Retail Channel Monthly $ Update – December Final & January Advance

In January, Commodities inflation vs last year  dropped from 0.8% in December to 0.1%. Although down from its peak, cumulative inflation still impacts consumer spending. The sales increase rate is lower than in recent years for most channels and even below the inflation rate in a number of cases. A sales increase below inflation indicates a drop in the amount of product sold. The recovery continues but there is still a long road ahead, so we’ll continue to track the retail market with data from 2 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 December Final Report and then go to the Advance Report for January. Our focus is comparing to last year but also 2021 & 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 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, 2021 & 2019. (Ytd data for Dec is Y/E; for Jan, Monthly = Ytd)
    • 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 December Final. All but Gas Stations were up from November and vs 22, 21 & 19. Considering inflation, the # of real drops vs 22 & 21 (4) were the same as November. Gas Stations are still really down vs 2019 but for the 2nd consecutive month and 2nd  time in 23, Relevant Retail is “really” up vs all years. ($ are Not Seasonally Adjusted)

The December Final is $2.3B less than the Advance report. Restaurants: No/Chg; Auto: -$0.9B; Gas Stations: +$0.2B; Relevant Retail: -$1.7B. $ were up for all but Gas Stations vs November. Plus, sales for all but Gas Stations & Y/E Auto vs 21 were positive in all measurements vs 22, 21 & 19. Gas prices fell but Gas Stations sales were down monthly vs 22 & 21 and Y/E vs 22. There were 5 “real” sales drops, 4 from Gas Stations. The Y/E real measurement vs 22 for Relevant Retail was positive again at +0.3%. Total Retail and Restaurants also have all positive measurements (actual & real) vs 22, 21 & 19 but Relevant is still the top “real” performer vs 2019. However, only 47% of their growth is real.

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

Overall– 8 were up from November. vs 22, 6 were up vs Dec and 8 YTD. 5 were “really” up monthly & Ytd. Vs 21, 6 were up monthly & 10 Ytd, but only 4 monthly & 5 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 34.0% since 2019. Prices for the Bldg/Matl group have inflated 11.6% since 2021 which is having an impact. HomeCtr/Hdwe stores are only actually up Ytd vs 21 & 19. Farm Stores are up Ytd vs 22, 21 & 19. However, all real measurements vs 22 & 21 are negative for both. Importantly, only 20% 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: 7.0%, Real: 1.1%; Farm: 11.2%, Real: 5.1%
  • 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 72% lower than Drug/Med products. Drug Stores are positive in all measurements but real vs Dec 21. 73% of their 2019>23 growth is real. All actual $ are up for Supermarkets but their 23 real sales are down vs 22 & 21 and just slightly positive vs 19. Only 8% is real growth. Avg 19>23 Growth: Supermarkets: +6.4%, Real: +0.5%; Drug Stores: +6.1%, Real: +4.5%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up +32.8% from November. Their only other positives are YTD vs 22 & 19. Prices are still deflating, -2.5% and YTD, -0.5%, a big change from +5.2% in 21>22 and +6.7% in 20>21. The result is that 61% of their 41.7% lift since 2019 is real. Their Avg 19>23 Growth Rate is: +9.1%; Real: +5.8%.
  • Gen Mdse Stores – All were up vs November. Actual sales vs 22, 21 & 19 were up for Clubs & $ stores but Disc Dept Stores were only up YTD vs 21 & 19. In real sales Clubs were down Ytd vs 22. $/Value Stores were up vs all years. Disc Dept Strs were down for all, even vs 2019, -3.0%. The other channels average 35% in real growth. Avg 19>23 Growth: SupCtr/Club: 6.2%, Real: 2.3%; $/Value Strs: +6.9%, Real: +2.9%; Disc. Dept. Strs: +1.8%, Real: -0.8%
  • Office, Gift & Souvenir Stores – Actual sales are up sharply from November (+36.0%) but down in all measurements but YTD vs 21 & 19. Their real sales numbers are all negative including -7.9% Ytd vs 2019. Their recovery started late, and their slow progress has stalled since June. Avg Growth Rate: +0.6%, Real: -2.0%
  • Internet/Mail Order – Sales are up 7.0% from November and set a new monthly record of $132.1B. All measurements are positive, but their Ytd growth is only 51% of their average since 2019. However, 79.2% of their 90.7% growth since 2019 is real. Avg Growth: +17.5%, Real: +14.5%. 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, fell in Jun>Aug, rose in Sep>Nov, then fell in December. However, all measurements vs 22, 21 & 19 are positive. They are in 2nd place in the % increase vs 21 & 19, trailing only the internet, and 72% of their 53.6% growth since 2019 is real. Average 19>23 Growth: +11.3%, Real: +8.5%.

