Retail Channel $ Update – May Monthly & June Advance

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In June, the Commodities inflation CPI flipped to 0.6% from -0.1% and Total Retail sales were +3.7% vs 24, -19.4% below their average June Lift. The Relevant Retail CPI rose to 1.2% from 0.8% and sales were +3.9% vs 24, -17.5% below average. There are other factors currently impacting sales, including high cumulative inflation and pre-tarifflation binge buying. The situation is complex but the problem with YOY drops and the size of sales lifts is still very real.

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

We will begin with the May Monthly Report and then go to the June Advance Report. Our focus is comparing to last year but also 21 & 19. We’ll show both actual and the “real” change in sales as we factor inflation into the data.

Both reports include the following:

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

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

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

First, the May Monthly. Only Auto was down from April and there were only 2 actual YOY sales drops, Gas Stations vs 24. Note: They are still selling less product than in 2019. 3 groups are “all positive”, the same as March & April. Relevant Retail has been all positive in 14 of the last 18 months and in 10 of the last 12. ($ are Not Seasonally Adjusted)

The May Monthly is $0.2B more than the Advance report. Restaurants: +$1.1B; Auto: -$0.7B; Gas Stations: +$0.6B; Relevant Retail: -$0.8B. Only Auto was down from April. An Apr>May increase in Total Retail  has happened 5 every year since 1992. However, the 4.3% lift was 28.3% less than the 6.0% average. There were only 2 YOY drops in actual sales, the same as March & April. There were only 3 “real” sales drops, down from 4 in April and 5 in March. 3 groups were again “all positive” (None in Feb). Restaurants still have the biggest increases vs 21 & 19 but Relevant Retail stayed at the top of “real” performance vs 2019. However, only 53% of their growth is real.

Now, let’s see how some Key Pet Relevant channels did in May (83% of May Ytd Rel Retl $)

Overall– All 11 were up from April. Vs Apr 24, 8 were actually and 9 “really” up. Vs Apr 21, 8 were up but only 6 were real increases. Vs 2019, The only negatives were Off/Gift/Souv & Dept Strs. Both were actually & really down.

  • Building Material Stores – The pandemic focus on home has produced sales growth of 29.6% since 2019. Prices for the Bldg/Matl group have inflated 18.0% from 21 and 22.5% from 2019 which is having an impact. Sales vs April were +3.7% for HomeCtr/Hdwe and +5.3% for Farm Stores. Vs other years, Farm stores are actually up for all and Home Center/Hardware are actually & really down monthly and Ytd for all but 2019. Farm stores are really down monthly & Ytd vs 21. Plus, only 20% of the Bldg Materials group’s 19>25 lift was real. Avg 19>25 Growth: HomeCtr/Hdwe: 4.0%, Real: 0.6%; Farm: 6.2%, Real: 2.7%
  • Food & Drug – Both are truly essential. Except for the pandemic food binge buying, they tend to have smaller changes in $. In terms of inflation, the Grocery rate is now 7 times the rate for Drug/Med products. Drug Stores are positive in all measurements and 67% of their 2019>25 growth is real. Supermarkets’ actual $ are up in all comparisons. They are only “really” down monthly and Ytd vs 2021. However, only 11.0% of their 19>25 increase is real growth. Avg 19>25 Growth: Supermarkets: +5.0%, Real: +0.6%; Drug Stores: +5.2%, Real: +3.6%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up 12.3% from April, but their only positives are vs 2019 & real vs 2024. Prices are still deflating, -4.7% vs 24. Deflation started in April 23 and is a big change from +1.1% in 22>23 and +7.9% in 21>22. This caused 72.8% of their 33.4% lift since 19 to be real. Avg 19>25 Growth Rate is: +4.9%; Real: +3.7%.
  • Gen Mdse Stores – Sales were +8.3% vs Apr and all YOY sales – actual & real were up for Club/SupCtrs and $ Stores. Department Stores are only up vs April 25. Their Actual sales are even -29.1% from 19 (Real: -35.8%). The other channels have an average of 43.9% in real growth. Avg 19>25 Growth: SupCtr/Club: 5.2%, Real: 2.4%; $/Value Strs: +5.4%, Real: +2.6%; Dept. Strs: -5.6%, Real: -7.1%.
  • Office, Gift & Souvenir Stores – After a -8.7% drop last month sales surged +34.3% from April. They are now only really down Ytd vs 21. Their recovery started late, but their progress may be slowly restarting again. However, we should remember that they are still actually & really down vs 2019. Avg Growth Rate: -0.1%, Real: -1.8%
  • Internet/Mail Order – Sales are only +3.3% from April but set a new May record of $117.3B. All measurements are positive, but their YOY growth, +7.3%, is only 50% of their average since 2019. However, 83.2% of their 127.1% growth since 2019 is real. Avg Growth: +14.6%, Real: +12.8%. As expected, they are by far the growth leader since 2019.
  • A/O Miscellaneous – Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached $100B for the first time in 2021. In 2022 their sales dipped in January, July, Sept>Nov, rose in December, fell in Jan>Feb 23, grew Mar>May, fell Jun>Aug, rose Sep>Nov, fell Dec>Jan 24, grew Feb>May, fell Jun>Sep, grew Oct, fell Nov, rose Dec, fell Jan>Feb, grew Mar>May. All comparisons are again positive, and they are in 2nd place, behind the Internet, in the % increase vs 19 and vs 21. Also, 77% of their 69.7% growth since 2019 is real. Average 19>25 Growth: 9.2%, Real: +7.4%

May had its usual lift vs Apr. All Big groups but Auto had an increase. Plus, all small channels were also up. The YOY May lift was 34% below avg for Total Retail and 21% below for Relevant Retail – better but still well below avg. Prices are deflating in 5 channels (= to Apr) but cumulative inflation still impacts sales as only 6 channels were really up vs May 21. The Retail Recovery is still slow. The May commodities CPI was -0.1% but flipped to 0.6% in June. Let’s see if it impacts Retail.

