Archive for category: Pet Market Distribution Channels

Pets, Pet Food and Supplies sales have shown tremendous retail growth since 1992. According to the Economic Census, which is conducted every 5 years by the U.S. Census Bureau, retail sales totaled $51.32 Billion in 2017 – up from $8.2 Billion in 1992. The spectacular growth was fueled by Americans’ growing love and commitment to their pets. 67% of U.S. Households have a pet – twice as many as have a child under 18.

While the love was growing in our hearts, the sales of pet products were growing at retail. It was not a simple journey –straight to the top. It involved expansion to a variety of different outlets and consumer migration between channels driven by their search for value, convenience and selection.

In this report we will use detailed data from the Economic Census to update our ongoing analysis through 2017.

Here is a visual look at the growth since 1992. I have also included a line on the graph which is adjusted for “petflation” and gives us a better indication of the actual increase in the amount of product sold.

Retail Growth 1992 to 2017

• 1992 > 2017: Up $43.12B (+525.9%); Avg Growth = 7.6%
  • 1992 > 2012: Up $32.27B (+394.8%); Avg Growth = 8.3%
  • 2012 > 2017: Up $10.85B (+26.8%); Avg Growth = 4.9%

Real Growth 1992 to 2017 (Adjusted for petflation – Pet Food & Supplies CPI)

• 1992 > 2017: Up $25.16B (+306.8%); Avg Growth = 5.8%
• • 1992 > 2012: Up $17.78B (+216.8%); Avg Growth = 5.9%
  • 2012 > 2017: Up $7.38B (+28.4%); Avg Growth = 5.1%

Note: Most of the growth (76.3%) in Pets, Pet Food and Supplies has been real growth. Pet Products Prices increased 53.8% in the 25 years from 1992 to 2017 compared to an increase of 74.6% in the Total U.S. CPI and a 138.6% increase in Pet Services Prices (Vet & Non-Vet combined) in just the 20 years from 1997 to 2017.

Pricing in Pet Products was an issue from 2007 to 2009 when prices jumped 17% in just two years, in the heart of the recession. Consumers started searching for value. This was a key point in Pet Products channel migration. On the flip side, from 2012 > 2017 Pet Products prices fell -1.25%. Although the growth rate during this period was down from the long term average, the increase in the amount of Pet Products purchased was actually greater than the $ increase.

We’ll stay with the total market and look at some key factors that have affected the overall growth since 1992.

Here’s how each factor changed during each of the five year measurements since 1992.

1992 to 1997 – No growth in outlets or in retailers’ share of overall market. The big growth was increased store volume due to increased consumer product demand – which was filled by expanded departments and bigger pet stores.

1997 to 2002– A 27% increase in number of outlets and a 15% increase in per store volume pushed sales up 45%. A huge increase in the representation of Pet in the overall market as it became available in stores doing over 35% of total retail.

2002 to 2007 – Store count continues to grow – up 18% and the per/store volume goes up even faster – +21%. Sales are up 43%. The overall Retail Market Share of outlets selling products remains stable at 35%.

2007 to 2012 – Another 18,000 stores (+14%) and a huge increase in per store volume (+32.4%). Consumers have started shopping intensely for value since the recession…and they found it as sales increased 50%. It was also easier to find products in a store, as outlets doing 47% of the total U.S. Retail market stocked pet supplies in 2012.

2012 to 2017 – Sales Growth slowed markedly to 26.8%. There were 12.600 more stores but +7.8% was much less than in the past. Pet Products stocking stores also loss share of the overall market but are still over 43%. It looks like this drop occurs regularly every 10 years. The $ lift was primarily due to a 17.7% increase in $ales per store – still relatively strong.

1992 to 2017 – Sales Now $51.3B; Up $43.1B (+525.9%)

• 160,282 “pet” outlets; Up 74,101 (+86.0%)
• Outlets stocking “pet” do 43.4% of U.S. Retail.
• Pet Products do 3.5% of an outlet’s total sales.
• Pet Products = 1.5% of Relevant Retail; 0.7% in 1992

Now, let’s see how the consumers decided to divide up their Pet Products $.

PET PRODUCTS SALES AND MARKET SHARE BY RETAIL CHANNEL

This chart shows the shows in detail the # of outlets, total pet product $ and market share of the retail channels and segments stocking pet products from 1992 to 2017. Use it as a reference point. Additional charts will follow.

99.3% of Pet Products Sales are done by 5 major Retail Channels. Let’s look at their market share from 1992 to 2017.

Drug Stores were included for historical reference. In 1992, they had a bigger share than Nonstore and Hdwe/Farm combined. Now their $ and share are below Gas Stations. 5 Major channels account for 99.3% of Pet Products $.

Observations

Drug and Health Stores – They were once a small, but notable force in Pet Products sales. However, except for an uptick in 2012, their share of Pet Products $ has generally declined. Their Pet Products Sales are now basically impulse or convenience purchases, a pattern similar to that for Gas Stations and Convenience Stores.

Hardware and Farm – Early growth came from the Farm Store segment. Hardware jumped on board in 2002 and pushed the market share up to 5.4%, capturing 40% of this channel’s pet business. The overall share stayed fairly stable from 2002 to 2012 then plunged in 2017 due to huge drop in Hdwe/Home Centers Pet Products $. While Farm Stores $ have consistently grown since 1992, Hdwe/Home Ctrs have been on a true roller coaster ride since 2002.

Food and Beverage – Supermarkets account for 98% of the business in this channel. In 1992 Supermarkets were the #1 Pet channel, with 42.1% of the business. They increased their business 9.5% in 1997. Unfortunately, overall “Pet” sales took off – up 55%, so their market share fell 30%. Sales stagnated in 2002 and actually dropped in 2007. Needless to say, their market share continued to plummet – down 73% from the 1992 high. Where did the business go? – just about everywhere else, but primarily to General Merchandise Stores and Pet Stores. Then from 2007 to 2012 they executed a remarkable turnaround.  The number of Supermarkets carrying pet products increased by over 70%. They more than doubled their pet sales and gained back 3.6 points in market share. However, 2012 to 2017 brought another turnaround – a negative one. The number of Supermarkets carrying Pet Products fell -12.5% and their Pet Products $ dropped -$725M (-12.2%). Their market share is at an all-time low of 10.2%, which is 76% below 1992. Some of the business may have been lost to SuperCtrs/Clubs or even Pet Stores, but most probably migrated to the Internet.

Nonstore Retailers – This channel includes both mail order and the internet. The increases in pet products $ have been truly astronomical. Sales in 2017 are 100 times what they were in 1992 and their Market share is up over 1500%. Since 2007 and especially since 2012 the growth has been fueled by the internet. In the years up to and including 2012 the internet/mail order share of Pet Products $ mirrored their share of Total Retail $. However, they have stepped up in Pet Products since then. Internet/Mail order now sells 18.8% of Pet Products $, compared to 16.1% of total relevant retail $.

