopping continues to grow in # of households and in $.
• Food & Beverage – Grocery– Restaurant $ are improving but consumers continue to eat & drink more at home.
• Bldg Materials/Garden/Farm– Their “Spring” lift may be ending but consumers are still focused on their homes.
• SuperCtrs/Club/Value/$ Strs – They kept the GM channel strongly positive. Value is still a big consumer priority.

Regarding the Individual Large Channels (Includes YTD Avg Annual Growth Rate since 2019)

General Merchandise Stores – Sales fell for all channels in September, but all other numbers were positive. Even Department Stores $ are growing increasingly positive. After dipping to +7.5% in February, the growth rate by Club/SuperCtr/$ stores has remained near the current 8.8%. These stores are still the key to this channel.

• YTD Avg Annual Growth: All GM = +7.4%; Dept Stores = +1.2%; Club/SuprCtr/$ = +8.8%

Food and Beverage, plus Health & Personal Care Stores – Sales in Grocery were down in March>May from 2020 – No surprise, as these were 2020 binge months. In June>Sept they beat 2020 $. The Health, Personal Care group finished 2020 at +1.8% but 2021 has been better. September was down from August but YTD they are +10% vs 2020 and 2019.

• YTD Avg Annual Growth: Grocery = +7.2%; Health/Drug Stores = +5.2%

Clothing and Accessories; Electronic & Appliances; Home Furnishings – March > Sept have been spectacular for all these channels. The increase in Clothing vs September 2020 was less than usual but was still +22.5%. Only Furniture was up vs August, but all remained positive in all measurements vs 2020 or 2019 for the 7th consecutive month.

• YTD Avg Annual Growth: Clothing = +5.1%; Electronic/Appliance = +3.4%; Furniture = +10.3%

Building Material, Farm & Garden & Hardware – Their “Spring” lift which began in 2020 may be slowing. They have greatly benefited from consumers focusing on their home needs. They finished 2020 +53B (+13.8%). Sales took off in March, set a record in April then trended down May > Sept. They are still +14.4% YTD. Avg Annual Growth = +13.8%

Sporting Goods, Hobby and Book Stores – Book & Hobby stores are open but Sporting Goods stores have driven the lift in this group. Consumers turned their attention to personal recreation and sales in Sporting Goods outlets took off. The group ended 2020 +5.5% vs 2019. The growth accelerated in 2021. Even though $ fell 10% in September, it was still good enough for the 9^th consecutive monthly record. September YTD they are +32.9% vs 2020. Avg Annual Growth = +17.1%

All Miscellaneous Stores – Pet Stores were deemed essential but most other stores were not, so closures hit this group particularly hard. Sales hit bottom at -$3.8B in April then began to rebound. They finished with a strong December and ended 2020 -$1.0B, -0.7%. In March 2021 sales took off and reached the $14+B level in May and they have stayed there. Sales fell -2.9% in September, but their YTD sales are now 27.8% above 2020 and 26.0% more than 2019. Their recovery has become very real. YTD Avg Annual Growth = +12.3% (4^th Best)

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV. The pandemic accelerated the movement to online retail. In February 2020 NonStore $ were +8.6% YTD. In December monthly sales exceeded $100B for the 1^st time. They ended 2020 at +21.4%, +$162.9B. This was 63% of the total $ increase for Relevant Retail Channels. Their 2020 performance far exceeded their 12.9% increase in 2019 and every month in 2021 has produced record $. September was -2.5% vs August but +10.6% vs 2020. YTD $ are +15.2%. YTD Avg Annual Growth = +17.9%

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

Recap – 2020 was quite a year. April & May had the 2 biggest year over year sales decreases in history while December sales broke $600B for the first time. 2021 may become even more memorable. March>September are 7 of the 8 biggest $ales months in history with the 7 largest year over year monthly sales increases ever. The total increase was +$861B, which is 5 times the -$174B decrease from March>May 2020 which caused so much concern. At yearend 2020, Restaurants and Gas Stations were still struggling but Auto had largely recovered. Relevant retail had segments that also struggled but they still led the way for Total Spending to finish the year +0.5% vs 2019. 2021 has been even better. In June > September all major groups are positive vs both 2020 and 2019. The recovery has also become real for virtually all channels and monthly sales continue to set records. In fact, the current annual growth rates of +9.2% for Total retail and +10.4% for Relevant Retail are the highest in history. Retail has recovered but we’ll keep checking.