May>Jun sales were down for all. A May>Jun Total Retail lift has happened in all but 4 years since 1992 but the 5.3% decrease is 1.7 times bigger than average. There were 2 YOY $ drops, the same as Apr & May. $ for all Big Groups but Gas Stations were up vs June 24 but the Total Retail lift of 3.7% vs Jun 24 was 19.4% below their +4.6% 92>24 avg. The Relevant Retail 3.9% increase vs 24 was also below their +4.7% avg (-17.5%). Inflation is still a factor. The CPI for all commodities is only 0.6% but it is still 12.6% vs 21. The inflation surge was accelerating back then (+9.0%). There is some good “real” news. 3 “real” measurements were down, the same as May, but down from 4 in April. Also, like Mar>May, 3 Big Groups were all positive. Relevant Retail has been all positive in 11 of the last 13 months.

Overall Inflation Reality– The Total Retail CPI rose to 0.6% and the $ lift vs 24 was -19% below avg. The Restaurant CPI stayed at +3.8% but their $ lift was now -3.8%  below avg. Gas prices rose to -8.2% and they are still in turmoil. Auto inflation rose to 1.2% but it is only 5.4% vs 21. Auto sales grew 5.3% vs 24 (23% above avg – pre-tariff buying). Inflation rose to 1.2% for Relevant Retail. Their YOY lift was 17.5% below avg but they are again all positive. Slow progress…

Total Retail – Since Jun 20, every month but Apr 23, Jun 24 & Feb 25 has set a monthly $ales record. In 2023>25, Sales were on a roller coaster. Up Jul>Aug, down Sept, up Oct>Dec, down Jan 24, up Feb>Mar, down April, up May, down Jun, up Jul>Aug, down in Sep, up Oct>Dec, down Jan>Feb 25, up in Mar, down in Apr, up in May, down in Jun. Prices are +0.6% and YOY sales are +3.7%, 19% below the 92>24 avg change of 4.6%. 42.9% of the 19>25 growth is real. Prices are now inflating, and cumulative inflation is still impacting sales. Growth: 24>25: 3.6%; Avg 19>25: +6.2%, Real: +2.9%.

Restaurants – They were hit hard by the pandemic and didn’t begin recovery until March 2021. However, they have had strong growth since then, exceeding $1T for the 1st time in 2023. June $ are up vs 24 and they have the biggest lifts vs 21 & 19. Inflation was stable at 3.8% vs 24 but is +24.8% vs 21 and +31.0% vs 19. Their 5.4% YOY lift is -3.8% below their +5.6% 92>24 avg. They are all positive again, but just 35.2% of their 57.7% growth since 2019 is real. They are 3rd in performance behind Relevant & Total Retail. Recovery started late but inflation started early. Growth: 5.1%; Avg 19>25:+7.9%, Real: +3.1%. They just account for 13.8% of Total Retail $, but their strong growth has helped Total Retail.

Auto (Motor Vehicle & Parts Dealers) – They worked to overcome the stay-at-home attitude with great deals and advertising. They finished 2020 up 1% vs 2019 and hit a record $1.48T in 2021 but much of it was due to skyrocketing inflation. In 22, sales got on a rollercoaster. Inflation started to drop mid-year, but it caused 4 down months in actual $. Their YE real 2022 sales numbers were even worse, -8.2% vs 21 and -8.9% vs 19. 23 started a sales rollercoaster but the $ hit a record, $1.595T. $ fell in Jan 24, grew Feb>Mar, fell Apr, grew May, fell June, grew Jul>Aug, fell Sep, grew Oct, fell Nov, grew Dec, fell Jan>Feb 25, grew Mar, fell Apr>Jun. June $ were +5.3% vs 24. (23% above avg – pretariff buying). Only real $ vs 21 are negative, but just 27.5% of 19>25 growth is real. Growth: 5.1%; Avg 19>25: +5.5%, Real: +1.7%

Gas Stations – Gas Stations were hit hard by “stay at home”. They started recovery in Mar 21 and inflation began. Sales got on a rollercoaster in 22 but set a record, $583B. Inflation started to slow in Aug and prices slightly deflated in Dec & Feb 23, then strongly fell in Mar>Jul to -20.2%. In Aug they rose to -3.7%. In Sep they were +2.7% but began deflating to -4.2% in Feb 24. In Mar>May their $ grew,fell June, rose July, fell Aug/Sep, rose Oct, fell Nov>Feb, rose Mar>May, then fell in June. June $ are -4.4% vs 24 (4.8% avg) but up vs A/O years. Real sales are only down Ytd vs 19. Growth: -4.0%; Avg 19>25: +3.2%, Real: -0.2%. They show the cumulative impact of inflation and how deflation can be both positive and negative.

Relevant Retail – Less Auto, Gas and Restaurants – They account for ≈60% of Total Retail $ in a variety of channels, so they took many different paths through the pandemic. Their only down month until Feb 25 was April 2020, and they led the way in Total Retail’s recovery. Sales got on a roller coaster in 2022, but all months set new records with December reaching a new all-time high, $481B, and an annual record of $4.81T. In 2023, the roller coaster continued. A December lift set a new monthly record of $494.7B & an annual record of $4.997T. Sales fell Jan>Feb 24, rose in Mar, fell in Apr, rose in May, fell in June, rose Jul>Aug, fell Sep, rose Oct>Jan 25, fell in Feb, rose Mar>May, fell in June. The June 3.9% YOY lift is 17.5% below their 92>24 avg of +4.7%, but they are all positive again and 53% of their 46.4% 19>25 growth is real – #1 in performance. Growth: 3.9%; Avg 19>25: +6.6%, Real: +3.7%. In 2024 their inflation rate dropped from 3.2% to 0.1%, stabilized at 0.5% Dec>Jan, rose to 0.7% in Mar, slowed to 0.6% in Apr, rose to 0.8% in May and then to 1.2% in June. Inflation is low but its cumulative impact can slow growth. We also saw tarifflation fear buying. We’ll see what happens.

