Retail Channel Monthly $ Update – May Final & June Advance

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While inflation continues to slow, its cumulative effect on consumer spending is still being felt. The rate of sales increases is still slower than the decrease in inflation in a number of channels, which causes 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 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 will begin with the Final Report for May and then go to the Advance Report for June. 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. 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 May Final. All were up from April, and all but Gas Stations were up vs 22, 21 & 19. When you consider inflation, the negatives were fewer than in April. However, Gas Stations are still really down vs 2019. The most significant change may be that Relevant Retail is now “really” up vs May 22. (All $ are Actual, Not Seasonally Adjusted)

The May Final is $2.8B more than the Advance Report. Specifically, Restaurants: +$1.4B; Auto: +$1.0B; Gas Stations: +$0.4B; Relevant Retail: N/C. Sales were up from April for all big groups and actual sales for all but Gas Stations were positive in all measurements vs 22, 21 & 19. Strong deflation caused Gas Stations sales to drop monthly and YTD vs 2022. There are some real sales drops, especially vs 2021. Restaurants have the most growth and are the only group with all positives. To reiterate, the most significant data may be that real sales for Relevant Retail vs May 22 are positive. They have been down for 7 straight months. They are #1 in performance since 2019 but only 48% of the growth is real.

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

Overall– All 11 were up from April, but vs 22, 8 were up vs May 22 and 10 Ytd. 6 were “really” down monthly & Ytd. Vs 2021, 9 had increases but only 4 monthly & Ytd were real. Vs 2019, only Off/Gift/Souv & Disc Dept Strs were really down

  • Building Material Stores – The pandemic focus on home has produced sales growth of 35.7% since 2019. Prices for the Bldg/Matl group have inflated 20.8% since 2021 which is having an impact. HomeCtr/Hdwe stores are down for the month & Ytd vs 22 but up vs 21 &19. Farm Stores are up in all measurements. However, both have all negative real numbers vs 2022 & 2021. Importantly, only 21.5% 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: 7.3%, Real: 1.3%; Farm: 11.3%, Real: 5.0%
  • Food & Drug – Both channels are truly essential. Except for the pandemic food binge buying, they tend to have smaller fluctuations in $. However, they have been very different in inflation. The gap is closing but the Grocery rate is still 32% higher than Drugs/Med products. Drug Stores are positive in all measurements and 73% of their growth since 2019 is real. While the $ are up for Supermarkets their 2023 real sales are down vs 2022 & 2021 and just slightly positive vs 2019. Only 9% is real growth. Avg 19>23 Growth: Supermarkets: +6.4%, Real: +0.6%;Drug Stores: +5.0%, Real: +3.7%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up from April and are actually & really positive vs 2022. However, they are actually & really negative vs 21. Prices are still deflating -0.9%, a big change from +5.4% in 21>22 and +6.5% in 20>21. The result is that 60% of their 44.6% lift since 2019 is real. Their Avg 19>23 Growth Rate is: +9.7%; Real: +6.1%.
  • Gen Mdse Stores – All were up vs April and $ stores had the biggest lift. Actual sales vs 22, 21 & 19 were also up for all but Disc Dept Strs vs May 22 & 21. In real sales, the only positive was in Ytd sales for $/Value Stores vs 22. Disc Dept Stores are the worst performer and are now really down -0.1% vs 2019. The other channels average 34% In real growth. Avg 19>23 Growth: SupCtr/Club: 6.2%, Real: 2.2%; $/Value Strs: +6.6%, Real: +2.6%; Disc. Dept.: +2.7%, Real: -0.01%
  • Office, Gift & Souvenir Stores – Actual sales are up 10.9% from April but down from May 22. They were up in all other measurements vs 22, 21 & 19. Their real sales growth is down monthly vs 22 & Ytd vs 19. All other real numbers are positive. Their recovery started late but they are making slow progress. Avg Growth Rate: +0.9%, Real: -1.8%
  • Internet/Mail Order – Sales are up from April and above $100B again at $105.3B – another monthly record. All measurements are positive, but their growth is only 43% of their average since 2019. However, 79% of their 97% growth since 2019 is real. Avg Growth: +18.5%, Real: +15.4%. 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, then turned up in Mar>May. (May was +18%) Ytd Real sales are down vs 22, but all other measurements are positive. They are still the % increase leaders vs 2021 and 71% of their 55.2% growth since 2019 is real. Average 19>23 Growth: +11.6%, Real: +8.7%. They are still 2nd in growth since 2019 to the internet. Pet Stores are surely contributing.

Inflation remains an important factor in Retail. In actual $, 8 channels reported increases in sales vs 2022 and 9 vs 2021. When you factor in inflation, the number with any “real” growth drops to 5 vs 2022 & 4 vs 2021. Inflation has impacted sales increases. May was a strong month but the lift was still 30% less than in Jan & Feb. The impact is very visible at the retail channel level. Inflation has continued to slow. Let’s look at the impact on the Advance Retail $ales for June.

Since 2019, we have seen 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. 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. In 2023, sales fell for all groups in Jan>Feb, rose in March, fell in April, grew again in May, then dropped in June. Except for a decrease by Gas Stations, all actual sales are positive vs 22, 21 & 19. There is also some stability in that of the groups’ total of 20 “real” sales measurements vs 22 & 21, 11 are again positive, including monthly sales vs 22 for Relevant Retail. The biggest change is that the lift vs 2022 is notably smaller, especially for Relevant & Total Retail.

Overall – Inflation Reality – Total, Auto & Gas prices all deflated. For Relevant Retail, the rate was slightly below the sales lift. For Restaurants, inflation remains high, +7.6% but they still have the strongest performance vs 2022 & 2021. The biggest news is that monthly real sales for Relative Retail vs last year have been positive for 2 straight months after 7 consecutive negatives. However, their Ytd Real sales are still down vs 2022 & 2021. They still have a ways to go.

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 dipped in Jan>Feb, rose in Mar, fell in Apr, grew in May, then fell in June. Inflation has become deflation, but sales growth is still low. