Retail Channel Monthly $ Update – June Final & July Advance

In May 2020, the Retail market began its recovery after hitting bottom in April. The road back has been long and complex and Consumer spending behavior continues to evolve. Now, the virus is resurging so we will continue to track the impact on the recovery of the retail marketplace with data from two reports provided by the U.S. Census Bureau.

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

We will begin with the Final Retail Report for June and then move to the Advance Retail Report for July. Remember, the retail impact of the pandemic began in March 2020, peaked in April, then recovery started in May. We will compare 2021 to both 2020 and 2019 to document the progress that the retail market has made towards a full recovery.

Both reports include the following:

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

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

  • Current Month change – % & $ vs previous month
  • Current Month change – % & $ vs same month in 2020 and 2019
  • Current YTD change – % & $ vs 2020 and 2019
  • Monthly and Year To Date $ will also be shown for each group/channel

First, the June Final. Retail hit bottom in April 2020 but began recovery, hitting record $ in December. $ fell in January & February but they took off in March, setting a new all time $ record. In April $ fell but they rebounded in May to another record high. Now, in June another $ dip. Here are the major retail groups. (All Data is Actual, Not Seasonally Adjusted)

The final total is $3.5B more than the Advance report projected a month ago. All groups but Auto were up slightly. The specifics were: Relevant Retail: +$2.3B; Gas Stations: $1.4B; Restaurants: +$0.1B; Auto: -$0.3B. Sales vs May were down in all but Gas Stations and Total Retail $ were the 2nd highest month of all time. Total $ales broke $600B for the 1st time in December and has now done it 5 times. Auto still has the strongest recovery and is in fact prospering – annual YTD growth rate since 2019 is +13.1%. Except for the spending dips vs May, for the first time since the recovery began, all groups, including Restaurants, were positive in all other measurements.

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

  • Overall– 6 of 11 channels were down vs May but all were up vs May 2020 and 10 vs May 2019. In YTD $, 10 were up vs 2020 and 10 vs 2019. 9 were up vs both. June was the 5th biggest month in history for Relevant Retail.
  • Building Material Stores – Their amazing lift continues. The ongoing surge came as a result of pandemic spending patterns developed in 2020. Consumers began focusing on their homes. Their Spring lift has slowed but Building and Farm stores are still going strong. Sporting Goods stores have a similar spending pattern. Sales took off in May 2020, hit a record peak in December and continued strong into 2021, peaking in March. April & May $ fell slightly but rebounded in June. YTD they are +51% vs 2019. That’s an Annual Growth Rate of 22.9%!
  • Food & Drug – Supermarkets were +$77.7B in 2020. $ are down vs May but YTD are on par with the 2020 binge. They are still up 15% vs June 2019 and 14% vs YTD 2019. Drug Stores were +$17B (+5.7%) for 2020. Their $ rose in June after monthly declines from a record March. Now all measurements are positive and YTD $ are +7.4%.
  • General Merchandise Stores – $ in all channels fell in Jan & Feb then spiked in March. In April, sales in all but $ stores declined but they bounced back in May. In June, sales dipped for all but they are going strong. $ Stores and Clubs/SuperCtrs are leading the way with a combined annual growth rate of +8.4%. These channels promote value. Their success vs both 2020 and 2019 reinforces its importance in Consumer spending decisions.
  • Office, Gift & Souvenir Stores– $ increased slightly from May and were +41.6% vs June 2020. The pandemic hit them hard. They are still down vs 2019 – monthly and YTD. Recovery is a long way off, but things are improving.
  • Internet/Mail Order – Their $ increased slightly in June as the pandemic continues to foster this channel’s growth. In June of 2019, their YTD growth was +13.3%. Now, their avg growth rate is +20.6% – a 54.6% increase.
  • A/O Miscellaneous – This is a group of small to midsized specialty retailers – chains and independents. It includes Florists, Art Stores and Pet Stores (22>24% of total $). Pet Stores were usually essential, but most stores were not. In May 2020 they began their recovery. Their 2020 total sales were up +11.6%. Their June $ were up slightly from May and another all-time record. YTD sales are +30.5% vs 2020 and +39.3% vs 2019. Very strong!

Relevant Retail began recovery in May and reached a record level in December. $ fell in Jan & Feb, turned up again in March and began a monthly up/down rollercoaster. June $ are down but virtually all channels are showing growth. The key drivers are the Internet, SuperCtrs/Clubs/$ Stores and Hdwe/Farm. Now, here are the Advance numbers for July.

2020 was a memorable year for both its traumas and triumphs. In April & May we experienced the 2 biggest retail spending drops in history, but the problems actually began in March. Retail sales began to recover in June and in October, YTD Total Retail turned positive for the 1st time since February. In December, Total Retail broke the $600B barrier – a historic first. Sales fell from their December peak in both January and February but still set monthly sales records. Then they took off again in March, setting a new monthly sales record of $633B. April sales were down slightly but they took off again in May to set yet another spending record, $641.5B. June $ fell but the rollercoaster ride continued as July $ bounced back to become the 2nd biggest $ month in history. Auto and Relevant Retail, the leaders of the recovery, were down from June but all the major groups were positive in all other measurements for the second straight month. Some other areas of the economy are still suffering, some spending behavior has changed, and inflation has become a factor in some increases. However, consumers continue to spend “big bucks” and the overall Retail marketplace has strongly recovered.

