Retail Channel Monthly $ Update – January Final & February Advance
By 2021, the market had generally recovered from the impact of the pandemic. In 2022, we were 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 January and then go to the Advance Report for February. 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 fill focus on Pet Relevant Channels
The data will be presented in detailed charts to facilitate visual comparison between groups/channels. Starting with February, the charts will show 11 separate measurements so we switched to a stacked bar format for the channel chart.
- 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. Note: January Monthly & Ytd are obviously the same. We will include actual and Real data for Jan 2023 vs 2019 for this report.
- Current Ytd Real change % for 2023 vs 2022, 2021 and 2019
- Monthly & Ytd $ & CPIs which are targeted by channel will also be shown. (CPI Details are at the end of the report)
First, the January Final. All were down from last month, but all were up vs January of 22, 21 & 19. Considering inflation, only Relevant Retail was really down for the month vs 2022. Vs 2021 & 2019 the real data for the big groups associated with cars was not good. Here are the specifics for the major retail groups. (All $ are Actual, Not Seasonally Adjusted)
The January Final is $8.2B more than the Advance. Restaurants had the only negative: -$0.5B; Gas Stations: N/C; Auto: +1.3B; Relevant Retail: +$7.3B. Sales are down from December as expected but consumers continue to spend more vs last year. At least for the 1st month, the Real numbers vs 2022 are positive except for a slight dip by Relevant Retail. Auto & Gas Stations are still really down vs 2021 and Gas Stations sold less product than they did in 2019. The inflation impact on Relevant Retail is concerning. Their Real $ales vs the prior year have now been negative for 10 straight months. They have also fallen behind Restaurants to 2nd place in performance since 2019 but 58.6% of their growth is Real.
Now, let’s see how some Key Pet Relevant channels did in January
Overall– All were down from December but up vs 2022. Only 3 were really down. Vs 2021, all had increases but only 4 were real – the impact of cumulative inflation. Vs 2019, Office/Gift/Souvenir & Supermarkets were only real negatives.
- Building Material Stores – The pandemic caused consumers to focus on their homes which has produced sales growth of 31.1% since 2019. Home Ctr/Hdwe has the most growth since 2021 but Farm stores are the leaders vs 2022 & 2019. Prices for the Bldg/Matl group have inflated 21.4% since 2021 which has produced a lot of negative real numbers. Importantly, only 22.8% of their 19>23 lift was real. It was only this high because half of the lift came from 20>21, prior to the inflation wave. Avg 19>23 Growth: HomeCtr/Hdwe: 6.8%, Real: 1.5%; Farm: 8.2%, Real: 3.2%
- 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 rate for Grocery products is 4 times higher than for Drugs/Med products. Drug Stores are positive in all numbers vs 22, 21 & 19 and 75% of their growth since 2019 is real. While the $ are up for Supermarkets their 2023 real sales are down vs 2022, 2021 and now 2019. Avg 19>23 Growth: Supermarkets: +5.5%, Real: -0.2%; Drug Stores: +4.0%, Real: +3.0%.
- Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are down 44.9% from December but up vs 2022, 2021 & 2019. Their current inflation rate is 1.5% which is down sharply from 5.4% in 21>22. It was even higher in 20>21, +6.5%. However, 75% of their 55.2% lift since 2019 is real. Their Avg 19>23 Growth Rate is: +11.6%; Real: +9.0%.
- Gen Mdse Stores – All channels were down from December but up vs 2022, 2021 & 2019. $/Value store are the only channel really up vs 2022. Vs 2021 all channels are really down. As expected, Disc. Dept Stores have the worst performance of any channel in all measurements. The other channels have 47% real growth since 2019. Avg 19>23 Growth Rate: SupCtr/Club: 6.8%, Real: 3.4%; $/Value Strs: +6.2%, Real: +2.8%; Disc. Dept.: +3.7%, Real: +1.3%
- Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are down 37.2% from December but their sales growth has been strong enough to make them positive in all measurements vs 2022 & 2021. They are still really down vs 2019 but they are making progress. Avg Growth Rate: +1.3%, Real: -1.2%
- Internet/Mail Order – Sales are down 21.2% from December but still a monthly record. They are positive for all other measurements, but their growth rate is only 53% of their average since 2019. However, 90% of their 99.7% growth since 2019 is real. Avg Growth Rates: +18.9%, Real: +17.3%. 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 in 2021 as annual sales reached $100B for the first time. In 2022 their sales dipped in January, July, Sept>Nov, rose in December and then fell 21% in January. All other measurements are very positive, and they are still the $ increase leaders vs 2021. Plus, 85% of their 68.1% growth since 2019 is real. Average 19>23 Growth: +13.9%, Real: +12.1%. 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 11 channels reported increases in sales vs 2022 & 2021. When you factor in inflation, the number with any “real” growth falls to 8 vs 2022 but only 4 vs 2021. This is a clear indication of the ongoing strong impact of cumulative 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 $ales for February.