YOY inflation is still low, but cumulative & impending lifts can affect sales. In June, 2 actual YOY $ comparisons were negative, the same as Mar>May. In June, there were 3 real drops, the same as May. In May, Gas Stations were down vs 24 but only Restaurants had an above avg YOY lift. In June, Gas Stations were again down vs 24, but only Auto had an above avg lift. However, in June 3 big groups were again all positive. Relevant Retail has now been all positive in 11 of the last 13 months. As expected, in June sales fell vs May, but the results were mixed. The Retail recovery is slow.

Here’s a more detailed look at June by Key Channels (98% of June Ytd Rel Retl $)

  • Relevant Retail: Growth: +3.9%; Avg 19>25: +6.6%, Real: +3.7%. All but Sport/Hobby/Books were down from May. Vs Jun 24: 10 were up, Real: 8, Vs Jun 21: 6 were up, Real: 5. Vs 19: Only Dept Stores were down – both actually & really.
  • All Department Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2021. Sales are -12.3% from May, but all actual & real YOY measurements are negative. Their -4.5% June YOY drop is equal to their avg change. Growth: -3.1%; Avg 19>25: -5.6%, Real: -7.1%.
  • Club/SuprCtr/$- They fueled a big part of the recovery because they focus on value which has broad consumer appeal. $ales are -4.6% from May, but they are positive in all measurements. However, only 43.2% of their 35.4% 19>25 lift is real. Their 1.9% YOY June lift is -77% below their 92>24 avg of +8.4%. Growth: 2.6%; Avg 19>25: +5.2%, Real: +2.4%.
  • Grocery- They depend on frequent purchases, so their changes are usually less radical. Actual $ are -4.8% from May but positive in all actual comparisons. Cumulative inflation has hit them hard as real $ are down vs 21 & vs Jun 24. Plus, only 8% of 19>25 growth is real and their 1.5% YOY lift is -52% below avg. Growth: 2.8%; Avg 19>25: +4.8%, Real: +0.4%.
  • Health/Drug Stores – Many stores are essential, but consumers visit less frequently than Grocery stores. $ are -1.7% from May, but they are positive in all comparisons. Inflation has been relatively low so 66% of their 34.4% 19>25 growth is real. Also, their +9.7% YOY lift vs Jun 24 is 93% above avg. Growth: 7.1%; Avg 19>25: +5.0%, Real: +3.5%
  • Clothing and Accessories – Clothes mattered less if you stayed home. That changed in March 2021 with strong growth through 2022. Sales are -11.0% from May but positive in all measurements but real vs Jun 24. 68% of their 19>25 growth is real. $ are +2.4% vs Jun 24, 24% below avg (pre-tariff buying over). Growth: 3.6%; Avg 19>25: +3.1%, Real:+2.2%
  • Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Inflation is up to 3.4%. $ are -6.2% from May but are only actually & really down monthly & Ytd vs 21. Only 21% of their 19>25 growth is real. YOY vs Jun 24: +4.3%, 47% above avg. (pre-tariff buying) Growth: 5.7%; Avg 19>25:+2.9%, Real:+0.6%
  • Electronic & Appliances – They have had many issues. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 21. $ are -3.2% from May and they are only actually & really up vs 19 & monthly vs 24. Also, real vs Ytd 24. Strong deflation drove real numbers up. Sales are +0.7% vs Jun 24, -68% vs avg. Growth: -1.5%; Avg 19>25: 0.5%, Real: +3.7%.
  • Building Material, Farm & Garden & Hardware – They truly benefited from the consumers’ focus on home. In 2022 the lift slowed as inflation grew to double digits. Prices turned up in Apr>Jun 25 and sales are -7.2% from May. Actual $ are only up vs Jun 24 and vs 2019. Real sales are down for all but vs 2019. Just 19.2% of their 19>25 sales growth is real. YOY sales vs Jun 24 were +0.2%, -96% below avg. Growth: -0.5%; Avg 19>25: +4.4%, Real: +0.9%.
  • Sporting Goods, Hobby and Book Stores – Consumers turned their attention to recreation and Sporting Goods stores sales took off. Book & Hobby Stores recovered more slowly. They have been on a sales rollercoaster since June 24 and $ are +0.5% from May. Actual & real sales are only up vs Jun 24 & 19. Real sales are also up Ytd vs 24. 83% of their 19>25 growth is real. YOY Sales vs May 24 are +0.9%, -72% below avg. Growth: -0.4%; Avg 19>25: +3.9%, Real: +3.3%.
  • All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 at +0.9% but sales took off in March 21 and have continued to grow. Sales are -3.2% vs May but positive in all comparisons. They are 2nd in the % increases vs 19 & vs 21 and 72.3% of their 51.6% 19>25 growth is real. Plus, their 11.5% YOY Jun lift is 177% more than their 92>24 avg of +4.2%. Growth: +7.4%; Avg 19>25: +7.2%, Real: 5.4%.
  • NonStore Retailers – 90% of their $ comes from Internet/Mail Order/TV. The pandemic accelerated online spending. They ended 2020 +21.4%. The growth continued in 2021 as sales exceeded $100B for the 1st time and they broke the $1 Trillion barrier. $ are -4.8% from May & their YOY lift of 6.8% is -34% below their 10.3% avg. However, they are positive in all comparisons and 82% of their 114.5% 19>25 growth is real. Growth: 6.4%; Avg 19>25: +13.6%, Real: +11.7%.

Recap – Driven by Relevant Retail, the Pandemic recovery was widespread by Y/E 2021. In 2022 we were hit with the strongest inflation in 40 years. Overall inflation has slowed considerably from its June 22 peak but only 3 channels are now deflating, down from 5 in May. Deflation helps, but cumulative inflation can still have a negative impact – slowed YOY growth and even sales drops. As expected, $ fell from May for 10 of 11 channels. The drops were above avg for all but 1 channel and Relevant Retail was 81% above avg. Their 3.9% lift vs Jun 24 was also -17.5% below avg. 1 channel had a YOY drop vs 24, 2 less than May and much less than 6 in Feb. 3 lifts were above avg, 1 less than Mar>May. There is more mixed news. In Mar>Jun 3 Big Groups were all positive. In May 5 smaller channels were also all positive. That fell to 4 in June. Relevant Retail has been all positive in 11 of the last 13 months. The biggest concern is still YOY drops and smaller lifts. In May there were 8 lifts vs 24. Relevant Retail and 7 channels were below avg. In June, the channel lifts rose to 10. However, the lifts for Relevant Retail and 7 channels were again below avg. The situation is mixed but still concerning.

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

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

Here are some answers to some obvious questions. Note: 24 of 28 had a significant CPI change. All were worse!

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

 

Retail Channel Monthly $ Update – September Final & October Advance

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

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

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

Both reports include the following:

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

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

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

First, the September Final. All groups were down from August but the $ for all were up for September and YTD vs 2021. However, factoring inflation into the data, only Restaurants and Gas Stations were up for the month and in YTD $, only Restaurants were up. Here is the September data for the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The September Final is $2.2B more than the Advance. Relevant Retail had the biggest change: +$2.5B; Restaurants: +0.8B; Auto: No Chge; Gas Stations: -$1.0B. Sales are down from last month, but consumers continue to spend more vs 2021. However, the “real” numbers tell a slightly different story. Only Restaurants and Gas Stations (just barely) are really up for the month but again only Restaurants are really up in YTD $. Auto & Gas Stations also remain really down YTD vs 2019. The inflation impact on Relevant Retail is significant and concerning. Their Real YTD $ales vs 2021 have been negative for 6 months. They do have the best performance since 2019 as 62.3% of their 32.1% growth is “Real”.

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

Overall – 10 of 11 were down from August. Vs Sept 2021, all reported more $ but only 5 were really up. In YTD vs 2021, all reported increases but only 4 were real. Vs 2019, for the 1st time in 2022, all were “really” up.

  • Building Material Stores – Sales are down from August but YTD Home Ctr/Hdwe is up 8.8% vs 21 and Farm stores are +12.8%. The Bldg/Matl group has a YTD inflation rate of 11.9% which has produced negative real numbers. The pandemic caused consumers to focus on their homes which has produced sales growth over 37% since 2019. Importantly, 60% of this lift was real, primarily because the bulk of the lift came from 20>21, prior to the inflation wave. Avg Growth Rate: HomeCtr/Hdwe: 11.0%, Real: 6.7%; Farm: 12.1, Real: 7.9%
  • Food & Drug – Both channels are truly essential. Except for the pandemic food binge buying, they tend to have smaller fluctuations in $. However, they are radically different in inflation. The YTD rate for Grocery products is 4 times higher than for Drugs/Med products. Drug Store $ are down from August but up vs 2021. Real sales are down vs Sept 2021 but 88% of their growth since 2019 is real. The Real Sales for Supermarkets are down for the month & YTD. Also, only 15% of their growth since 2019 is real. Avg Growth Rate: Supermarkets: +6.6%, Real: +1.1%; Drug Stores: +4.8%, Real: +4.2%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Their sales fell $1B from August but 2022 YTD sales are still 1.7% above 2021. Their current inflation rate is 3.0% which is down from 7.5% in April but YTD it is still 5.9%. It was also high in 20>21, +4.8%. However, 71% of their 48% lift since 2019 is real. Their Avg Growth Rate was: +14.0%; Real: +10.4%.
  • Gen Mdse Stores – Only $/Value store sales were up from August. However, all are now up for the month and YTD vs 2021. All real numbers for all channels except the monthly for $ stores vs 2021 are negative. Disc. Dept Stores were hurting before COVID but their YTD sales are again “really” up vs 2019. The other channels have 38% real growth. Avg Growth Rate: SupCtr/Club: 5.7%, Real: 2.1%; $/Value Strs: +7.7%, Real: +4.2%; Disc. Dept.: +2.7%, Real: +0.05%
  • Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are down from August but up vs 2021. Real sales are down vs September 2021 but the growth vs 2021 has been strong enough that it turned real YTD sales positive vs 2021 and finally vs 2019. They still have a ways to go. Avg Growth Rate: +2.9%, Real: +0.3%
  • Internet/Mail Order – The growth of the “hero” of the Pandemic is slowing. Sales are down from August but up for all other measurements. Their YTD growth rate is only half of their average since 2019, but 90% of their 79.3% growth since 2019 is real. Avg Growth Rates: +21.5%, Real: +19.6%. As expected, they are by far the growth leaders since 2019.
  • A/O Miscellaneous – This is a group of specialty retailers. Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level by December 2021 as annual sales reached $100B for the first time. Their sales dipped in January, July and now September but all measurements have been positive for every other month. In 2022, they are by far the Sales increase leaders over 2021. Plus, 86% of their 59.4% growth since 2019 is real. Average Growth Rate is: +16.8%, Real: +14.8%. They are 2nd in growth since 2019 to the internet. I’m sure Pet Stores are helping.

There is no doubt that high inflation is an important factor in Retail. In actual $, all channels reported increases in monthly  and YTD sales over 2021. When you factor in inflation, the number with any “real” growth falls to 5 for monthly & 4 for YTD. This is a clear indication of the ongoing strong impact of inflation at the retail channel level. Recent data indicates that Inflation again slowed a little. Let’s look at the impact on the Advance Retail $ numbers for October.

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

Overall – Inflation Reality The monthly increase vs 2021 continues to be lower than the inflation rate. The spending for all groups increased from September and all are up for the month and YTD vs 2021. Restaurants are all positive, but for all others, the monthly sales are really down vs 2021 and the real YTD sales vs 2021 are down for the 7th straight month.

Total Retail – Every month in 2022 has set a monthly sales record. October $ are $688B, the 6th highest of all time. 2022 has become somewhat normal as sales dipped slightly in September then bounced back in October. October $ are +3.6% vs September but are up 7.9% vs October 2021 and 9.9% vs YTD 2021. However, when you factor in inflation, monthly sales are down -0.7% and YTD sales are down for the 8th consecutive month. Plus, only 40% of the 32% growth since 2019 is real. The Avg Growth Rate is: +9.7%, Real: +4.1%. Even as inflation slows slightly it continues to have an impact.