Pet Stores – In 1992 Pet Stores were the second largest retail channel selling pet products. The category caught fire. Big Box Pet Super Stores were developed and built to offer the consumer the wider selection that they sought. In 1997, due to the growth of chains, Pet Stores moved into the #1 position with a 40.5% share of the business. The proliferation of Super Stores resulted in the closing of a number of smaller Independents, so the number of stores and market share dipped slightly to 38.0% in 2002. They were still #1 but now they were being strongly pursued by General Merchandise Stores – not Supermarkets.  More Super Stores, along with a continued high consumer demand, brought their market share back up to 39.0% in 2007. They had maintained the #1 status with a market share of 38 – 40% for over 10 years. Then…the recession happened, and consumers became focused on value. Their store count was the same and sales grew but their market share fell 5.9 points (-15.1%). On the surface, it appears that the bulk of the business went to Grocery and Internet/Mail-order but almost every major channel and a few minor players got a piece of their lost share. Things certainly changed in the period from 2012 to 2017 as the world, including retail began to move increasingly online. Pet Stores not only held their ground, but they also actually had a slight gain in share. They capitalized on Pet Parents desire for personal interaction in pet products purchases along with their desire for the convenience of one stop shopping. More Pet Stores began offering grooming services and some even added Veterinary services. They will never beat Internet product prices, but you can’t get your dog groomed online!

Minor Players – Although their combined market share is under 1%, the widespread appeal of Pets has brought in retailers from a variety of other “Specialty” channels – Home Goods (Furniture), Value Clothing Stores, Sporting Goods, Gift…to name a few. Although their selection is generally limited, they do broaden the consumer availability of certain pet product categories in the overall U.S. Retail Market. The success or failure of their venture into the Pet Products world is usually dependent upon the overall success of the individual retailer. If they are attracting consumers and their business is growing, then they may have some success with Pet. After all it appeals to 67% of U.S. households.

General Merchandise Stores – Currently they are hanging on as the #1 major channel in Pet Products sales. This group enjoyed strong to spectacular growth from 1992 to 2007. The number of outlets grew from 10K to 37K (+250%); sales grew $8B to $9.5B (+533%); market share grew from 19.1% to 35.3% (+83.9%). From 2007 to 2012, the number of outlets continued to grow, and sales increased to $14.2B (+49.5%) but their market share actually fell 0.1%…Yet, they still took over the #1 position in Pet…by just matching the overall market increase. From 2012 to 2017, their number of outlets and sales grew but couldn’t keep up with the internet, so their share fell. There were also some changes within the segments in terms of product mix and classification. This is a large and complex channel and deserves a closer look.

All Department Stores – Stores have been classified as either Traditional Department Stores, like Macy’s or J.C. Penney or Discount Department Stores, like Wal-Mart or Target. For the Economic Census that has changed.

Traditional Department Stores Although they do 8% of this channel’s overall business, they are basically a nonentity in Pet Products. These stores have consistently loss market share as they have done little to meet the consumer’s changing “needs” – including failing to recognize and embrace the Pet Phenomenon in the U.S.

Discount Department Stores – This segment is the one that started the decline in traditional Department Stores. In terms of Pet Market Share, these stores were at their peak in 1992. The commitment to SuperCenters and the rise of Club Stores started their decline. Sales continued to increase until 2002 and there was even a little uptick in market share between 2002 and 2007. From 2007 to 2012 sales flattened out and the number of outlets fell. In 2012 they were surpassed by the Dollar/Value stores in Pet Products’ market share. Between 2012 and 2017 the corporate owners decided to revise the product mix in many of these outlets. The continued growth in sales by Super Centers convinced them to add increasing quantities of fresh groceries to the product mix. Although the fresh offering is not as extensive as Super Centers it became significant. For the Economic Census, it was decided to eliminate the Discount Department Store Classification. Most of the existing outlets were classified as Super Centers. Those with an insignificant fresh grocery segment were lumped in with All Department Stores which included the traditional stores. The result was that Pet Product sales in the all department stores segment now mirrored that of the traditional stores – essentially zero.

SuperCenters & Warehouse Club Stores – This segment has been a retail winner since it came into play in the 90’s. It has shown consistent, even spectacular growth and in every measuring period its % increase in Pet Products $ has surpassed even the impressive growth rate of the overall Pet Products market. In 2007 they moved up in rank to #2, behind only Pet Stores in sales. Their pet products sales and share growth slowed from 2012>2017 and much of the growth from 2012 to 2017 must be attributed to the reclassification of many Discount Department stores. In fact, in 2012 the combined Pet Products $ share of SuperCtr/Clubs and Discount Dept Stores was 29.6%. In 2017, the share of all stores classified as SuperCtr/Club outlets was 27.0%. Like almost everyone else, this group lost $ to the internet.

$ Stores/Value Retailers – This channel was originally occupied by 5&10¢ Stores. They faded and were replaced by these Value Retailers. Since 1997, the store count and Pet Product sales have gone up dramatically. Their appeal and their share of the total market has grown markedly since the recession. In terms of number of outlets selling Pet Products, in 2017 they passed Supermarkets to take over the top spot. Their sales and market share also grew so they now rank #5 in Pet Products sales. Unlike most channels, they gained ground, in the internet wave.

Speaking of the internet wave, let’s take a closer look at the specifics for 2012>2017. First, the major channels Here’s the 2017 market share by Channel: (Arrows show if they are up ↑, down ↓and by how much in share from 2012)

• GM Strs: 33.6% ↓1.6
• Pet Stores: 33.3% ↑0.2
• Nonstore Retailers: 19.0% ↑9.5
• Food & Bev (Groc): 10.4% ↓4.6
• Hdwe & Farm: 3.0% ↓2.3
• All Other: 0.7% ↓1.2

Only Pet Stores held their ground and even gained a little in the Internet tsunami.

Now let’s look at the individual segments in terms of 2017: (Same rules as above)

• Pet Stores: 33.3% ↑0.2
• SuperCtrs/Club: 27.0% ↑2.9
• Internet/MailOrder: 18.8% ↑9.6
• Supermarkets: 10.2% ↓4.5
• $ Value Strs: 6.5% ↑0.9
• Farm Stores: 2.6% ↓0.5
• Gas/Convenience: 0.5% ↓0.3
• Hardware: 0.3% ↓1.9
• Drug Stores: 0.3% ↓0.7
• Other Nonstore: 0.2% ↔0.0
• Furniture/Home: 0.1% ↓0.2
• All Dept Strs: 0.03% ↓5.47

 The story is a bit more complex, and the specifics can be a little bit misleading. The gain by SuperCtrs/Clubs was largely due to the assimilation of many Discount Department Stores into this channel. The combined share of these two channels was 27.0% in 2017. That’s down -2.6% from 29.6% in 2012. There was also another winner – $ Value Stores. Consumers love the value and convenience of these outlets and they continue a rapid expansion in numbers.

The move to the internet is definitely a trend. Let’s look at some major trends that have impacted and continue to affect Pet Product Sales over the 25 years from 1992 to 2017.

There are 3 driving forces in consumer spending behavior:

• Value (quality + price) – Looking for a deal.
• Convenience – Make shopping easy.
• Selection – They want choices. 