We have had memorable times since 2019, including the 2 biggest monthly drops in history but a lot of positives in the Pandemic recovery. Total Retail reached $700B in a month for the first time and broke the $7T barrier in 2021. Relevant Retail was also strong as annual sales reached $4T in 2021 and all big groups set annual $ales records. In 2022 radical inflation was a big factor with the largest increase in 40 years. At first, this reduces the amount of product sold but not $ spent. Total Retail hit $8T and all groups again set new annual records in 2022. As expected, sales fell for all groups in January and now February. The only other February negatives are from Auto or Gas Stations. This comes despite actual price deflation in both. The other big groups and Total Retail are positive in all measurements vs 2022, 2021 & 2019.
Overall – Inflation Reality February inflation vs 2022 fell below the $ increase rate for all but Gas stations. However, you see the impact of cumulative inflation as real sales are down for Gas Stations and Auto vs 2021. Restaurants have the strongest performance in all measurements vs 2022, 2021 & 2019. There is another positive. Although the increase was small, real Ytd sales vs last year are finally up for both Total & Relevant Retail.
Total Retail – Every month since June 2020 has set a monthly sales record. December 2022 $ were $748.9B, a new all-time record. As expected, sales dipped in January & February. February is usually the low point for retail sales, but all measurements are positive vs 2022, 2021 & 2019. Inflation is slowing but so is sales growth. Sales are up 5.6% vs last year. That’s the lowest rate since 3.0% in February 2021. Also, only 46% of the 19>23 growth is real but that’s better than 26%, 21>23. Avg 2019>23 Growth: +8.6%, Real: +4.2%. Inflation slows but continues to have a cumulative impact.
Restaurants – They were hit hard by the pandemic and didn’t truly start to recover 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 best performance of any big group in all measurements vs 2022, 2021 & 2019. Inflation increased to 8.3% for February from 8.1% last month and is now 15.5% vs 2021 and 20.0% vs 2019 but 59.8% of their 49.7% growth since 2019 is real. Avg 2019>23 Growth: +10.6%, Real: +6.7%. They only account for 13.6% of Total Retail $ales, but their 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 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 2021>2022. This is bad but their real 2022 sales numbers were much worse, down -8.2% vs 2021 and -8.9% vs 2019. 2023 has started off a little better. Sales are up vs 2022, 2021 & 2019. Plus, real sales are only down vs 2021. After 8 negative months, Jan>Feb real Ytd Sales vs 2019 are positive. Prices have now deflated for 3 straight months. Avg 2019>23 Growth: +7.2%, Real: +1.7%.
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 deflated in December & February. However, it is still +35.7% vs 2021. Monthly sales vs the previous year actually decreased in February for the 1st time in 2 years. Real sales are even worse. Monthly, they are down vs 2022 & 2021 and Ytd they are down vs 2021 & 2019. Avg 2019>23 Growth: +8.6%, Real: -1.8%. The numbers show the cumulative impact of inflation. In 2023 consumers paid 39% more to buy 7% less gas than in 2019.
Relevant Retail – Less Auto, Gas and Restaurants – This group accounts for 60+% of Total Retail $. It has a variety of channels, so they took many different paths through the pandemic. However, their only down month was April 2020. They have led the way in Total Retail’s recovery, which became widespread across the channels. Sales went on an up/down roller coaster in 2022. However, 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, but sales in February set a record and were up in all measurements vs 2022, 2021 & 2019. After 10 straight negative months, real sales vs last year have now turned positive. In fact, 58% of their 19>23 $ are real compared to only 23% for 21>23. This shows that inflation is a cumulative problem that began in 2022. Their Avg 2019>23 Growth: +8.6%, Real: +5.2%. The performance of this huge group is critically important. This is where America shops. The fact that real sales are now positive is great news.