Restaurants – They were hit hard by the pandemic and didn’t truly start to recover until March 2021. Sales in the last 9 months of 2021 exceeded $70B and 2021 was the biggest year in history, $876B. January sales fell from December but then turned up, setting new all-time monthly records in March>May. $ fell in June, set a new record in July and then fell again in Aug>Sep. October brought a new record as sales hit $90B for the 1st time. They are the only big group that is positive in all measurements vs 2021 & 2019. Inflation is high at 8.5% for October and 7.4% YTD and contrary to the trend, it is getting worse. 58% of their 32.4% growth since 2019 is real. Their Avg Growth Rate: +9.8%, Real: +5.9%. They only account for 12.7% of Total Retail $ales, but their strong performance helps to improve the overall retail numbers.

Auto (Motor Vehicle & Parts Dealers) – This group actively worked to overcome the stay-at-home attitude with great deals and a lot of advertising. They finished 2020 up 1% vs 2019 and hit a record $1.48T in 2021. In 2022 sales got on a rollercoaster – Jan down, Feb/Mar up, Apr>May down, then flipping monthly with October being up. They have 4 down months in actual sales which are the only reported sales negatives by any big group vs 2021. This is bad but their real YTD sales numbers are much worse. Extremely high inflation has pushed their real YTD sales down -10.2% vs 2021, the worst of any group. Plus, their 24.3% growth since 2019 is really down -7.1%. Their Avg Growth: +7.5%, Real: -2.4%.Inflation has slowed in the last 5 months. It is likely that the 4 drops in $ales vs 2021 were tied to high inflation.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and obviously need less gas. This group started recovery in March 2021 and reached a record $584B for the year. Sales fell Jan>Feb, turned up Mar>Jun, fell in Jul>Sep, now up in Oct. They have the biggest increases vs 2021 and 2019 but it is not reality. Gasoline inflation has slowed but $ are still really down vs 2021. Inflation is still 18.1% and 38.3% YTD, the highest of any expenditure category. It has even caused consumers to buy 4.1% less than they did in 2019. Avg Growth Rate: +14.3%, Real: -1.4%. The YTD numbers show a big impact of inflation. Consumers spend more but buy less, even less than they bought 3 years ago.

Relevant Retail – Less Auto, Gas and Restaurants – This the “core” of U.S. retail and accounts for 60+% of Total Retail Spending. There are a variety of channels in this group, so they took a number of different paths through the pandemic. However, their only down month was April 2020. They finished 2020, up +7.1% and 2021 got even better as they reached a record $4.50T. They have led the way in Total Retail’s recovery which became widespread across the channels. Sales fell in Jan>Feb, then went on an up/down roller coaster from Mar>Oct with October up 4.4%. All months in 2022 set new records but their YTD increase is 21% below their 9.7% avg growth since 2019. Now, we’ll look at the impact of inflation. 61.4% of their 32.1% growth since 2019 is real. However real sales vs 2021 are down -1.7% for the month and -0.8% YTD. This shows that inflation is only a 2022 problem. Their Avg Growth Rate: +9.7%, Real: +6.2%. The performance of this huge group is critically important. This is where America shops. Real YTD sales are down almost 1% so the amount of products that consumers bought in 2022 is less than in 2021. They just paid more. That’s not good.

Inflation is slowing slightly but the impact is still there. All groups but Restaurants have no YTD real growth vs 2021 and Auto & Gas Stations are still “really down” vs YTD 2019. We’ve now had 8 straight months of real YTD drops for Total Retail and 7 straight for Relevant Retail so we are still in Phase II of inflation. Consumer spending grows but the amount bought declines. Actual Auto sales in 4 of the last 8 months were down vs 2021. However, inflation slowed so they have avoided Phase III, when consumers actually cut back on spending. If inflation grows again, Phase III could become reality.

  • Relevant Retail: Avg Growth Rate: +9.7%, Real: +6.2%. 9 of 11 channels were up from September but only 8 were up vs October 2021. 10 were up YTD vs 2021. The negative impact of inflation is less but still there in the “real” data.
  • All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. They are up from September but down vs October 2021. Their YTD reported numbers have been positive vs 2019 since April but they are still “really” down in all measurements vs both 2019 & 2021. Avg Growth: +0.5%, Real: -2.4%.
  • Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. Inflation is a big factor in their current numbers. Sales are up from September and vs 2021. Their real numbers are all down vs 2021 and only 37.9% of their 19.5% lift from 2019 is real. Avg Growth: +6.1%, Real: +2.4%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Inflation has hit them hard. $ are up from September. The increases vs 2021 are strong but inflation is stronger. Real sales are down and only 14.0% of the growth since 2019 is real. Avg Growth: +6.7%, Real: +1.0%.
  • Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. Sales increased from September and are ahead in all measurements vs 2021 – actual & “real”. Their inflation rate is low so 86% of their 15.6% growth from 2019 is real. Their Avg Growth is: +5.0%, Real: +4.4%.
  • Clothing and Accessories – They were nonessential, and clothes mattered less when you stayed home. That changed in March 2021 and resulted in explosive growth through May 2022. October sales are +2.5% from 21 but real sales are down -1.5%. YTD $ are up 7.3%% and 86% of their growth from 2019 is real. Avg Growth: 5.1%, Real: 4.4%.
  • Home Furnishings – Sales dipped Mar>May in 2020. Then as consumers’ focus turned to their homes, furniture became a priority. Inflation has been high. Sales are down for the month and only slightly up YTD vs 2021. All of their real numbers vs 2021 are very negative. Only 16.4% of their growth since 2019 is real. Avg Growth: +6.3%, Real: +1.1%.
  • Electronic & Appliances – This channel has problems beyond the pandemic. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. Sales are up from September but down in all measurements vs 2021. Actual $ are even down vs 2019, but deflation kept their “real” YTD sales up +0.6% vs 2019. Avg Growth: -0.4%, Real: +0.2%.
  • Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. This year’s spring lift ended in May. Sales rose slightly after dropping in September. Monthly & YTD sales are up vs 2021, but when you factor in double-digit inflation, the real amount sold is down for both measurements. However, 56.9% of their strong 36.7% sales growth since 2019 is real. Their Avg Growth is: +11.0%, Real: +6.5%.
  • Sporting Goods, Hobby and Book Stores – Consumers turned their attention to recreation and Sporting Goods stores sales took off. Book & Hobby Stores recovered more slowly. October $ fell 3.8% from September but are still ahead of 2021, monthly & YTD. However, real $ are down again vs 2021. Inflation in this group is lower than most groups and most comes from Sporting Goods. 78.3% of their 38.2% growth since 2019 is real. Avg Growth is: +11.4%, Real: +9.1%.
  • All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 +0.9% but sales took off in March 21. They set a new monthly $ales record in December. Sales are up 3.6% from September and since April they have held the top spot in YTD increase vs 2021. Their YTD growth since 2019 is 2nd only to NonStore. Plus, 81.3% of the 45.0% growth since 2019 is real. Their Avg Growth is: +13.2%, Real: +11.0%.
  • NonStore Retailers – 90% of their volume comes from Internet/Mail Order/TV. The pandemic accelerated online spending. They ended 2020 +21.4%. The growth continued in 2021. In December monthly sales exceeded $100B for the 1st time and they broke the $1 Trillion barrier for the year. Their YTD Growth has slowed significantly in 2022 but all measurements are positive. 87.8% of their 73.2% increase since 2019 is real. Their Avg Growth is: +20.1%, Real: +18.0%.