With that in mind, let’s look at the trends indicated by our analysis:

1. The biggest trend is Value. It has shown consistent growth in importance and has been the single biggest factor since 2007. The channels that focus on Value are SuperCtr/Clubs, $ Stores and Internet/Mail order. They are definitely winning.
2. One Stop Shopping is all about convenience. This is the second biggest driver and explains the ongoing success of SuperCtr/Clubs and the Internet. Supermarkets began this trend in the late 1970s by radically expanding their Gen Mdse sections in an effort to fulfill this consumer need.
3. Groceries in the store. In 1992 consumers bought most pet products where they shopped for groceries – Supermarkets. In 1997 Supermarkets lost the top spot to Pet Stores. The GM Channel was also growing at this time and SuperCtr/Clubs also offered full grocery sections. Since 2012, consumers have come full circle and once again buy most Pet Products where they shop for groceries.
4. The rise of Pet Super Stores and chains took off in the 90s. Their huge selection of Pet Products had a great appeal to the new generation of Pet Owners – Now Pet Parents. Pet Stores became the single biggest channel for Pet Products sales in 1997. Their success caused other channels to expand their Pet Sections. Pet Stores lost some ground in 2012 but they held onto the top spot and even gained share in 2017 by offering more Pet Services in store. They appealed to the consumer with 1 stop pet shopping.
5. Internet – Their success should be no surprise. The game plan for online retailers exactly fits the consumers “wish list”. Great Prices! Shop without leaving home. Plus, a nearly unlimited selection

Summary

The underlying cause behind migration is evolution. In the migration of Pet Products there are two key evolutions taking place. The first is the evolution of Pet Owners to Pet Parents. Pet Parents are much more concerned about fulfilling the wants and needs of their Pet Children. This transformation took hold in the 90’s and accelerated during the early 2000’s when Pet Parents increasingly personified their pets. They began reading labels, became increasingly concerned about nutrition and now generally transfer human needs to their pet children. This movement continues to grow stronger.

The other evolution occurred in the retail marketplace and with all consumers. Consumers became less brand driven in their purchasing behavior and more concerned about value, convenience and selection. The great recession further cemented Value at the top. Online shopping was growing far before the pandemic moved it to the retail forefront.

We see the migratory results of the ongoing evolutions in our analysis.  In the 90s Pet Super Stores grew rapidly because they offered an unparalleled, broad selection of products to the ever increasing number of Pet Parents who were ready, willing and able to buy. Their success caught the attention of other retailers who expanded their Pet Products offerings. SuperCenters and Clubs were also growing strong at this time because these huge stores offered great Value and 1 stop shopping for groceries and a wide selection of GM categories, including Pet.

Everyone wants value but sometimes you don’t want to fight the crowds  – $/Value Stores are the answer. Great everyday prices plus brand name “close outs” in a small footprint store that is easy to navigate. Plus, they carry Pet Products. They continue to add stores and currently have more outlets stocking pet items than any other channel.

That brings us to the Internet, our most recent and largest migration, +9.6% gain in share. Want a bigger selection…. Go online. No one can build a store big enough to stock the selection of products available online…and with no brick and mortar overhead…you can get great value. Plus, you can shop for the best price and get what you want without ever leaving your easy chair…talk about convenient.

At this point, Pet Products have grown in importance and spread across the U.S. retail landscape. Consumer $ales are $51.3B, +525% from 1992. They are available in 160K outlets, up from 86K in 1992. They also account for 1.5% of Total Relevant Retail $, compared to 0.7% in 1992. The migration will continue. Brick ‘n Mortar Businesses need to adapt in the current internet surge. They must have an online presence and offer delivery and same day pickup in store/curbside if possible. Pet Stores have a unique advantage as they can offer pet services and personal interaction with Pet Parents and their pets – which can’t happen online. We’ll see how everyone adapts and what changes the next chapter brings.

Time for our monthly update on U.S. retail sales by channel. The current COVID-19 crisis has caused turmoil in the Retail Marketplace. Consumer spending behavior has changed and continues to evolve. In this report we will track the changes and migration between channels. We will do that 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 look at the latest release of both reports. We will begin with the Final Retail Report from February and then move to the Advance Retail Report for March. Remember, February 2020 was pre-pandemic, but in March the impact began. We will continue to compare 2021 to both 2020 and 2019 to track the ongoing evolution of the retail market.

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 February Final. Retail hit bottom in April then began to recover, hitting record $ in December. January & February $ fell but were monthly records. Here are the major retail groups. (All Data is Actual, Not Seasonally Adjusted)

The final total is $1.7B more than the Advance report projected a month ago. All Groups were up slightly but most of the positive change came from Auto: +$1.0B; Restaurants: +$0.5B; Relevant Retail: +$0.1B; Gas Stations: +$0.1B. All groups were down vs January, but Total Retail still set a February record. Total $ales broke $600B for the first time in December and continued to set monthly records in both January and February thanks to strong performances by Relevant Retail and Auto. Restaurants and Gas Stations continue to struggle although Gas Stations are now above both monthly and YTD 2019 $. Throughout the pandemic, Relevant Retail has been the driving force in the recovery.

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

• Overall– All 11 channels were down vs January. However, 9 of 11 were up vs February 2020 and 2019 and all but one were up in YTD $ vs 2020 and 2019. 2021 continues its strong start.
• Building Material Stores – Their strong lift continues. The ongoing surge came as a result of pandemic spending patterns developed in 2020. Consumers began focusing on their homes. They’re still showing double digit % increases. Farm Stores are leading the way, with 20+% increases in all measurements. Sporting Goods stores are not in this group, but they have a similar spending pattern. Sales took off in May, hitting a record peak in December. The lift continued into 2021. They are up 21.0% vs February 2020 and +28.8% YTD.
• Food & Drug – Supermarkets finished 2020 up +$77.7B. Sales dipped slightly in both January and February but are still +8.4% YTD vs 2020. Drug Stores ended up +$17B (+5.7%) for 2020. Their $ also fell in January and February but are still +4.7% YTD vs 2020.
• General Merchandise Stores – $ in all channels continue to fall from their December peak. Discount Department Store $ in February were down vs 2020 and 2019. In fact, their YTD $ are now essentially even with 2020. This shows that this channel was having problems even before the Pandemic. The growth slowed in Clubs/SuperCtrs and $ Stores. Combined, they were up 3.0% vs February 2020. However, their YTD sales are still up 8.8%.
• Office, Gift & Souvenir Stores– Sales dropped again in February. They have negative numbers in all measurements. Recovery is a long way off.
• Internet/Mail Order – The pandemic has accelerated this channel’s growth. Last February they were up 10.3% YTD vs 2019. This year they are up 29.0%. The pandemic lift spending pattern almost tripled the rate of 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. Stores began reopening in May and the $ grew. Their 2020 total sales were up +11.6%. February YTD sales are +$1.6B (+11.6%) vs 2020. However, that is down from 2020 when they were +$2.5B (+21%) vs 2019.

The Relevant Retail Segment began recovery in May and reached a record level in December. $ plummeted in January & February but still set monthly records. Almost all members of this group are showing growth, but the key drivers are the Internet, Supermarkets, SuperCtrs/Clubs/$ Stores and Hdwe/Farm. Now, here are the Advance numbers for March.

2020 will always be 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. Sales increased slightly from February but were $34.1B less than March 2019. 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. While sales fell from their December peak, monthly sales records were set in both January and February. Then they took off again in March, breaking $600B again while setting a new monthly sales record of $627.9B. A March lift in sales from February is pretty normal but this is the first time in records going back to 1992 that March sales have exceeded those from the previous December. All of the major groups increased sales from February and Restaurants were the only group to register any negatives vs 2020 or 2019. As we progressed through 2020 and now into 2021, we have seen real evidence of the strength and resiliency of the U.S. Retail Market.

Total Retail – As we said, the Total Retail $ for March set a record for the most spending in any month in any year. The $627.9B was up $134.8B (+27.3%) from February and $146.4B (30.1%) more than March 2020. If you compare the YTD 2021 spending to 2019, you see an increase of $232.4B (+15.7%). That is an average annual spending increase of 7.6%. If you just looked at these topline numbers, you would not suspect that a spending crisis had ever happened. Always look below the surface.