Inflation remains an important factor in Retail. In actual $, 6 channels reported monthly sales increases vs 22 & 21. When you factor in inflation, the number with “real” growth drops to 5 vs 22 and 4 vs 2021. Inflation’s impact is slowing but it is still lowering sales increases. The December lift vs 2022 was still 20+% below Jan/Feb. The impact is also visible in specific retail channels. The commodities CPI was down slightly in January. Let’s look for any impact on Retail $ales.

January sales vs December fell for all big groups and all channels – no surprise. A Dec>Jan Total Retail drop has happened every year since they began collecting  data. The average decrease since 1992 is -21.4% so this year’s drop is a little lower than “normal”. All actual $ measurements are again positive vs 22, 21 & 19 for all big groups but Gas Stations, but the lifts vs 2023 are small. Inflation is still a big factor. The national CPI fell from 3.4% to 3.1% but is still 17.9% vs 21. The all commodities rate, which is the best pricing measure for Retail, fell from 0.8% to 0.1% but is 17.5% vs 21. Here is some significant “real” good news. In January only 3 measurements were “really” down vs 22 & 21 and 2 of those came from Gas Stations. Relevant Retail’s real monthly sales vs last year have now been positive for 7 straight months, but the best news is that Relevant Retail is positive in all measurements for the 3rd consecutive month.

Overall – Inflation Reality – For Total Retail, inflation slowed and all real sales are again positive. For Restaurants, inflation remains high, +5.0% but they are still really positive vs 22 & 21. Gas prices are deflating but that group is in turmoil. Auto prices are down but up 19.7% vs 21 which pushed their real sales down. Inflation is 0.2% for Relevant Retail and all of their real sales are positive for the 3rd straight month. They continue to make slow progress.

Total Retail – Since June 20, every month but April 23 has set a monthly sales record. In 2023 Sales were on a roller coaster. Up in Jul>Aug, down in Sept, up in Oct>Dec (new record), then down in Jan 24. Inflation slowed to 0.1% but YOY sales growth is still very low. Sales are up 2.0% vs last year, but this is only 28% of their avg 19>24 growth. All real sales are positive again but only 39% of the 19>24 growth is real. YOY inflation in Total Retail has radically slowed but we still see its cumulative impact. Growth: 23>24: 2.0%; Avg 19>24: +7.1%, 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 $96B in December 23 and exceeding $1T for the 1st time. They have the biggest increases vs 23, 21 & 19 and all real sales are positive. Inflation slowed to 5.0% from 5.2% last month but is still +20.6% vs 21 and +25.6% vs 19. 41.5% of their 53.5% growth since 19 is real but they remain 2nd in performance behind Relevant Rtl. Recovery started late but inflation started early. Growth: 5.9%; Avg 19>24: +9.0%, Real: +4.1%. They just account for 13.5% of Total Retail $, but their performance improves the overall retail numbers.

Auto (Motor Vehicle & Parts Dealers) – They 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 22 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 Y/E real 2022 sales numbers were much worse, down -8.2% vs 2021 and -8.9% vs 2019. 2023 was a true rollercoaster but the $ grew in December pushing them to a new record, $1.595T. As expected, January $ fell. Only real $ vs 21 are down. Prices vs 23 are -0.8%. Only 25% of their 19>24 growth is real. Growth: 1.3%; Avg 19>24: +6.3%, Real: +1.7%.

Gas Stations – Gas Stations were also hit hard. If you stay home, you drive less and need less gas. They 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 Sep they were +2.7% but then began deflating and are -6.6% in Jan. Pricing is a big factor in the actual $ drop vs 23 and all real sales vs 23, 21 & 19 are negative.  Growth: -7.5%; Avg 19>24: +5.1%, Real:-1.3%. Their numbers show the cumulative impact of inflation and have demonstrated 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, sales continued on the roller coaster. A December lift set a new monthly record of $494.7B and annual record of $4.997T. Sales fell in January, which literally always happens. The 21.2% drop is equal to the average since 2019. However, the big news is that all real sales vs 22, 21 & 19 are positive for a third consecutive month. 53% of their 41.7% 19>24 growth is real – #1 in performance. Growth: 2.6%; Avg 19>24: +7.2%, Real: +4.1%. This is where America shops. They finished 2023 and now have started up 2024 with all positive sales vs last year, 21 & 19. This is great news!

