Retail Channel Monthly $ Update – March Final & April Advance

The pandemic started in March 2020. In the Retail sector, we have seen both record drops and record highs. The market has generally recovered but now we are being hit by extreme inflation. 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 March and then move to the Advance Report for April. 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 March Final. February is the normal Retail $ bottom for the year and sales turned up in March. Overall, the growth is slowing, and Auto sales actually dropped vs March 2021. Obviously, factoring in inflation paints a different picture of the situation. Here are the major retail groups. (All $ are Actual, Not Seasonally Adjusted)

The March Final is $4.2B more than the Advance Report. All but Auto were up. Restaurants: +$6.3B; Auto: -$5.5B; Gas Stations: +$0.4B; Relevant Retail: +$3.0B. All groups are up from the February bottom. Growth is slowing but all but Auto are up vs 2021 & 2019. When you look at the “real” numbers you get a different view. The Auto/Gas groups are really down in all measurements. Restaurants are strong due to a late recovery but also note that half of the inflation in this group came before 2022. Total and Relevant Retail are starting to see the impact of inflation as Real sales are down or flat vs 2021. Relevant Retail has the best performance since 2019 as 69% of their 31% growth is “Real”.

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

Overall – All 11 were up vs February. Vs March 2021, 6 reported more $ but only A/O Misc. was really up. In YTD, 7 reported increases but only 4 were real. Vs 2019, Only Office/Gift was “really” down, the only decrease vs 2019.

  • Building Material Stores – Their Spring lift has started but it is not as strong as last year. Home Ctr/Hdwe is up vs 21 but Farm stores are down for the month & YTD. The Bldg/Matl group has an inflation rate over 10% which produced all negative real numbers. The pandemic caused consumers to focus on their homes which produced sales growth over 30% since 2019 in both channels. Importantly, 2/3rds of this lift was real. The chart shows that almost all of the lift came from 20>21, prior to the inflation wave. Avg Growth Rate: HomeCtr/Hdwe: 11.8%, Real: 8.0%; Farm: 10.3, Real: 6.6%
  • Food & Drug – Both channels are truly essential. Except for the food binge buying in the pandemic, 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. Sales for Drug Stores are down vs March 2021 but 84% of their growth since 2019 is real. The Real Sales for Supermarkets are down for the month and YTD. Also, only 31% of their growth since 2019 is real. Avg Growth Rate: Supermarkets: +6.1%, Real: +2.0%; Drug Stores: +4.2%, Real: +3.7%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Their Spring lift has started but it’s not as strong as last year. Their current inflation rate is almost 8% but it was also high in 20>21, +4.8%. However, 73% of their 48.9% lift since 2019 is real. Their Avg Growth Rate was: +14.2%; Real: +10.7%.
  • Gen Mdse Stores – All channels had strong growth out of the February “bottom” but vs 2021 they don’t look good. Clubs/SupCtrs & $/Value stores are up slightly YTD vs 2021 but all other measurements vs 2021 – published or real, are negative. Disc. Dept Stores were struggling before COVID and only 9% of their 8% growth since 2019 is real. For the other channels, it averages 47%. Avg Growth Rate: SupCtr/Club: 5.7%, Real: 2.8%; $/Value Strs: +6.1%, Real: +3.2%; Disc. Dept.: +2.6%, Real: 0.2%
  • Office, Gift & Souvenir Stores – Their recovery didn’t start until the spring of 2021. Sales are up vs 2021, but real sales are flat or down, including a real 6.6% drop from 2019. Their true recovery is still a long way off. Avg Growth Rate: +0.2%, Real: -2.3%
  • Internet/Mail Order – The sales growth of the “hero” of the Pandemic is slowing. Real March sales vs 2021 are even down. However, 91% of their 81.9% growth since 2019 is real. Their Avg Growth Rates is: +22.1%, Real: +20.4%. 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. Sales continue exceptionally strong in 2022. In fact, they are the only channel on the chart with all positive measurements. Plus, 88% of their 61.6% growth since 2019 is real. Their Avg Growth Rate is: +17.3%, Real: +15.6%. They are 2nd in growth since 2019 to the internet, which is somewhat surprising.

There is no doubt that high inflation is an important factor in Retail. In actual $, 8 channels are up in YTD sales over 2021 but only 5 are up for the month. When you factor in inflation, the number with any “real” growth falls to 4 YTD & 1 monthly. Inflation is starting to have a growing impact at the channel level. Now, the Advance numbers for April.

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 but in fact, all big groups set annual sales records in 2021. Now radical inflation has entered the game with the largest increase in 40 years. This can first reduce the amount of product sold but not $ spent. In April there was a  small overall increase from March, but the amount sold fell in all but Restaurants. If it continues, it can actually reduce consumer spending which is now happening in Auto.

Overall – Inflation Reality is starting to set in. The monthly increase vs the previous year is much smaller than it has been. The still recovering Restaurants and Gas Stations are up double digits but Auto $ are actually down. Although April set a new $ record for the month, the real monthly and YTD sales vs 2021 for all but restaurants are down or flat.

Total Retail – Every month in 2022 has set a monthly sales record. April $ are $684B. In a normal year, sales should stay at or near that level until dipping slightly in September. However, 2022 is not normal. Sales are flat vs March but are still up 8.7% vs April 2021 and 11.3% vs YTD 2021. When you factor in 13% inflation, both measurements are down for the 2nd consecutive month and only 46.4% of the 32.1% growth since 2019 is real. The Avg Growth Rate is: +9.7%, Real: +4.7%. Inflation is making 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 have turned up since then setting new all-time monthly records in March and now April ($86.4B). They are the only big group that is positive in all measurements. Their inflation is high at 7.1% for April and 6.7% YTD but it is the lowest of any big group. Also, only 51.4% of their 29.0% growth since 2019 is real. This is due to the fact that inflation started earlier in this group, +5.9% in 2021. Here is their Avg Growth Rate: +8.9%, Real: +4.7%. Although they only account for 12.6% of Total Retail sales, their positive performance significantly 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 fell in January, turned up in Feb/Mar then fell again in April. They are unique in that their March and now April sales are below 2021. These are the only reported sales negatives by any group vs 2021. This is bad but their real sales numbers are much worse. Extraordinarily high inflation has pushed their real sales down -15+% in all measurements vs 2021, the worst performance of any group. Plus, only 16% of their 29.4% growth since 2019 is real. Their Avg Growth Rate: +9.0%, Real: +1.5%. It is very likely that the drops in the reported $ales in March & April are tied to extreme 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 in January and February then turned up in March & April. They have the biggest increases vs 2021 and 2019 but it is not reality. Gasoline inflation is in all of the headlines and is by far the highest of any expenditure category. It is over 42% for 2022 vs 2021 and has even caused consumers to buy less than they did in 2019. Avg Growth Rate: +12.7%, Real: -2.4%. It’s a textbook example of the initial impact of inflation. Consumers are spending more but buying 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 January and February, turned up in March, but were basically flat in April. All months in 2022 set new records but their YTD numbers are now below their 9.7% avg growth. Now, we’ll look at the impact of inflation. 68.2% of their 32.1% growth since 2019 is real. However real sales vs 2021 are down -1.6% for the month and flat YTD. This shows that inflation is only a 2022 problem. Their Avg Growth Rate: +9.7%, Real: +6.8%. The performance of this huge group is critically important. This is where Retail America shops. Real YTD sales are up only 0.2% but the amount of products that consumers bought in March & April was actually less than 2021. They just paid more. That’s not good.

The impact of inflation is truly beginning to Hit home. Auto and Gas Stations have no monthly or YTD real growth. Relevant Retail is really down for the 2nd straight month and basically flat YTD. Restaurants have the only positive real numbers. This adds up to real monthly and YTD drops for Total Retail. We are now in Phase II of inflation. Consumer spending increases but the amount bought declines. With 2 straight down months, the Auto Group may be moving into Phase III, when consumers actually cut back on spending. If inflation continues, the situation will only get worse.

