Retail Channel Monthly $ Update – August Final & September Advance

Commodities inflation rose in August & September. This was largely due to a big increase in Gasoline prices. Inflation slowed for most product expenditures. Although down from its peak, inflation is still impacting consumer spending. The sales increase rate is lower than the inflation rate in a number of channels, which indicates a drop in the amount of product sold. A recovery may have started but there is still a long road ahead, so we’ll continue to track the retail market with data from two reports provided by the Census Bureau and factor in a targeted CPI from US BLS data.

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 will begin with the August Final Report and then go to the Advance Report for September. Our focus is comparing to last year but also 2021 and 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’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 in 2022 and 2021.
    • Current Month Real change for 2023 vs 2022 and vs 2021 – % factoring in inflation
  • Current Ytd change – % & $ for 2023 vs 2022, 2021 and 2019.
    • Current Ytd Real change % for 2023 vs 2022, 2021 and 2019
  • Monthly & Ytd $ & CPIs for 22>23 and 21>23 which are targeted by channel will also be shown. (CPI Details are at the end of the report)

First, the August Final. All but Restaurants were up from July and all, but Gas Stations were up vs 22, 21 & 19. When you consider inflation, the # of real drops vs 22 & 21 (8) was down from July (10). Gas Stations are still really down vs 2019. A significant fact to note is that Relevant Retail is again “really” up monthly vs 22. (All $ are actual, Not Seasonally Adjusted)

The August Final is $3.2B more than the Advance report. Specifically, Restaurants: +$0.4B; Auto: +$0.4B; Gas Stations: +$1.2B; Relevant Retail: +$1.2B. $ were up from July in all but Restaurants but actual sales for all but Gas Stations were positive in all measurements vs 22, 21 & 19. Deflated, but now rising prices caused Gas Stations sales to again drop monthly & YTD vs 22. There were 8 “real” sales drops, 5 vs 21. Restaurants have the most growth and are the only group with all positives. Monthly real sales for Relevant Retail vs 22 are up but have been down in 15 of the last 18 months. Their YTD real measurements vs 22 & 21 are both negative. They are the top “real” performer vs 2019 but only 48% of the growth is real.

Now, let’s see how some Key Pet Relevant channels did in August in the Stacked Bar Graph Format

Overall– 9 were up from July, but vs 22, 7 were up vs August and 10 YTD. 5 were “really” down monthly & 7 Ytd. Vs 2021, 10 had increases but only 6 monthly & 3 Ytd were real. Vs 2019, Off/Gift/Souv & Disc Dept Strs were really down.