Total Retail – In March, Total Retail hit $633.1B, a record for the most spending in any month in any year. In April, $ales dipped to $625.5B but were still $218.3B more than April 2020 – a record increase that was more than double the size of last year’s record drop. In May, sales set another new record, $641.5B. In June sales dipped slightly but rebounded in July to $637.0B, the 2nd biggest month in history. Moreover, the current YTD average annual sales growth rate since 2019 is 9.2%, the highest ever in records going back to 1992. Total Retail has not just recovered. It is stronger than ever.

Restaurants – This group has no negative measurements vs 2020 or 2019 for 2 straight months. Last February YTD sales were up 8.1% vs 2019. The Pandemic changed that. Restaurants started to close or cease in person dining in March and sales fell -$33.3B (-52.5%) compared to March 2019. Sales bottomed out in April at $30.1, the lowest April sales since 2003. Sales started to slowly increase in May but never reached a level higher than 88% compared to the previous year. 2021 started off slowly. Through February, YTD sales were down -16.7% from pre-pandemic 2020 and -10.0% from 2019. In March sales took off and grew steadily in April and May. Sales dipped slightly in June but were still strong vs 2019 & 2020. In July the $ turned up. YTD their $ are plus 30.5% vs 2020 and +2.4% vs 2019. Their recovery is getting stronger.

Auto (Motor Vehicle & Parts Dealers)   – Staying home causes your car to be less of a focus in your life. Sales began to fall in March and hit bottom in April. Auto Dealers began combating this “stay at home” attitude with fantastic deals and a lot of advertising. It worked. They finished 2020 up 1% vs 2019 and have returned to a strong positive pattern in 2021. The “attitude” grew amazingly positive in March and slowed only slightly in April>July as sales exceeded $134B in all 5 months, by far the 5 biggest months in history. To show how well consumers responded to their campaign you just need to look at the data. This group has exceeded $110B in monthly sales only 13 times in history. 11 of those occurred after the onset of the pandemic.  YTD Avg Annual Growth Since 2019 = +12.8% – the best performance of any big group.

Gas Stations – Gas Station $ales have been a mixed bag. If you drive less, you visit the gas station less often. Sales turned down in March 2020 and reached their low point in April. They moved up but generally stayed about 15% below 2019 levels for the rest of 2020. In February they were still behind 2020 in monthly and YTD $ but ahead of 2019 in both measurements. In March, sales skyrocketed and continued to grow in April > July to a record $53.7B, 38.1% above July 2020. They have been positive in all measurements vs both 2019 and 2020 since March. Their comeback continues but there is another factor that must be considered – inflation. Gas prices can be pretty volatile. They dipped in the first 2 months of the pandemic but then returned to more normal levels for the balance of 2020. They began strongly inflating in 2021. In fact, the July 2021 prices were 41.8% above July 2020. That means that the 38.1% year over year $ lift in July was actually a decrease in the amount of gas sold. YTD Annual Avg Growth Rate Since 2019 = +4.2%

Relevant Retail – Less Auto, Gas and Restaurants – This is what we consider the “core” of U.S. retail and has traditionally accounted for about 60% of Total Retail Spending. When you look at the individual channels in this group, you see a variety of results due to many factors – non-essential closures, binge buying, online shopping and a consumer focus on “home”. However, overall, April 2020 was the only month in which spending in this group was down vs 2019. Monthly $ales exceeded $400B for the first time ever in December ($407B). They finished 2020 up $260B, +7.1%. Their performance was the only reason that Total Retail was able to finish 2020 with positive numbers, +0.5%. Sales fell in January and February but set monthly records. In March they turned sharply up and then down in April. They bounced back in May then fell in June. July was down slightly from June, -$1.5B (-0.4%) but was still the biggest July ever and the 6th largest month on record. We should also note that that while December 2020 is still #1, March > July are five of the seven highest $ months of all time. The Relevant Retail Market has exceeded $366B in monthly sales 7 tImes in history. 6 of those have occurred since the onset of the pandemic. It is also very important that the Relevant Retail group has posted positive numbers versus last year and YTD for every month since April 2020 and their average YTD growth rate since 2019 now stands at +10.3%. Through July all but Department Stores continue to be positive in all measurements vs both 2020 and 2019. However, the primary drivers throughout the pandemic were and continue to be Nonstore, Grocery, SuperCenters/Clubs/$ Stores plus never ending “spring lift” from Hardware/Farm and Sporting Goods.

Now let’s look at what is happening in the individual retail channels to see where the $ are coming from. July $ were down slightly from June and none of the increases were “off the charts”. However, it was still the 6th largest month in history for Relevant Retail outlets. The groups are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets.