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

Recap – The Retail recovery from the pandemic was largely driven by Relevant Retail. While the timing varied between channels, by the end of 2021 it had become very widespread. In late 2021 and now in 2022, a new challenge came to the forefront – extreme inflation. It isn’t the worst in history, but it is the biggest increase in prices in 40 years. Overall, and in most product categories it has slowed in Jul>Oct. Services also slowed a little in October. On the surface, the Retail impact is almost invisible. Sales in the total market and in the Relevant Retail group continue to grow but the growth rate has markedly slowed compared to last year. Overall, the retail market is generally in phase II of strong inflation – spending grows but the amount purchased falls. The channels in the graph illustrate this perfectly and show how widespread that it has become. 8 of 11 channels are up for the month & 10 YTD vs 21. However, if you factor in inflation, only 3 are up for month and 4 YTD. Inflation is real and there are real and even worse consequences if it continues.

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

Monthly CPI changes of 0.2% or more are highlighted.

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

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

GLOBAL PET EXPO 2022…Where Big Ideas Come to Life!

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Global Pet Expo, the Pet Industry’s premiere event, is back, live and in person. The show switched to a virtual event last year due to COVID, breaking a string of 63 consecutive live shows (since 1958). The 2020 show was also affected by COVID, as last-minute travel restrictions forced many Chinese exhibitors to cancel.

How important is a live event? In the Pet Industry it is critical because of our attitude towards Pets and Pet Products. Pets became an integral part of our families in the 90’s as Pet Owners became Pet Parents. This relationship has grown even stronger in recent years as we now increasingly personify our pets. This is why a live show is important. Pet shows are primarily focused on Pet Products. Studies have shown that over 60% of consumers prefer to make initial buying decisions on Pet Products in person. This makes Pet Products second only to fresh groceries in this consumer behavior. This preference applies to all Pet Products buyers, not just consumers. The retailers and distributors attending GPE and SuperZoo want to see and touch a new product before they buy. Obviously, live shows are not just important, they are critical to the continued growth and strength of the Pet Industry.

There will be changes this year as the APPA and PIDA are doing everything possible to ensure the safety and comfort of all attendees. If you are not at serious risk, then it is an event not to be missed. Now, let’s take a brief look at what awaits attendees of GPE 2022.

The show is smaller this year, both in square footage (-20%) and number of exhibitors (-30%) but there is still a bounty available,  more than enough to satisfy the needs and wants of every buyer that attends. Here are some relevant facts.

  • 704+ Booths – as of 2/20 but more are being added daily
  • 270,000+ sq ft of exhibit booth space (Not counting the 45,000 sq ft new product area)
  • 20 x 10 is again the most popular size – 253 (35.9%), reflecting the need for more space.
  • Booths are larger – the “average” booth is over 379 sq ft, up 16% from 2020. (Almost equal to a 20’x20”)
  • Size matters – Booths 300 to 800 sq ft (31%) occupy 41% of the space. Those over 1000 sq ft (7%) cover 34%.

Will you see any new exhibitors or is it the usual group? There have been 4 live pet trade shows from 2019>21 – 2 GPEs and 2 SZs. Of the current exhibitors at GPE 2022:

  • 218 (31%) – Did all 4 other shows
  • 511 (73%) – Did at least 1 other GPE
  • 193 (27%) – Are new to GPE
  • 120 (17%) – No other shows; new to the industry

The percentage of exhibitors new to GPE this year is about the same as 2020’s 29%. There is plenty of “New” to see.

Specially Designated “Floor Sections” at GPE account for 41% of Booths, about the same as 2020 (40%). Due to the big drop in booth count, the best way to compare GPE 2022 to previous years in this and other areas is by share of booths.

  • Natural – 180 Booths. The number of booths in this section is actually up from 174 in 2020. The share has skyrocketed up to ¼ of all booths, reflecting the growing strength of the natural trend in our whole society.
  • Boutique – 21 Booths. After a brief resurgence in 2020, the booth share of this area fell sharply. Boutique is essentially the opposite of Natural and more discretionary in a country that is increasingly focused on “needs”.
  • Aquatic – 15 Booths. Popularity of this category continues to trend down.
  • 1st Time Exhibitors – 74 Booths. The share is up but most of the 193 1st Timers chose the regular floor or another special section. GPE is a “must do” for new companies and New – products and companies are a major focus of GPE.
  • International – No international pavilions this year, except a 2 booth Canadian. In 2020, before the last-minute travel restrictions, there were 268 exhibitors from 26 countries outside the U.S. COVID is still affecting travel.

There are large numbers of exhibitors in the “regular” floor space who would qualify for inclusion in these sections. You need to “work” the whole show to ensure that you get a full view of the product categories of interest to you. I will again be creating a GPE Exhibitor Visit Planner that allows attendees to plan their floor time by targeting the exhibitors with products of interest. The GPE 2022 SuperSearch will be made available by March 2nd and be regularly updated with last minute changes. Now, let’s take a look at the results from this year’s research on exhibitors’ product offerings.