  • Building Material Stores – The pandemic focus on home has produced sales growth of 34.9% since 2019. Prices for the Bldg/Matl group have inflated 19.9% since 2021 which is having an impact. HomeCtr/Hdwe stores are down monthly & Ytd vs 22 but up vs 21 &19. Farm Stores are up in all measurements but vs Aug 22. However, both have all negative real numbers vs 2022 & 2021. Importantly, only 20.6% of their 19>23 lift was real. It was only this high because most of the lift came prior to the inflation wave. Avg 19>23 Growth: HomeCtr/Hdwe: 7.2%, Real: 1.2%; Farm: 11.4%, Real: 5.2%
  • Food & Drug – Both channels are truly essential. Except for the pandemic food binge buying, they tend to have smaller fluctuations in $. They have been very different in inflation and the situation has flipped as the Grocery rate is now 33% lower than Drug/Med products. Drug Stores are positive in all measurements and 73% of their growth since 2019 is real. While the $ are up for Supermarkets, except vs Aug 22 their 23 real sales are down vs 22 & 21 and just slightly positive vs 2019. Only 6% is real growth. Avg 19>23 Growth: Supermarkets: +6.2%, Real: +0.4%; Drug Stores: +5.6%, Real: +4.1%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up from July and are actually & really up vs 2022 and 2019. Vs 2021, real & actual $ vs August are up. YTD is down. Prices are still deflating -1.2%, a big change from +5.4% in 21>22 and +6.5% in 20>21. The result is that 59% of their 42.2% lift since 2019 is real. Their Avg 19>23 Growth Rate is: +9.2%; Real: +5.7%.
  • Gen Mdse Stores – All were up vs July and actual sales vs 22, 21 & 19 were up for all but Disc Dept Stores vs August 22. In real sales both SupCtr/Clubs & $/Value Stores were up vs Aug 22 & 21 and $ stores were also up YTD vs 22. Disc Dept Stores are the worst performer and are the only real negative vs 2019, -1.6%. The other channels average 35% In real growth. Avg 19>23 Growth: SupCtr/Club: 6.2%, Real: 2.2%; $/Value Strs: +6.7%, Real: +2.7%; Disc. Dept.: +2.3%, Real: -0.4%
  • Office, Gift & Souvenir Stores – Actual sales are up 0.2% from July but down vs August 22 & 21. They were up in YTD measurements vs 22, 21 & 19. Their real sales numbers are all negative including -7.4% Ytd vs 2019. Their recovery started late, and their slow progress appears to have stalled in Jun>Aug. Avg Growth Rate: +0.7%, Real: -1.9%
  • Internet/Mail Order – Sales are up from July and still above $100B at $105.6B – another record for the month. All measurements are positive, but their growth is only 49% of their average since 2019. However, 79% of their 96% growth since 2019 is real. Avg Growth: +18.3%, Real: +15.2%. As expected, they are still by far the growth leaders since 2019.
  • A/O Miscellaneous – Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached a record level of $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, then fell in Jun>Aug, However, all measurements except actual & real vs August 2022, are positive. They are still the % increase leader vs 2021 (barely) and 71% of their 54.3% growth since 2019 is real. Average 19>23 Growth: +11.5%, Real: +8.5%. They are still 2nd in growth since 2019 to the internet. Pet Stores are definitely contributing.

Inflation remains an important factor in Retail. In actual $, 7 channels reported increases in sales vs 2022 and 10 vs 2021. When you factor in inflation, the number with “real” growth drops to 6 vs 2022 and vs 2021. Inflation’s impact may be slowing but it is still lowering sales increases. The August lift vs 2022 was still only 50% of Jan/Feb. The impact is also visible in specific retail channels. The overall CPI stabilized in September but most product expenditures deflated. Let’s look for any impact in the Advance Retail $ales

The big change from August is that all channels, big and small, had a sales decrease from last month. This is 8 straight years for an Aug>Sep decrease in Retail $. This has happened in 18 of the last 23 years so it is normal. Prior to 2001, there was almost always an increase. The avg drop since 2001 is -4.9% so 2023 is a little bigger. On the plus side, all actual $ measurements are again positive vs 22, 21 & 19 for all big groups but Gas Stations. However, you will also see that the lifts vs 2022 are still low. Inflation is a big factor. The national CPI stabilized at 3.7% but the all commodities rate, which is the best pricing measure for Total Retail, rose from 1.0% to 1.4%. This lift was largely driven by rising gasoline prices. Inflation slowed for most Product expenditures. Remember, back in June & July, commodities prices actually deflated from 2022. Again, this was largely driven by Gasoline prices, which were down over 20%. There is some significant “real” good news. The groups have 20 “real” sales measurements vs 22 & 21. In September, only 6 were negative and 4 of those came from Gas Stations. Relevant Retail’s real monthly sales vs 22 has now been positive for 3 straight months. Note: The monthly % lift vs 22 for Relevant & Total Retail is less than half of Jan & Feb levels

Overall – Inflation Reality – Gas prices turned up, but Auto prices are still down vs 22. For Total & Relevant Retail, the rate was again below the sales lift. For Restaurants, inflation remains high, +6.0% but they are really positive vs 22 & 21. Monthly real sales for Relative Retail vs last year are positive again. That’s 4 of the last 5 months but only 4 of the last 19. Also, their Ytd Real sales are now only down vs 2022. They continue to make slow progress.

Total Retail – Since June 2020, every month but April 23 has set a monthly sales record. December 22 $ were $748.9B, a new all-time record. Sales have been on a rollercoaster. After lifts in July & Aug, they fell in September. Inflation is only 1.4% but sales growth is still low. Sales are up 3.4% vs last year. That’s only 43% of their average 19>23 growth. All real sales measurements are now positive but only 34% of the 19>23 growth is real. Inflation in Total Retail has radically slowed vs 2022 but we still see its cumulative impact. Avg 2019>23 Growth: +7.9%, Real: +3.0%.