Restaurants – This is the only big group with any negative measurements. 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 $30.1, 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 did not start off well. Through February,  YTD sales were down -16.7% from pre-pandemic 2020 and -10.0% from 2019. That brings us to March. Sales took off, up $14.2B, 28.2% from February and 35.2% from March 2020. They reached $64.0B, the highest level since December of 2019. However, the $ were still down vs March 2019 and YTD $ were still below both 2020 and 2019. We’ll see how their recovery progresses in April. YTD Avg Growth Since 2019 = -3.8%

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 as sales reached $145.2B. This was by far the biggest month in history. It beat the former leader, July 2020, by $28B. 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 9 times in history. 7 of those occurred after the onset of the pandemic.  YTD Avg Growth Since 2019 = +11.1%

Gas Stations – Gas Station $ales are a mixed bag. Obviously, 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 to $45.6B, 28.4% more than February and a 35.7% increase over March 2020. They turned positive in all measurements vs both 2019 and 2020. It looks like they are beginning their comeback. However, 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 inflating in 2021 and spiked in March. The March 2021 prices were 22.5% above March 2020. That means that 63% of the 35.7% year over year lift came from just higher prices. Analyzing retail can be complicated. YTD Avg Growth = +3.0%

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 ($411B). They finished 2020 up $251B, +6.8%. Their performance was the only reason that Total Retail was able to finish 2020 with positive numbers, +0.6%. Sales fell in January but continued to set monthly records through February. In March they turned sharply up again, +22.6% from February. Currently, they are up $55.1B, +17.3% vs March 2020 and  +$113.1B, +12.7% YTD. The $373B spending in March is the third highest monthly total of all time, trailing only December 2020 and December 2019. We should also note that the Relevant Retail group has posted positive numbers versus last year and YTD for every month since April 2020 and their average YTD growth rate since 2019 now stands at +9.3%. More channels are turning positive, but the primary drivers continue to be Nonstore, Grocery, SuperCenters/Clubs/$ Stores plus a never ending “spring lift” from Hardware/Farm and Sporting Goods. 

Now let’s look at what is happening in the individual retail channels. March was a spectacular month. Let’s see where the $ came from. These groups are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets. We will continue to track 2021 monthly and YTD sales vs both 2020 and 2019.

Sales in all 13 channels were up vs February. 11 channels beat March 2020 $ and 12 beat March 2019 $. In YTD $ales, all channels beat 2020 and 10 were ahead of 2019. (Relevant Retail YTD Avg Annual Growth Rate since 2019 = +9.3%)

After hitting bottom in April 2020, Relevant Retail has now beaten the previous year’s $ for 11 consecutive months. The group set an all-time record of $410.9B in December and finished  2020 +$250.9B vs 2019. They have also started 2021 strong, with record sales in every month. Essential channels are still primarily responsible for the continued lift:

• 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 continues unabated as consumers focus on their home.
• SuperCtrs/Club/Value/$ Strs – They keep the GM channel positive. Value is still a major consumer priority.

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

General Merchandise Stores – Sales surged up from February producing all positive numbers overall. Department Stores $ were up vs 2020 but down vs 2019. They were having problems before the Pandemic. The growth by Club/SuperCtr/$ stores has slowed to +2.5% in March, down from +9.6% in January but these stores are still the key.

• YTD Avg Annual Growth: All GM = +5.7%; Dept Stores = -4.3%; Club/SuprCtr/$ = +7.7%

Food and Beverage, plus Health & Personal Care Stores – Sales in Grocery were up 9.8% from February but down 16.6% from 2020 – No surprise, as March 2020 was a binge month. The Health, Personal Care group finished 2020 at +1.7%. 2021 has started even better. With a strong March, YTD they are +4.2% vs 2020 and +8.2% vs 2019.

• YTD Avg Annual Growth: Grocery = +6.3%; Health/Drug Stores = +4.0%

Clothing and Accessories; Electronic & Appliances; Home Furnishings – March was a spectacular month for all these channels. Home Furnishings is now positive in all measurements. Electronic & Appliance had a strong March but still remains slightly below 2019 in YTD $. Clothing Stores more than doubled their 2020 $ but are still -5.4% YTD vs 2019.

• YTD Avg Annual Growth: Clothing = -2.7%; Electronic/Appliance = -0.2%; Furniture = +8.5%

Building Material, Farm & Garden & Hardware – Their Spring lift began on time in 2020 and it has essentially never stopped. They have greatly benefited from consumers turning their focus to their home needs. They finished 2020 +53B (+13.8%). In March sales took off, +43.5% from February, +32.4% vs 2020 and +20.9% YTD. Avg Annual Growth = +13.0%

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. January & February set monthly sales records, but March had the most $ of any non-December month in history, +78.2% vs 2020. YTD Avg Annual Growth = +15.1%

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 down $1.0B, -0.7%. January sales were +6.9% vs 2020 but February sales were down -0.01% vs 2020. In March Sales took off. They were +27.3% from February, +30.3% from March 2020. Their YTD sales are now 13.7% above 2020 and 22.1% more than 2019. It appears that their recovery has gained traction. YTD Avg Annual Growth = +10.5%

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV businesses. The COVID-19 crisis 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 +21.9%, +$173.9B. Their increase was 69% of the total $ increase for Relevant Retail Channels. Their 2020 performance far exceeded their 12.9% increase in 2019 and they started off 2021 even better. March is +30.7% vs 2020 and YTD $ are +27.8%. YTD Avg Annual Growth = +19.2%

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. Restaurants, Auto and Gas Stations suffered the most. Auto had recovered by yearend but Gas Stations and Restaurants were still struggling. Relevant retails had segments that also struggled but overall, they led the way for Total Spending to finish the year +0.6% vs 2019. 2021 started out even more positive, especially in March when Total Spending of $627.9B broke the record set in December – an unheard feat for March. Auto also set a spending record in March. Gas Stations $ are now all positive and YTD Restaurant $ are only slightly below 2020 and 2019. The recovery in Relevant retail has also become much more widespread and monthly sales continue to set records. We’ll see if the trends continue but the Retail economy has come back strong.

 

 

Time for our monthly update on U.S. retail sales by channel. The current COVID-19 crisis has caused turmoil in the Retail Marketplace. Consumer spending behavior has changed and continues to evolve. In this report we will track the changes and migration between channels. We will do that 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 – approximately 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 look at the latest release of both reports. We will begin with the Final Retail Report from December and then move to the Advance Retail Report for January. This will allow us to look at both the final numbers for 2020 and do an initial comparison of January 2021 vs 2020.

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 one year ago.
• Current YTD change – % & $ vs 2019 (Note: In the January Advance we will compare January 2020 to 2019)
• Monthly and Year To Date $ will also be shown for each group/channel

First, the December Final. U.S. Retail hit bottom in April then began to recover. December $ were up from November, and still growing vs 2019. Here are the major retail groups. (The Data in all graphs is Actual, Not Seasonally Adjusted)

The final total is $3.4B less than the Advance report projected a month ago. All but Gas Stations were down but most of the reduction came from Relevant Retail: -$2.5B; Restaurants: -$0.1B; Auto: -$0.6B; Gas Stations: N/C. All groups were up vs November and set a new record Total Retail $ peak. YTD Total $ales finished more positive vs 2019 thanks to another strong month from Relevant Retail and Auto. The Auto segment finally beat 2019 $, but Restaurants and Gas Stations are down -$229B. Relevant Retail was the driving force in turning Total YTD sales positive vs 2019.

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

• Overall– $ in 10 of 11 groups were up vs November and 9 were up vs December 2019 and YTD. That’s very good.
• Building Material Stores – Their “Spring” lift continued through Summer, Fall and now Winter. While sales peaked in June, they’re still showing double digit % increases vs 2019. Sporting Goods stores are not included in this group, but they have a similar Spring lift pattern. Their sales took off in May, and ultimately hit a record peak in December. In June, their YTD $ vs 2019 turned positive and by yearend they were up 16.6%.
• Food & Drug – Supermarket $ slowed in Aug, Sep & Nov but turned up in October & December. They finished 2020 up +$77.7B. Drug Stores $ dipped in Aug & Nov but increased in Sep, Oct & Dec. They ended up +$17B.
• General Merchandise Stores – $ in Clubs/SuperCtrs slowed in September then grew in Oct>Dec. They finished at +$33.2B vs 2019. $ Stores sales slowed from June>Sept but grew in Oct>Dec and ended 2020 +12.0% vs 2019. Discount Dept. store sales were slowing before the pandemic. This trend continues despite their Nov>Dec lift.
• Office, Gift & Souvenir Stores– A 44% lift after a 28% November drop . A holiday lift but recovery is long way off.
• Internet/Mail Order – The pandemic has accelerated this channel’s growth vs 2019. $ hit another record peak in December. Many consumers have discovered online shopping and the behavior is likely to become habitual.
• 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 to 24% of total $). Pet Stores were usually essential, but most stores were not. The others began reopening in May. That number grew in June and YTD $ surpassed 2019. Sales have been stable and strong vs 2019 since then and peaked in December. Their 2020 total sales were up +11.6%.

The recovery began in May and accelerated in June>July as even more businesses began to re-open. The Relevant Retail Segment was positive in all measurements in May>July. In Aug>Sept $ slowed but were still strong vs 2019. In Oct>Dec $ turned up and reached a record peak. The key drivers in the positive numbers vs 2019 were the Internet, Supermarkets, SuperCtrs/Clubs/$ Stores and Hdwe/Farm.  Now, how is 2021 starting off? Here are the Advance numbers for January.

April & May 2020 were the 2 biggest spending drops in history. Then sales began to recover and in October YTD Total Retail turned positive for the 1^st time since February. Sales dipped in November but not vs 2019 . In December, Total Retail set a sales record. In January, as expected, $ fell but still set a new record high. All but Gas Stations and Restaurants are up from 2020.

Total Retail – Total Retail spending hit a record $616.6B in December and 2020 finished +$37B vs 2019. As usual, $ plummeted in January but still hit a record $509B, $27.9B ahead of 2020 and $51.7B ahead of 2019. (add the $ changes in the 2 columns to get status vs 2019). Remember, the impact of the pandemic didn’t begin until March 2020.

Restaurants – Spending was basically unchanged vs December but down $9.6B versus 2020, which shows the continuing impact of the pandemic on this group. Last January, $ fell 7% from December but were up 7.1% from 2019. Normally, January and February are the 2 slowest months, but they finished on top last year. Their 2020 totals were down $149B,  -19.5%. Recovery is still a long way off. If 2019 $ are the target for a return to normal, then they are only down $5.6B.

Automobile & Gas Stations – When you are staying home your car becomes less of a focus in your life. Auto Dealers began combating this attitude with fantastic deals and a lot of advertising. Monthly $ turned positive versus 2019 in June and stayed that way, finishing 2020 at +1.0% vs 2019. 2021 started even stronger, +10.4%. Gas Station $ales hit bottom in April and have been up and down ever since. However, sales have remained consistently about 16% below 2019. They finished 2020 -$79.6B (-15.9%). January began down $3.4B but we should note that $ were up $0.1B vs 2019.

Relevant Retail – Less Auto, Gas and Restaurants – Many non-essential businesses shuttered their doors in March but there was a rash of binge/panic buying for “necessities”, especially groceries, which drove spending up $19B. April brought a full month of closures and an end in binge buying, spending dropped $34B from March. In May, the overall market began to reopen so spending began to move in the right direction and growth continued through July. $ales fell in Aug/Sept but turned up again in Oct>Dec, reaching a record $412.9B in December. For 2020, they were up $252.9B, +6.8%. That brought us to January. Sales fell 22.5% (-$92.7B) from December. However, that was less than the 24.5%     (-$93.7B) drop in 2020. So $ are up 10.8%, triple the 3.6% from a year ago and the Relevant Retail group now has posted positive numbers versus last year and YTD for 9 consecutive months. The primary drivers continue to be Nonstore, Grocery, SuperCenters/Clubs/$ Stores plus a radically extended “spring lift” from Hardware/Farm and Sporting Goods.

Now let’s look at what is happening in the individual retail channels. After a record December, relevant retail $ took an expected plunge in January but was still +$31.3B vs 2020. Let’s see where the $ came from. These groups are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets.

In December, all 13 channels beat last month’s $. In January they were all down. 10 channels beat January 2020 $. Last year 12 beat 2019 $. However, the 2021 increases were generally significantly higher than 2020. Clothing stores had the biggest decrease vs 2020 but Department stores are the only channel with decreases in both years.

After April’s widespread closures there was a retail surge in May, but things truly opened up in June/July. In Aug/Sept, sales slowed but growth began again in October and peaked with a record December. Relevant Retail finished up $252.9B vs 2019 and started 2021 strong, +10.8%. Essential channels are responsible for the continued lift, primarily:

• Nonstore Retailers – Even more consumers are online shopping.
• Food & Beverage, especially Grocery– Restaurant $ are still down so consumers continue to eat & drink at home.
• Bldg Materials/Garden/Farm– Their “Spring” lift continues unabated as consumers focus on their home.
• SuperCtrs/Club/Value/$ Strs – Sales slowed in April but came back in May and continue to grow vs the previous year. They turned the whole Gen Mdse channel positive. It clearly shows that value is still a consumer priority.

Regarding the Individual Large Channels

General Merchandise Stores – As expected Sales dropped in January after the holiday lift with the biggest % decrease coming from Department Stores. Their problems were amplified by the pandemic but existed before as they are the only channel down in January vs a year ago for 2 consecutive years. Club/SuperCtr/$ stores are still the big positive force. They finished 2020 up $33B, +7.4% and started off 2021 at +9.6%, considerably better than the +3.5% in January 2020.

Food and Beverage, plus Health & Personal Care Stores – The Grocery segment is still strong and growing, +11.3% in January, due to the continuing big drop in restaurant sales. Sales in the Health, Personal Care group turned positive vs 2019 in September and finished +1.7%. They started 2021 even better, +3.3%. Drug Store $ growth has been the driver.

Clothing and Accessories; Electronic & Appliances; Home Furnishings – Except for September, monthly sales have grown every month since May. All 3 channels finished the year down significant percentages in sales vs 2019. Clothing Stores have been the worst performers and that continued in January. Home Furnishing stores may be breaking the pattern in 2021. In January, their sales were up 9.3% vs 2020. Perhaps their recovery has truly begun.

Building Material, Farm & Garden & Hardware – Sales peaked in late spring, as usual. However, this channel continues to benefit from consumers turning their focus to their home needs, including house and yard repair and improvements. Their Spring lift extended into winter and they finished +$53B (+13.8%). No change for 2021 – January $ +13.7% vs 2020.

Sporting Goods, Hobby and Book Stores – Book and Hobby stores are open and sales in Sporting Goods stores have taken off as Consumers are seeking more recreation. They were down -$3.4B in April. This deficit was wiped out in September and driven by Sporting Goods stores, sales exploded in December. They ended 2020 up $4.4B, +5.5%. January 2021 sales fell 35.8% from December but they are still up an amazing 22.0% vs January 2020.