First, we’ll Compare Exhibitor Types – By function: By Animal type (Numbers are based assigned booths as of 2/20/22)

Dogs & Cats had a slight flip in share, but the other 10 categories basically maintained existing gain/loss trends.

  • Dogs Still Rule – They are still in about 83% of all booths. 5 out of every 6 booths are selling dog products.
  • Cats are also maintaining their share. Cat Products are offered by 56% of exhibitors. Up from 40% in 2014.
  • Fish/Aquatic – This category had the biggest decrease of the animal types and is down 43% since 2017.
  • Other Animals – In a continuing trend, all gained share. Reptiles & Small Animals had the biggest increases.
  • Business Services – Besides wellness products, this is the other big trend in the Industry. The lift is driven by private label/OEM and reflects the changing needs in the industry. There were only 8 exhibitors in 2014.
  • Distributors – The count is the same as 2020 so the share increased. Only 8 exhibited in 2014.
  • Gift/Gen Mdse – This category has been consistently declining since peaking at 7.8% in 2016.

Dogs and Cats are the undisputed royalty of Pet. Because of their huge impact on the industry. I have divided the products designed for them into 33 subcategories. Let’s see how this year’s GPE Top Ten (by booth count) are doing.

The top 4 are the same as 2020 and the top 2 had the biggest gains in share. There was a shuffling in the rankings from 5>10 – 3 moved up in rank and 3 fell. Grooming Tools returned to the Top 10 as Crates/Carriers fell to #12.

  • Treats are still #1 and their share grew 10+%. 1 in 2 booths offers treats. (Many supplements are in treat form.)
  • OTC Meds/Supplements/Devices also continues to grow in importance. In 2014, their share was only 11%.
  • Food had the 3rd largest gain and reflects the ever-growing Pet Parent focus on nutrition, health and wellness.
  • Feeding Accessories gained share but were passed by Food. They are perennially ranked 5th or 6th.
  • Toys – Toys held onto #3 despite having the 2nd biggest loss in share. This relates to fewer Far East exhibitors.
  • Collars, Leads & Harnesses – They held the #4 spot and their share has been stable since 2019 after falling from 22.1% in 2018. In 2016, they also had a 22.1% share but that earned them the #2 ranking.
  • Beds/Mats – Their share decline began in 2019 and continues as they fell from a tie for 5th to 7th.
  • Apparel – They held the #7 spot from 2016>19 with a 12% share. They began to decline in 2020 and had the biggest drop in share in 2022. They have now fallen to 9th
  • Waste Pickup – They have been growing in popularity. They broke into the Top 10 in 2020 and now rank 8th.
  • Grooming Tools– After years at 9/10, they fell to #12 in 2020 but they returned to #10 with a 1.1% gain in share.

Pet Parents’ concern for the overall health and wellness of their “pet children” remains the biggest trend.

The last chart details the specifics for all 33 of the Dog/Cat product categories that I defined. Of note: All the data inputs for this report and the SuperSearch tool come from a review of the GPE online exhibitor product listings AND visits to over 700 websites. They’re not 100% accurate, but pretty close. Which categories are of interest to your business?

GPE 2022 is the place to literally see big Pet Industry ideas come to life! There are products, services and education to fulfill every need and want. There is also an abundance of “new” – both in products and the 120 exhibitors who are new to Pet Industry shows. However, to reap the benefits, you need a plan. Exhibitors must showcase the “right” items. Attendees need to strategically analyze their data, determine what they need to improve their business and develop a plan to find the products to fulfill their needs. Then…execute the plan. If they do nothing else at GPE, attendees will have 2 minutes and 3 seconds to spend at each booth. With bigger booths and mergers/consolidations, you definitely need a plan! The GPE 2022 SuperSearch will be available next week. It can help. Try it out. Stay Safe & Good luck in Orlando!

U.S. PET FOOD SPENDING $28.90B (↓$2.46B): MID-YEAR 2019 UPDATE

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The US BLS just released their Mid-Year Update of the Consumer Expenditure Survey covering the period 7/1/2018 to 6/30/2019. The report shows Pet Food (& Treat) Annual Spending at $28.90B, down $2.46B (-7.8%). The following charts and observations were prepared from calculations based upon data from that report and earlier ones. The first chart will help put the $28.90B into historical perspective and truly show you the roller coaster ride that is Pet Food Spending.

Here are the current numbers:

  • Mid 2019: $28.90B; ↓$2.46B (-7.8%) from Mid-18. The net -$2.46B in Mid 2019 came from:
    • Jul>Dec 2018: Down $2.51B from 2017.
    • Jan>Jun 2019: Up $0.05B from 2018.

Historical research has shown that Pet Food spending has been on a roller coaster since 2000, with 2 years up, followed by a flat or even declining year. This up and down “ride” has been driven by a succession of Food trends. The most recent were “Natural” in 2011 and “Super Premium” in 2014. Another factor was added in 2013 – deflation. As consumers opted for higher quality, more expensive pet food, competition became more intense, with the Internet now becoming a key player. 2013 was a definitely a game changer for this segment as it began an extended period of deflation which continued through 2018. Midway through 2018, Pet Food prices were still 2.3% lower than in 2013.

The spending drops in 2013 and 2016 were driven by pet parents value shopping for their recently upgraded pet food.