Inflation is still low, but the cumulative impact is still there. Sales increases are still small, but the fact that 94% of all Non-Gas Station real sales numbers vs 22 & 21 are still positive is a good sign. Restaurants are still doing well, and Auto is improving. Inflation/Deflation has caused turmoil in Gas Stations’ sales. The biggest positive is from Relevant Retail. All sales measurements are again positive. This means that consumers not only spent more $ in Nov, Dec, Annually in 2023 and Jan 24 vs last year, 21 & 19, they also bought more product. The turnaround continues to gain ground.

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

  • Relevant Retail: Growth: +2.6%; Avg: +7.2%, Real: +4.1%. All were down from Dec. Vs 22: 5 were up, Real: 6. Vs 21: 9 were up, Real: 5. Vs 19: Only Electronics & Appliances were actually down in $ & only Dept Strs were “really” down.
  • All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Their Actual $ are down -47.0% from December and -5.1% vs 23 but are up vs 21 & 19. Their real sales are down in all measurements even vs 2019. Growth: -5.1%; Avg 19>24: +0.3%, Real: -1.6%.
  • Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. Actual $ales are down from December but up in all other measurements. Real sales are only down vs 21, but only 42% of their 31.5% 19>24 lift is real – the impact of inflation. Growth: 1.8%; Avg 19>24: +5.6%, Real: +2.5%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Actual $ are down from December but up vs 22, 21 & 19. However, inflation hit them hard. Real $ are down for all but vs 2019 and only 9% of the growth since 2019 is real. Growth: 2.9%; Avg: +5.3%, Real: +0.5%.
  • Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. Sales are down from December but positive in all other measurements, actual & real. Inflation has been relatively low so 68% of their 27.7% growth from 2019 is real. Growth: 6.7%; Avg 19>24: +5.0%, Real: +3.5%.
  • Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Sales are down -52.3% from December but up in all comparisons, actual & real vs 22, 21 & 19. Plus, 76% of their 19>24 growth is real. Growth: 1.4%; Avg 19>24: +4.0%, Real:+3.1%
  • Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices are now deflating but they were high in 2022. Sales are down from December and negative in all other measurements but actual and real vs 2019. Only 0.3% of their 19>24 growth is real – all inflation. Growth: -7.5%; Avg: +2.8%, Real: +0.1%.
  • 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 32.3% from December and are now only up vs 21. However, consistent & strong deflation has caused real sales to be positive in all measurements. Growth: -5.5%; Avg 19>24: -1.1%, Real: +1.5%.
  • 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 are now deflating but sales are down from December. They are only positive vs 21 & 19. Prices are still high, 20% above 2021, so real sales are negative in all but vs 2019. Also, just 4.5% of their 19>24 sales growth is real. Growth: -6.4%; Avg 19>24: +4.4%, Real: +0.2%.
  • Sporting Goods, Hobby and Book Stores – Consumers turned their attention to recreation and Sporting Goods stores sales took off. Book & Hobby Stores recovered more slowly. Sales are down 40.5% from December and negative for all measurements but actual & real vs 2019. Prices deflated again and their inflation rate has been lower than most groups so 69.5% of their 27.9% growth since 2019 is real. Growth: -1.8%; Avg 19>24: +5.0%, Real: +3.6%.
  • 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 December and vs Jan 23 – both actual & real. However, all measurements are up vs 21 &19. They are still 2nd in increase size vs 19 but fell to 3rd vs 21. 62% of their 43.2% 19>24 growth is real. Growth: -2.5%; Avg 19>24: +7.5%, Real: 5.4%.
  • 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 22, 23 and now 24. $ales are down from December but up in all other measurements. 81.7% of their 101.2% 2019>24 growth is real. Growth: 8.2%; Avg: +15.0%, Real: +12.8%.

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. Overall, inflation has slowed considerably from its peak in June 2022, which has helped the Retail Situation. As expected, Sales fell from December for all channels. Inflation is slowing in most channels and even deflating in some. 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 YOY sales increase rate for almost all channels has markedly slowed. The evidence for this is clear. In January, only Health/Drug stores had a YOY change above their 19>24 Avg – a clear indicator of the impact of cumulative inflation. Some great news is that Relevant Retail has been positive in all measurement for 3 straight months. However, in January, 5 of 11 channels were really down vs 23. The slow turnaround continues, and we are making progress, but we still have a long way to go for a full recovery.

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 since 2021 to show cumulative inflation.

Monthly YOY 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?
    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.