All Miscellaneous Stores – This group is mostly small to medium specialty stores – both chains and independents. Pet Stores are essential but most other stores are not, so closures hit this group particularly hard. Sales hit bottom at -$3.8B in April then began to rebound in May and grew through July when they finally beat the monthly sales for 2019. Sales seesawed up and down but finished with a strong December. They ended 2020 down $1.0B, -0.7%. They started out 2021 +6.9% but this is only about half of the +13.3% start in 2020. We’ll see how their recovery progresses in 2021.

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV businesses. The COVID-19 crisis has only accelerated the ongoing movement to online retail. In February NonStore was up 8.6% YTD. In December monthly sales exceeded $100B for the 1^st time. They ended 2020 at +21.9%, +$173.9B YTD. Their increase is 69% of the total $ increase for Relevant Retail Channels. Their 2020 performance far exceeds their 12.9% annual increase in 2019 and they started off 2021 even better, +22.1%. Last January, in pre-pandemic times, they were only up 7.1%.

Note: Almost without exception, online sales by brick ‘n mortar retailers are recorded along with their store sales in their regular channel. Whether they are up or down, their online sales are included in the totals.

Recap – April and May saw the 2 biggest year over year monthly sales declines in history. Restaurants, Auto and Gas Stations increased sales from May through July, but results were mixed until yearend. The Auto segment did beat 2019 YTD $ in December, but Restaurants and Gas Stations finished down -$229B. The Relevant Retail segment was the only true positive. Sales began to recover in May and hit a record high in December. They finished 2020 up $253B but for some segments in this group there is still a long way to go. Total Retail Sales passed 2019 in October, set a new monthly $ record in December and ended the year +$37B (+0.6%) vs 2019. In 2021 Relevant Retail and Auto both began the year at +10% vs 2020, much better than last year. For Restaurants and Gas Stations the problems continue as both started off 2021 down significantly vs 2020. Thanks to Auto and Relevant Retail, Total Retail is +5.8% vs 2020. (last year they were +5.2%) However, this is an ongoing battle. We will continue to monitor the data and provide you with regular updates.

 

 

 

 

Time for our monthly update on U.S. retail sales by channel. The current COVID-19 crisis has caused turmoil in the Retail Marketplace. Consumer spending behavior has changed and continues to evolve. In this report we will track the changes and migration between channels. We will do that 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 – approximately 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.

This means to get the full picture in our monthly channel update we need to look at the latest release of both reports. We will begin with the Final Retail Report from September and then move to the Advance Retail Report for October. This will also allow us to better track the consumers’ evolving spending behavior in terms of channel migration.

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

First, the September Final report. The retail market hit bottom in April then began a slow recovery. Sales $ peaked in July but are growing vs 2019. Here are the major retail groups. (The Data in all graphs is Actual, Not Seasonally Adjusted)

The final total is $2.8B more than the Advance report projected a month ago. Auto $ were the same as projected. Everyone else was up. Relevant Retail: +$2.5B; Restaurants:+$0.1B; Gas Stations:+$0.2B. $ales were still down from the  peak in all groups. However, driven by Relevant Retail, +$38B and Auto, +$14B, monthly sales were up $38B vs 2019.

An August > September decline in sales is normal. In 2019 the drop was -9%. In 2020 the drop was much smaller, only -3% , which is a good sign for a retail recovery. However, all groups but Relevant Retail are still down YTD vs 2019.

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

• Overall – $ in 7 of 11 groups were down vs August, but 10 of 11 were up vs September 2019 and 9 were up YTD.
• Building Material Stores – This group has their biggest annual lift in Spring. This is unchanged and even stronger. While sales peaked in June, they’re still showing strong increases vs 2019. Although Sporting Goods stores are not included in this group, they have a similar Spring lift pattern. Their sales took off in May, peaked in June but continued to grow vs 2019. In June, their YTD $ vs 2019 turned positive and by September they were up 13.1%.
• Food & Drug – $ fell in August & September but Supermarkets are maintaining incredibly strong growth vs 2019. Drug Stores $ bounced back after a decline in August and remain positive compared to 2019.
• General Merchandise Stores – $ in Clubs/SuperCtrs stabilized in June and fell in September but are still strong vs 2019. Despite slowed sales in June>Sept, $ Stores are showing exceptional strength vs 2019. Discount Dept. store sales were generally slowing before the pandemic. This trend has continued despite a small Summer lift.
• Office, Gift and Souvenir Stores – They were slow to re-open. $ grew but now are stable. They were hit hard.
• Internet/Mail Order – The pandemic has accelerated this channel’s growth vs 2019. Sales peaked in August, but the crisis has introduced many new consumers to online shopping and the behavior is likely to become habitual.
• 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 to 24% of total $). Pet Stores were usually essential, but most stores were not. The others began reopening in May and the number grew in June which produced an increase vs 2019. Sales peaked in July but stabilized and remain strong vs 2019. In fact, YTD sales are up +10.2%.

The recovery began in May and continued in June and July as even more businesses began to re-open. The Relevant Retail Segment turned positive in all measurements in May and stayed that way through July. In August & September, sales fell but remained strong vs 2019. The key drivers in the positive numbers vs 2019 were the Internet, Supermarkets, SuperCtrs/Clubs/$ Stores and Hdwe/Farm.  How are things progressing? Here are the Advance numbers for October.

April and May were the 2 biggest spending drops in history. In June, monthly sales turned positive for the first time since February. The recovery continued in July but flattened out in Aug/Sept. In October, all groups spent more than in September. This lift turned YTD Total Retail positive for the 1^st time since February.

Total Retail – Total Retail spending rose +$23.1B vs September and was up +6.0% vs October 2019. In February 2020 sales were up $60B, +6.6% YTD versus 2019. Then came COVID-19. Hopefully, we hit bottom at -$112B in May. We began moving in the right direction and finally broke even in October up $1.1B YTD but still down -$59B from February.

Restaurants – Spending increased +$2.7B from September but was still down -$8.0B vs October 2019. Things remain Topsy Turvy. August is usually their biggest $ month of the year. January and February, normally the 2 slowest months, are on top in 2020. In February YTD sales were up $9B. Then came the forced closures. Re-openings began in May but ran into problems in the Summer. Delivery/Pickup can’t make up the difference as spending is now down $123.5B YTD.

Automobile & Gas Stations – When you are staying home your car becomes less of a focus in your life. Auto Dealers began combating this attitude with fantastic deals and a lot of advertising. Monthly $ turned positive versus 2019 in June and have maintained this pace through October. The result is that this group is now only down -0.3% YTD vs 2019. Gas Station $ales increased in May>July over the previous month but fell in August & September. Sales turned up again in October but remain (-$67.8B YTD) People are still not driving as much, for commuting or road trips.

Relevant Retail – Less Auto, Gas and Restaurants – Many non-essential businesses shuttered their doors in March but there was also a rash of binge/panic buying for “necessities” and a big lift in groceries as consumers focused on home cooking which drove spending up $19B. April brought a full month of closures and an end in binge buying, spending dropped $34B from March. In May, the overall market began to reopen so spending began to move in the right direction. In June and July, the $ growth continued. $ fell in August & September but turned up again in October. We should note that the monthly June>October $ are larger than all months in 2019 but December. The primary drivers have been Nonstore, Grocery and SuperCenters/Clubs & $ Stores along with a big spring lift from the Hardware/Farm and Sporting Goods channels. The Relevant Retail group now has posted positive numbers versus last year and year to date for 6 consecutive months and is up $195.1B YTD (+6.5%) vs 2019. In May when the streak began, it was up +2.7%.