Restaurants – They were hit hard by the pandemic and didn’t begin recovery until March 2021. However, they have had strong growth since then, setting an all-time monthly record of $91B in December and exceeding $1T in 2022 for the 1st time. They have the biggest increases vs 22, 21 & 19 and all real sales are positive. Inflation slowed to 6.0% from 6.5% last month but is still +14.8% vs 21 and +21.9% vs 19. 38.1% of their 40.9% growth since 19 is real but they remain 2nd in performance behind Relevant Retail. Recovery started late but inflation started early. Avg 2019>23 Growth: +8.9%, Real: +3.7%. They just account for 13.2% of Total Retail $, but their performance improves 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 but much of it was due to skyrocketing inflation. In 2022 sales got on a rollercoaster. Inflation started to drop mid-year, but it caused 4 down months in actual sales which are the only reported sales negatives by any big group in 21>22. This is bad but their real 2022 sales numbers were much worse, down -8.2% vs 2021 and -8.9% vs 2019. 2023 started off a little better. $ grew in Jan>Feb, fell in Mar>Apr, grew in May, fell in Jun>Jul, grew in Aug, then fell in Sep. Only Ytd real sales vs 21 are negative. Prices vs 22 are -2.3% monthly & -1.5% Ytd but only 7% of 19>23 growth is real. Avg 2019>23 Growth: +6.7%, Real: +0.5%.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and need less gas. This group started recovery in March 2021 and inflation began. Sales got on a rollercoaster in 2022 but reached a record $583B. Inflation started to slow in August and prices slightly deflated in Dec & Feb 23, strongly dropped in Mar>Jul to -20.2%. In August they turned up to -3.7%. In September, they are +2.7% and +21.9% vs 21. Pricing is a big factor in the monthly & Ytd sales drops vs 22. Real sales vs 22, 21 & 19 are now down monthly & YTD.  Avg 2019>23 Growth: +6.5%, Real: -1.3%. The numbers show the cumulative impact of inflation and demonstrate how strong deflation can be both a positive and a 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. However, their only down month was April 2020, and they led the way in Total Retail’s recovery. Sales got on a roller coaster in 2022 but all months in 2022 set new records with December reaching a new all-time high, $481B, and an annual record of $4.81T. In 2023, Jan & Feb had normal drops then grew in March, starting another roller coaster. Sales fell in Jun>Jul, turned up in Aug, then fell in Sep. All actual sales are up vs 22, 21 & 19. Real sales are only down Ytd vs 22. Monthly Real sales vs last year are again positive. That’s 4 of the last 5 months, but only 4 of the last 19. 48% of their 19>23 growth is real – #1 in performance. Avg 2019>23 Growth is: +8.3%, Real: +4.3%. This group is where America shops. Another month of positive real sales is a good sign.

Inflation is still relatively low but the cumulative impact is still there. Sales increases are still low, but the fact that 88% of all Non-Gas Station real sales numbers vs 22 & 21 are positive is a good sign. Restaurants are still doing well, and Auto is improving. Inflation/Deflation has caused a drop in Gas Stations’ actual sales. Our biggest concern is Relevant Retail. Their situation is improving. Ytd real sales vs 22 are still negative, which shows the impact of cumulative inflation, but monthly real sales vs 22 have now been positive in 4 of the last 5 months. A slow turnaround appears to be continuing.

Here’s a more detailed look at September by Key Channels in the Stacked Bar Graph Format