As it turns out, 2014 brought out yet another new factor in Pet Food spending. For over 30 years Baby Boomers have been the leaders in the Pet Food, both in spending and in adopting new products. They still spend the most, but it turns out that the 25>34 year old Millennials led the movement to Super Premium in late 2014. The older groups, especially Boomers followed in 2015 and spending rose $5.4B. At the same time, the Pet Food spending of the 25>34 yr olds dropped. At first, we thought they had rolled back their upgrade. However, it turns out they were leading the way in another element of the trend to Super Premium – value shopping. The Boomers once again followed their lead and spending fell -$2.99B in 2016. For consumers, the Super Premium upgrade movement consisted of 3 stages:

  1. Trial – The consumer considers the benefits vs the high price and decides to try it out. Usually from a retail outlet.
  2. Commitment – After a period of time, the consumer is satisfied and is committed to the food.
  3. Value Shop – After commitment, the “driver” is to find a cheaper price! – The Internet, Mass Market, Private label

This brought us to 2017. Time for a new “must have” trend. That didn’t happen but the competitive pricing situation brought about another change. Recent food trends have been driven by the higher income and higher education demographics. However, the “value” of Super Premium was established and now more “available”. Blue Collar workers led a new wave of spending, +$4.6B, as Super Premium more deeply penetrated the market. After the big lift in 2017, 2018 started off slowly, +$0.25B. Then came the FDA warning on grain free dog food. Many of the recent Super Premium converts immediately rolled back their upgrade and spending fell -$2.51B. This 2018 decrease broke a 20 year spending pattern. What came next? In the 1st half of 2019, Pet Food spending was stable, +$0.05B.

Let’s look deeper, starting with the 2 most popular demographic measures – age & income. The graphs will show both the current and previous 12 months $ as well as 2018 yearend. This will allow you to track the spending changes between halves.

The first graph is Income, which has been shown to be the single most important factor in increased Pet Spending. Here’s how you get the change for each half using the $150K+ group as an example:

$150K+ Mid-yr Total Spending Change: $6.05B – $5.02B = Up $1.03B (Note green outline = increase; red outline = decrease)

  • 2nd half of 2018: Subtract Mid-17 ($5.02B) from Total 2018 ($5.57B) = Spending was up $0.55B in 2nd half of 2018.
  • 1st half of 2019: Subtract Total 2018 ($5.57B) from Mid-19 ($6.05B) = Spending was up $0.48B in 1st half of 2019.

  • The over $150K group was the only group unaffected by the FDA grain free warning as spending grew consistently in both halves. If they had concerns about grain free, they apparently upgraded to even more expensive options.
  • The over $100K groups and the under $30K group had the only annual increases. However, the under $30K group had their lift in the second half of 2018, which was very unusual. Their spending flattened in the first half of 2019.
  • Besides the High Income pattern, there appear to be 2 other spending patterns based upon income. The Middle Income group, from $50K to $150K was most affected by the FDA warning with a spending drop in the second half of 2018. As income increased, the impact lessened until it was minimal at $100>150K. Spending rebounded very slightly in the first half of 2019 for all of these groups and the amount of the increase grew along with income.
  • The Lower Income group, under $50K had almost the opposite pattern. They showed a spending increase in the last half of 2018, with the biggest increase coming from the <$30K group. In the first half of 2019, spending in the $30>$50K group fell -$0.78B, a huge drop. The <$30K spending was flat. However, this data suggests that the $50K income level is a key dividing point in Pet Food Spending behavior, at least in the era of Super Premium. It also demonstrates once again that analyzing pet food spending behavior is a complex process.

Now let’s look at Pet Food spending by Age Group.

  • The 45>54 yr olds had the biggest 2019 1st half lift and were the only group with increased spending in both halves. They have the highest income, so it is to be expected that their behavior matches that of the $150K+ income group.
  • Annual decreases occurred in 3 groups – 75+, 55>64, 25>34. However, the oldest and youngest (75+ & <25) had the only 2019 decreases and shared the same overall pattern. A 2018 2nd half lift followed by the drop in 2019 suggests that they were slower to act than other groups, first in upgrading food and then in reacting to the FDA warning.
  • Although the 2019 lift was sometimes minor, all age groups from 25>64 spent more on Pet Food in the first half of 2019. This is a good sign for the second half of 2019.

That brings us to the obvious question, “What is happening in Pet Food spending at the start of 2019 across the whole range of demographic categories?” We will endeavor to answer that in our final chart. We will list the biggest $ moves, up and down by individual segments in 11 demographic categories.

The increase in the 1st half of 2019 was bland – up $0.05B but this bland result came from some tumultuous spending behavior…Always look deeper.

  • There are big differences between the winner and loser in all categories but Area. You also see that the losers are often much bigger than the winners. The overall slight increase came from 44 of 80 segments (55%) spending more.
  • You see the negative spending by the older groups reflected in the spending drops by these demographics – over 65, Retired, Homeowners w/o Mtge, Silent/Greatest Generations and $30>49K income. (Avg Retired income is $42.8K)
  • In terms of positives, one thing immediately stands out. Thank God for Singles, especially if they are working. They had the biggest increase in 3 demographic categories. That’s unusual to say the least.
  • Two “usual” winners are back on top – Homeowners w/Mtge and White, not Hispanic.
  • Income matters, as is demonstrated by wins by $150K+ and the 45>54 yr olds, but education not as much. The winner was HS Grads, but all college educated groups, from Associates Degree to PHD also spent more on Pet Food.
  • In Generations, the Millennials/Gen Z won. However, all but the very oldest groups spent more. Even the Boomers bounced back with a small $0.12B increase after a -$3.18B drop in the second half of 2018.
  • Speaking of bouncing back, Blue Collar workers also started to recover after a bad second half of 2018.
  • There are 2 “losers” that raise some concern – Married Couple Only and 1 earner, 2+ people CUs. Married Couples Only are a perennial winner but their share of Pet Food spending fell from 40% to 27%. 1 earner, 2+ CUs had a big lift in both halves of 2018. Perhaps their big 2019 decrease is also a delayed reaction to the FDA warning.

So, what will happen in the second half of 2019? It is a good sign that 55% of demographic segments are spending more in the first half of 2019 than they did in 2018. Also, Gen Xers, Millennials and even Boomers spent more so the increase is widespread. Considering these trends in conjunction with the big spending drop in the second half of 2018 a continued lift in the second half of 2019 is likely. However, there is another factor – inflation. Pet Food prices trended down from Mid-yr 2013 to Mid-yr 2018. Then they turned up and continued to increase through 2019. In the first half pet food prices were up 2.1% vs 2018. In the second half they were 3.6% higher.  Will this impact spending? We don’t know. One thing is certain. We definitely need a new “must have” pet food trend.

The Pet Food segment continues to become more complex. In September, we’ll see what the 2nd half of 2019 brings.