Now let’s look at what is happening in the individual retail channels across America. In October, consumer spending in the relevant retail market grew even more positive versus 2019. Let’s see where the $ came from. These groups are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets.

In September only 3 channels beat last months $. In October it was up to 11. In September, 10 channels beat September 2019. This number held in October. In YTD numbers, 8 are showing an increase – the same as September. The YTD decreases are coming from channels that are primarily nonessential businesses.

After a full month of stay at home and widespread closures there was a surge in May. Things truly opened up in June and July and sales continued to increase. In August and September, they slowed then grew again in October. Relevant Retail Channels are up $195.1B vs 2019. The essential channels are responsible for the YTD lift vs 2019, primarily:

• Nonstore Retailers – Even more consumers are online shopping.
• Food & Beverage, especially Grocery– Restaurant $ are still down so consumers continue to eat & drink at home.
• Bldg Materials/Garden/Farm– A big Spring lift continues into the Summer/Fall as consumers focus on their home.
• SuperCtrs/Club/Value/$ Strs – Sales slowed in April but came back in May and continue to grow vs 2019. This group turned the whole Gen Mdse channel positive. It clearly shows that value is still a consumer priority.

Regarding the Individual Large Channels

General Merchandise Stores – Regular Department stores are reopening which has cut the losses for total Department Stores as Discount Department stores continue to slowly fade. Club/SuperCtr/$ stores provided the big positive force. In April consumers dialed back their panic buying and spending on discretionary items was also down significantly. Since May we have seen consumer spending return to a more normal pattern in the big and small stores that promise value.

Food and Beverage, plus Health & Personal Care Stores – The Grocery segment is still driven by increased Food sales due to a slow restart by restaurants, up 10.3%, +$5.9B in October. Monthly Sales in the Health, Personal Care group have been up vs 2019 since June. Since August, the YTD $ have been positive. Drug Store $ growth was a key factor.

Clothing and Accessories; Electronic & Appliances; Home Furnishings – Except for September, monthly sales have grown every month since May. Home Furnishing was the only group with a decrease vs September, but they have had 5 consecutive monthly increases vs 2019. All 3 channels are down significant percentages in YTD sales. Clothing Stores are by far the worst performers. In October they were down 11.3% vs October 2019 and 30.0% YTD.

Building Material, Farm & Garden & Hardware – Sales peaked in the Spring. However, this channel continues to benefit from consumers turning their focus to their home needs, including house and yard repair and improvements. This has extended their Spring lift to Summer/Fall. $ were up 17.0% vs October 2019 and up +$42.9B (+13.2%) YTD.

Sporting Goods, Hobby and Book Stores – Book and Hobby stores are open and sales in Sporting Goods stores have taken off as Consumers again sought outdoor recreation. Although October sales fell again from their June peak, they were up 14.1% vs October 2019. YTD sales were down $3.4B in April. In September, this deficit was wiped out and through October YTD sales were +$1.8B (+2.8%).

All Miscellaneous Stores – This group is mostly small to medium specialty stores – both chains and independents. Pet Stores are essential but most other stores are not, so closures hit this group particularly hard. Sales began to rebound in May and grew through July when they finally beat the monthly sales for 2019. In Aug>Sept sales plateaued then turned up in October. Back In February, this group was up $2.6B YTD. Through July,  they were down -$3.2B but moving in the right direction. The lift in October has put them back on track, -$2.4B. However, they still have a long road ahead.

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV businesses. The COVID-19 crisis has only accelerated the ongoing movement to online retail. In February NonStore was up 8.6% YTD. In October they reached a new monthly sales peak for the year and they are up 21.9%, +$137.2B YTD. Their increase is 70% of the total $ increase for Relevant Retail Channels. They are the clear leader, and their performance far exceeds their 12.9% annual increase in 2019. Since much of their annual increase comes from holiday sales, 2020 could be another great year for NonStore Retailers.

Note: Almost without exception, online sales by brick ‘n mortar retailers are recorded along with their store sales in their regular channel. Whether they are up or down, their online sales are included in the totals.

Recap – April and May saw the 2 biggest year over year monthly sales declines in history. Restaurants, Auto and Gas Stations increased sales from May through July. By September, all had decreased sales but $ turned up again in October. The Auto segment is almost back to even in YTD vs 2019 but Restaurants and Gas Stations are still struggling. The Relevant Retail segment has been the only true positive. Sales turned up in October after slowing in Aug>Sep. Monthly and YTD sales vs 2019 are up for 6 consecutive months. However, for some segments in this group there is still a long way to go. Total Retail reached a new $ peak in October and edged past YTD 2019, +$1.1B (+0.02%). Now the virus is resurging, and retail restrictions may be reimposed in many areas. This is going to be a long battle with no end in sight.

We will continue to monitor the data and provide you with regular updates.

 

 

Time for our monthly update on U.S. retail sales by channel. The current COVID-19 crisis has caused turmoil in the Retail Marketplace. Consumer spending behavior has changed and continues to evolve. In this report we will track the changes and migration between channels. We will do that 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 – approximately 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.

This means to get the full picture in our monthly channel update we need to look at the latest release of both reports. We will begin with the Final Retail Report from July and then move to the Advance Retail Report for August. This will also allow us to better track the consumers’ evolving spending behavior in terms of channel migration.

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

We’ll start with the July Final report. The retail market hit bottom in April then began a slow recovery which continued in July. First, we will look at some major retail groups. (Note: The Data in all graphs is Actual, Not Seasonally Adjusted)

The final total is $2.5B less than the Advance report projected a month ago. All were down slightly from projections. Relevant Retail: -$1B; Auto:-$0.6B less; Restaurants: -$0.3 less and Gas Stations’ $ were -$0.4B. $ales were up vs June across the board. Driven by Relevant Retail, +$30B and Auto, +$8B, Total monthly sales were also up $18.8B vs 2019.

The Spring Lift is usually over by July but the COVID crisis has pushed the Spring timing back. Things began to open up in May and continued into July. However, all but Relevant Retail were still down YTD vs 2019.

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

• Overall – Sales in 5 of 11 groups were down vs June, but 9 of 11 again showed increases vs same month in 2019.
• Building Material Stores – This group has their biggest annual lift in Spring. This is unchanged and even stronger. While sales were down vs June, they still have spectacular increases vs 2019. Although Sporting Goods stores are not included in this group, they have a similar Spring lift pattern. Their sales took off in May and continued to grow spectacularly through June. Although July sales dipped slightly from June, they turned positive YTD in June.
• Food & Drug – After a dip in June vs May Supermarket sales are back up with incredibly strong growth vs 2019. After 2 months of slowed $, Drug Stores came back strong in June and July and remain positive across the board.
• General Merchandise Stores – Sales in Clubs/SuperCtrs slowed down in June but are back up in July and still strong vs 2019. Despite slowed sales in June & July, $ Stores are showing exceptional strength vs 2019. Discount Dept. store sales were generally slowing before the pandemic. This trend has continued despite a small July lift.
• Office, Gift and Souvenir Stores – They were slow to re-open. Sales are growing, but this group was hit hard.
• Internet/Mail Order – The pandemic has accelerated this channel’s growth vs 2019. Sales vs June were flat, but the crisis has introduced many new consumers to online shopping and the behavior is likely to become habitual.
• 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 to 24% of total $). Pet Stores were usually essential, but most stores were not. The others began reopening in May and the number grew in June which produced an increase vs 2019. July was down slightly from June but was strong vs 2019 which pushed YTD sales up to +9.0%.