  • Relevant Retail: Avg Growth Rate: +8.3%, Real: +4.3%. All were down from August but 5 were up vs 22 & 8 vs 21. Only 4 had a “real” increase vs 22 & 5 vs 21. Inflation continues to slow sales increases.
  • All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Their Actual $ are down from August and for all comparisons but Ytd vs 21 & 19. Their real sales are down in all measurements, even vs 2019. Avg 2019>23 Growth: +0.2%, Real: -2.5%.
  • Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. $ales are down from August but up in all other measurements. Their real sales are up in all measurements but Ytd vs 22 & 21. Only 36% of their 28.2% 19>23 lift is real – the impact of inflation. Avg Growth: +6.4%, Real: +2.4%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. $ are down from August but up in all measurements vs 22, 21 & 19. However, inflation hit them hard. Real sales are down for all but Ytd vs 2019 and only 6.2% of the growth since 2019 is real. Avg Growth: +6.2%, Real: +0.4%.
  • Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. Sales are down from August but positive in all other measurements, actual and real vs 22, 21 & 19. Their inflation rate has been relatively low so 73% of their 25.2% growth from 2019 is real. Avg 2019>23 Growth: +5.8%, Real: +4.3%.
  • Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Actual $ales are down from August but up vs 22, 21 & 19. Their real sales are now down monthly vs 22 & 21 and Ytd vs 22. However, 64% of their 19>23 growth is real. Avg 2019>23 Growth: +3.9%, Real:+2.5%
  • Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices are now deflating but they were very high in 2022. Sales are down from August and negative in all other measurements but actual Ytd vs 2019. Their real sales are even down -2.7% vs 2019. Avg 2019>23 Growth: +3.3%, Real: -0.7%.
  • Electronic & Appliances – This channel has many problems. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. $ales are down from August and in all measurements but Ytd vs 19. However, consistent deflation has caused real sales to be up in all measurements. Avg 2019>23 Growth: +0.5%, Real: +2.6%.
  • 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. Inflation is still high at 6.3%. Sales are down from August and they are again all negative vs 2022. They still have the highest Inflation of any channel so real sales are negative in all but Ytd vs 2019. Also, just 21% of their sales growth since 2019 is real. Avg 2019>23 Growth is: +7.8%, Real: +1.8%.
  • Sporting Goods, Hobby and Book Stores – Consumers turned their attention to recreation and Sporting Goods stores sales took off. Book & Hobby Stores recovered more slowly. Actual $ales are down from August, but positive for all but vs Sep 22. Real sales are down for all but YTD vs 22 & 19. Prices deflated again and their inflation rate has been lower than most groups so 66.1% of their 29.8% growth since 2019 is real. Avg 2019>23 Growth: +6.7%, Real: +4.6%.
  • 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 down vs August but positive in all but vs Sep 22. Real sales are only down vs Sep & Ytd 22. They are 2nd to NonStore in increases vs 21 & 19. 65% of their 41.8% 19>23 growth and 46% of their 21>23 growth is real. Their Avg 19>23 Growth is: 9.1%, Real: 6.2%.
  • NonStore Retailers – 90% of their volume comes from Internet/Mail Order/TV. The pandemic accelerated online spending. They ended 2020 +21.4%. The growth continued in 2021 as sales exceeded $100B for the 1st time and they broke the $1 Trillion barrier. Their growth slowed significantly in 2022 and now 2023. $ are down from August but all other measurements are up. 78% of their 87.2% growth since 2019 is real. Their Avg Growth: +17.0%, Real: +13.8%.

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

Recap – The Retail recovery from the pandemic was largely driven by Relevant Retail and by the end of 2021 it had become very widespread. In 2022, there was a new challenge, the worst inflation in 40 years. Despite the recent uptick in Commodities prices, inflation has slowed considerably from its peak in June 2022, which should help the Retail Situation. Sales were down from August for all groups & channels. Inflation is slowing in many channels and even deflating in a few. However, some channels like Gas Stations, Grocery and Bldg Material stores still have high cumulative inflation rates so they are still struggling. Only a few channels are doing well. The new problem is that the sales increase rate vs 2022 for many channels has slowed and is even below the lower inflation rate. Real monthly sales for Relevant Retail have been positive vs 22 for 4 of the last 5 months but are still negative for 7 of 11 channels. The turnaround for Relevant retail is not widespread. It is primarily being driven by NonStore with a little help from Health Care. September was truly a mixed bag of pluses and minuses compared to August. We still have a long way to go for a full recovery from the inflation tsunami.

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 from 2021 to 2023 to show cumulative inflation.

Monthly 22>23 CPI changes of 0.2% or more are highlighted. (Green = lower; Pink = higher)

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?

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.