Inflation is slowing slightly but the impact is still there. Sales increases are also slowing, but the fact that real sales for Total & Relevant Retail are finally both slightly positive is a good sign. The biggest concern is with Auto & Gas Stations. Their extreme inflation is now deflating but they are struggling. Restaurants were hit hard by the pandemic, but they are now by far the best performers. For Relevant Retail, we may be moving back to Inflation Phase I, where Consumer spending grows but the amount bought still increases – just at a lower rate. Let’s hope that inflation continues to slow.
Here’s a more detailed look at February by Key Channels in the Stacked Bar Graph Format
- Relevant Retail: Avg Growth Rate: +8.6%, Real: +5.2%. 9 of 11 channels were down from January but 10 were up vs 2022 & 2021. 7 were really up vs 2022 & 8 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. Their $ are up from January and for the month & Ytd vs 2022 & 2021 & 2019. However, their real sales are down vs February 2022 & Ytd vs 2022 & 2019. Avg 2019>23 Growth: +0.9%, Real: -1.9%.
- Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. Sales are down from January but up in all other measurements. 45% of their 29.3% 19>23 lift is real, but that’s much better than the 6% from 21>23. This shows the impact of inflation. Avg 19>23 Growth: +6.6%, Real: +3.2%.
- Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. $ are down from January but up vs 22, 21 & 19. However, inflation hit them hard. $ Real sales are down for all but Ytd vs 2019 and only 4% of the growth since 2019 is real. Avg Growth: +5.9%, Real: +0.2%.
- Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. Sales are down from January but are up in all other measurements vs 22, 21 & 19. Their inflation rate is low so 77% of their 19.8% growth from 2019 is real. Avg 2019>23 Growth: +4.6%, Real: +3.6%.
- Clothing and Accessories – They were nonessential, and clothes mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Sales grew after the big drop in January and for the 3rd straight month all other all measurements are positive. 75% of their 2019>23 growth is real. Avg 2019>23 Growth: +4.5%, Real:+3.5%
- Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Inflation has slowed but was very high in 2022. Sales are down from January but up vs 22, 21 & 19. However, their monthly real sales are down vs 22 & 21 and Ytd vs 21. Only 25% of their 19>23 growth is real. Avg 2019>23 Growth: +5.7%, Real: +1.5%.
- 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 in all measurements except vs February 2021. However, all real sales are up. This only happened because of strong deflation, -6>8%. Avg 2019>23 Growth: -1.6%, Real: +0.06%.
- 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. Sales fell Nov>Feb but are still up vs 22, 21 & 19. Inflation actually increased to 11.8% from 9.6% in January. Real sales are negative in all measurements but Ytd vs 2019. Also, only 30% of their Ytd 35.2% sales growth since 2019 is real. In December 2022, it was 54%. Their Avg 2019>23 Growth is: +7.8%, Real: +2.5%.
- 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. February $ are down from January but they are positive in all other measurements for the 2nd straight month. Inflation in this group is lower than most groups and most comes from Sporting Goods. 78% of their 41.4% growth since 2019 is real. Avg 2019>23 Growth: +9.0%, Real: +7.2%.
- 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 from January but up for all other measurements. They still have the biggest increase vs 2021 and vs 2019 they are 2nd only to NonStore. 79% of their 50.8% growth since 2019 is real, which is also 2nd to Nonstore. Their Avg 19>23 Growth is: 10.8%, Real: 8.8%.
- 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 January but all other measurements are up. 87% of their 88.5% increase since 2019 is real. Their Avg Growth: +17.2%, Real: +15.4%.
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, and in most product categories it has slowed in Jul>Feb which brought a significant improvement to the Retail Situation. Sales were down from January for almost all channels, but this is no surprise as February is often the sales low point of the year. Inflation continues to slow in most channels, which increased Real Sales – the amount of products sold. Some channels like Auto, Gas Stations, Grocery and Bldg Material stores still have high cumulative inflation rates so they are still struggling but most other channels are showing a marked improvement. This is evident in the Relevant Retail group as Ytd Real sales vs last year turned positive after 10 straight negative months. In fact, all their measurements vs 2022, 2021 & 2019 were up. This pattern was duplicated by 6 of 11 major retail channels. Inflation is still high and the rate of sales increase is lower but we may be turning the corner in our struggle against the pricing tsunami that has hit the U.S. Retail Market.
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. We have expanded the data to include 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.
- Why is the group for Non-store different from the Internet?
- Non-store is not all internet. It also includes Fuel Oil Dealers, the non-motor fuel Energy Commodity.
- Why is there no Food at home included in Non-store 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.
- 6 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.
- 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.
- 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.
- 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.