May began a slow recovery which continued in June and July as even more businesses began to re-open. The Relevant Retail Segment turned positive in all measurements in May and has stayed that way through July. Although many segments are now contributing, the Internet, Supermarkets, SuperCtrs/Clubs/$ Stores and Hdwe/Farm are the key drivers. Let’s see how the situation is progressing. Here are the Advance numbers for August.

April and May were the 2 biggest spending drops in history. In June, monthly sales turned positive for the first time since February. In July the recovery continued. However, it flattened out in August leaving Total Retail still down -$74B YTD.

Total Retail – Total Retail spending increased $0.6B, +0.1% vs 2019, a big change from +3.9% in July and +3.4% in June. In February 2020 sales were up $60B, +6.6% YTD versus 2019. Then came COVID-19. Hopefully, we hit bottom at -$112B in May. We began moving in the right direction but have stalled in August, still -$74B YTD and -$134B from February.

Restaurants – The Spending increase slowed to +$2.1B over July and sales were down $11.6B vs 2019. This is important as August is usually their biggest $ month of the year. January and February, normally the 2 slowest months, are on top in 2020. In February YTD sales were up $9B. Then came the forced closures. Re-openings began in May but ran into problems in July and August. Delivery/Pickup can’t make up the difference as spending is now down $106.7B YTD.

Automobile & Gas Stations – When you are staying home your car becomes less of a focus in your life. Auto Dealers, both new and used, began combating this attitude with some fantastic deals and a lot of advertising. Sales turned positive versus 2019 in June, grew strongly in July, then slowed a bit in August. Although sales are down $28.6B YTD, they are up $20B vs 2019 in the last 3 months. Gas Station $ales increased in May, June and July over the previous month, but fell in August – Down $56.6B YTD. People are still not driving as much, whether for commuting or road trips.

Relevant Retail – Less Auto, Gas and Restaurants – Many non-essential businesses began to shutter their doors in March but there was also a rash of binge/panic buying for “necessities” and a big lift in groceries as consumers focused on home cooking which drove spending up $19B. April brought a full month of closures and an end in binge buying, spending dropped $34B from March. In May, the overall market began to reopen so spending began to move in the right direction. In June and July the growth continued but it slowed in August. However, the monthly June>August $ are larger than all months in 2019 but December. The primary drivers have been Nonstore, Grocery and SuperCenters/Clubs & $ Stores along with an enhanced spring lift from the Hardware/Farm and Sporting Goods channels. The Relevant Retail group now has posted positive numbers versus last year and year to date for 4 consecutive months and is up $118B YTD (+4.9%) vs 2019. In July it was up +4.8%.

Now let’s look at what is happening in the individual retail channels across America. In August, consumer spending in the relevant retail market grew even more positive versus 2019. Let’s see where the $ came from. These groups are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets.

In July, 11 of 13 channels beat last month’s $. In August it was down to 7. In July, 10 channels beat July 2019. In August, this number was down to 7. However, in YTD numbers, 8 are now showing an increase as Health & Personal Care joined the group. The YTD decreases are coming from channels that are primarily nonessential businesses.

After a full month of stay at home and widespread closures there was a surge in May. Things truly opened up in June and July and sales continued to increase. In August they slowed slightly but YTD Relevant Retail Channels are up $117.9B vs 2019. The essential channels are responsible for the YTD lift vs 2019, primarily:

• Nonstore Retailers – Even more consumers are online shopping.
• Food & Beverage, especially Grocery– Restaurant $ are still down so consumers continue to eat & drink at home.
• Bldg Materials/Garden/Farm – A bigger than usual Spring lift continues as consumers focus “on their home”.
• SuperCtrs/Club/Value/$ Strs – Sales slowed in April but came back in May and continue to grow. This group turned the whole Gen Mdse channel positive. It clearly shows that value is still a consumer priority.

Regarding the Individual Large Channels

General Merchandise Stores – Regular Department stores are reopening which has cut the losses for total Department Stores as Discount Department stores continue to slowly fade. Club/SuperCtr/$ stores provided the big positive force. In April consumers dialed back their panic buying and spending on discretionary items was also down significantly. Since May we have seen consumer spending return to a more normal pattern in the big and small stores that promise value.

Food and Beverage, plus Health & Personal Care Stores – The Grocery segment is still driven by increased Food sales due to a slow restart by restaurants, up 7.6%, +$4.5B in August. Sales in the Health, Personal Care group were up vs 2019 in June July and August and finally turned positive YTD. Drug Store sales growth was a key factor.

Clothing and Accessories; Electronic & Appliances; Home Furnishings – In August, sales grew for the fourth consecutive month. Home Furnishing has even registered slight increases vs 2019 in July and August. However, all 3 channels are down double digit percentages in YTD sales. Clothing Stores are by far the worst performers. Even though August sales were up 7.4% over July they were still down 23.5% vs August 2019 and 34.9% YTD.

Building Material, Farm & Garden & Hardware – Sales fell again after peaking in June. However, this channel continues to benefit from consumers turning their focus to their home needs, including house and yard repair and improvements. This has accelerated and extended their Spring lift. Sales were up 11.9% vs August 2019 and up +$29.6B (+11.4%) YTD.

Sporting Goods, Hobby and Book Stores – Book and Hobby stores are open and sales in Sporting Goods stores have taken off as Consumers again sought outdoor recreation. Although sales fell again from their June peak, they were up 8% vs August 2019. YTD sales were down $3.4B in April. In August, this deficit had been cut to -$0.3B. If current trends continue, their YTD numbers could turn positive by September.

All Miscellaneous Stores – This group is mostly small to medium specialty stores – both chains and independents. Pet Stores are essential but most other stores are not, so closures hit this group particularly hard. Sales began to rebound in May and grew through July when they finally beat the monthly sales for 2019. In August sales dropped -2.9% vs July and -4.9% vs 2019. In February, this group was up $2.6B YTD. Through July,  they were down -$3.4B but moving in the right direction. That has stopped, at least temporarily as they are now down -$3.9B YTD. They have a long road ahead.

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV businesses. The COVID-19 crisis has only accelerated the ongoing movement to online retail. In February NonStore was up 8.6% YTD. In August, despite falling -4.2% from July, they are up 19.6%, +$97.2B YTD. Their increase is 82% of the total $ increase for Relevant Retail Channels. They are the clear leader and their performance far exceeds their 12.9% annual increase in 2019. Since much of their annual increase comes from holiday sales, 2020 looks to be another banner year for NonStore Retailers.

Note: Almost without exception, online sales by brick ‘n mortar retailers are recorded along with their store sales in their regular channel. Whether they are up or down, their online sales are included in the totals.

Recap – April and May saw the 2 biggest year over year monthly sales declines in history. Restaurants, Auto and Gas Stations increased sales from May through July. In August, only restaurants had an increase. The Auto segment is  showing positive monthly numbers vs 2019 but Restaurants and Gas Stations are still struggling. The Relevant Retail segment has been the only true positive. Although August sales are lower than July, monthly and YTD sales vs 2019 are up for 4 consecutive months. However, for many segments in this group there is still a long way to go. In July Total Retail was positive for the second consecutive month but it turned essentially flat in August. We saw a resurgence of the virus and retail restrictions were reimposed in many areas, which contributed to sales declining from July. This is going to be a long battle with no end in sight. We will continue to monitor the data and provide you with regular updates.