  • Relevant Retail: Avg Growth Rate: +9.7%, Real: +6.8%. Only 5 channels were up vs March but 8 were up vs April 2021. This was enough to set an April $ales record but you see the negative impact of inflation in the “real” numbers.
  • All Dept Stores – This group was struggling before COVID, and the pandemic hit them hard. They began to recover in March 2020 and have continued to grow through April 2022. Their YTD numbers turned positive vs 2019 in April but are still down in real terms vs both 2019 & 2021. Avg Growth: +0.3%, Real: -2.3%.
  • Club/SuprCtr/$ – 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. While April Sales are up vs 2021 and YTD, their real numbers are down and only 46.5% of their 18.7% lift from 2019 is real. Avg Growth: +5.9%, Real: +2.8%.
  • Grocery – These stores are essential and depend on frequent purchases, so except for the binge buying in 2020, their changes are generally less pronounced. Inflation has hit Groceries hard. Monthly and YTD increases vs 2021 are strong but real sales are actually down and only 28.5% of the growth since 2019 is real. Avg Growth: +6.3%, Real = +1.9%.
  • Health/Drug Stores – At least the drug stores in this group are essential, but consumers visit far less frequently than Grocery stores. Most of their COVID ride has been rather calm. Their inflation rate is low but enough to push April sales down vs 2021. However, 89% of their small 13.5% growth from 2019 is real. Their Avg Growth is: +4.3%, Real: +3.8%.
  • Clothing and Accessories – They were nonessential, and clothes mattered less when you stayed home. That changed in March 2021 and resulted in explosive growth which has continued through 2022. $ are up only slightly from March but they’re positive in all measurements and 92% of growth from 2019 is real. Avg Growth: 4.8%, Real: 4.5%.
  • Home Furnishings – They were also less impacted by COVID. Sales dipped Mar>May in 2020. Then as consumers’ focus turned to their homes, furniture became a priority. Inflation on Furniture is extremely high so all of the real numbers for 2022 are negative and only 36% of their growth since 2019 is real. Avg Growth: +7.2%, Real: +2.7%.
  • Electronic & Appliances – Look at the graph. This channel has problems beyond the pandemic. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 2021. Their sales are down across the board vs 2021. April deflation did help turn their sales positive vs 2019 but only 11% is real. Avg Growth: +0.3%, Real: +0.03%.
  • Building Material, Farm & Garden & Hardware –They truly benefited from the consumers’ focus on home. This year’s spring lift looks to be lower than 2021 and when you factor in strong, double-digit inflation, the amount sold is significantly lower for both April and YTD. 63.6% of their 37.1% sales growth since 2019 is real. Their Avg Growth is: +11.1%, Real: +7.3%.
  • Sporting Goods, Hobby and Book Stores – Consumers turned their attention to personal recreation and sales in Sporting Goods outlets took off. Book and Hobby Stores recovery was slower. YTD sales are up 0.4% but all other measurements are down vs 2021 and last month. Inflation in this group is lower than most groups and most of it comes from Sporting Goods. 78% of their 36.2% growth since 2019 is real. Their Avg Growth is: +10.9%, Real: +8.7%.
  • 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 and now in April. They are #1 in April & YTD lifts vs 2021 and their YTD growth since 2019 is 2nd only to NonStore. Plus, 84% of the 46.1% growth since 2019 is real. Their Avg Growth is: +13.5%, Real: +11.5%.
  • NonStore Retailers – 90% of their volume comes from Internet/Mail Order/TV. The pandemic accelerated the online spending movement. 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 Growth has slowed in 2022 but all measurements are positive. 90% of their 76% increase since 2019 is real. Their Avg Growth is: +20.7%, Real: +18.9%.

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. Moreover, each month it is getting worse. On the surface, the impact is almost invisible. Sales in the total market and in the Relevant Retail group continue to grow but the growth has slowed markedly in April. In our summary of the big groups, we said that the market had entered phase II of strong inflation – spending grows but the amount purchased falls. The channels in the graph above illustrate this perfectly and show how widespread that it has become. 8 of 11 channels are up vs April 2021 and 10 are up YTD. However, when you factor in inflation, only 4 are up for April and 4 for YTD. Inflation is real and there are real and even worse consequences if it continues.

Finally, here are the details of the specific 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 these specially created aggregates are 100% accurate but they are much closer than the overall CPI or available aggregates.

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?
    • 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?
    • 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.
    • 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?
    • 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 mix of actual products is substantially different.