Sales in only 4 of 13 channels were down vs June but all were up vs July 2020, vs July 2019 and YTD vs 2020. Only 1 was down YTD vs 2019 and they were only -0.1%. (Relevant Retail YTD Avg Annual Growth Rate since 2019 = +10.3%)

After hitting bottom in April 2020, Relevant Retail has now beaten the previous year’s $ for 15 consecutive months. The group set an all-time record of $407B in December and finished 2020 +$260B vs 2019. 2021 started strong, with record sales in every month. March > July were 5 of the 7 biggest of all time. Essential channels are still the primary drivers:

  • Nonstore Retailers – The biggest driver. Online shopping continues to grow in # of households and in $.
  • Food & Beverage – Grocery– Restaurant $ are improving but consumers continue to eat & drink more at home.
  • Bldg Materials/Garden/Farm– Their “Spring” lift continues unabated as consumers focus on their home.
  • SuperCtrs/Club/Value/$ Strs – They keep the GM channel positive. Value is still a major consumer priority.

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

General Merchandise Stores – Sales rose in July and all other numbers are positive. YTD Department Stores $ remain up vs 2020 but are down -0.1% vs 2019. Their problems began before the Pandemic. After dipping to +7.5% in February, the growth rate by Club/SuperCtr/$ stores has remained near the current 8.6%. These stores are still the key to this channel.

  • YTD Avg Annual Growth: All GM = +7.1%; Dept Stores = -0.07%; Club/SuprCtr/$ = +8.6%

Food and Beverage, plus Health & Personal Care Stores – Sales in Grocery were down in March>May from 2020 – No surprise, as these were 2020 binge months. In June/July they beat 2020 $. The Health, Personal Care group finished 2020 at +1.8%. 2021 has started even better. Although July was down -1.0%, YTD they are +10.2% vs 2020 and +9.9% vs 2019.

  • YTD Avg Annual Growth: Grocery = +6.9%; Health/Drug Stores = +4.9%

Clothing and Accessories; Electronic & Appliances; Home Furnishings – March > July have been spectacular for all these channels. The increase in Clothing vs July 2020 was not “off the chart” but was still +45.8%. All of these groups were up vs June and they remained positive in all measurements vs 2020 or 2019 for the 5th consecutive month.

  • YTD Avg Annual Growth: Clothing = +4.8%; Electronic/Appliance = +3.6%; Furniture = +10.2%

Building Material, Farm & Garden & Hardware – Their Spring lift began on time in 2020 and has never stopped. They have greatly benefited from consumers focusing on their home needs. They finished 2020 +53B (+13.8%). Sales took off in March, set a record in April then trended down May > July. They are still +16.4% YTD. Avg Annual Growth = +14.1%

Sporting Goods, Hobby and Book Stores – Book & Hobby stores are open but Sporting Goods stores have driven the lift in this group. Consumers turned their attention to personal recreation and sales in Sporting Goods outlets took off. The group ended 2020 +5.5% vs 2019. The growth accelerated in 2021. January > July set monthly records and March had the most $ of any non-December month in history. July YTD they are +39.0% vs 2020. Avg Annual Growth = +17.5%

All Miscellaneous Stores – Pet Stores were deemed essential but most other stores were not, so closures hit this group particularly hard. Sales hit bottom at -$3.8B in April then began to rebound. They finished with a strong December and ended 2020 -$1.0B, -0.7%. In March sales took off and the channel set a new all-time monthly record of $14.39B in May. However, they beat that record in June with $14.41B and now July with $14.65B. Their YTD sales are now 36.2% above 2020 and 26.0% more than 2019. Their recovery has become very real. YTD Avg Annual Growth = +12.2% (4th Best)

NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV. The pandemic accelerated the movement to online retail. In February 2020 NonStore $ were +8.6% YTD. In December monthly sales exceeded $100B for the 1st time. They ended 2020 at +21.4%, +$162.9B. This was 63% of the total $ increase for Relevant Retail Channels. Their 2020 performance far exceeded their 12.9% increase in 2019 and every month in 2021 has produced record $. July was -3.7% vs June but still +3.7% vs 2020. Their YTD $ are +16.9%. YTD Avg Annual Growth = +18.0%

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

Recap – 2020 was quite a year. April & May had the 2 biggest year over year sales decreases in history while December sales broke $600B for the first time. 2021 may become even more memorable. March>July became the 5 biggest $ales months in history with the 5 largest year over year monthly sales increases ever. The total increase was +$701B, which totally dwarfs the -$174B decrease from March>May 2020 which caused so much concern. At yearend 2020, Restaurants, Auto and Gas Stations were still struggling but Auto had largely recovered. Relevant retail had segments that also struggled but overall, they led the way for Total Spending to finish the year +0.5% vs 2019. 2021 has grown even more positive. In June and now July, all major groups, including Restaurants are positive vs both 2020 and 2019. The details show that the recovery in Relevant retail has become real for virtually all channels and monthly sales continue to set records. Retail has recovered so the question is, “Will the resurgence of COVID negatively impact Retail?”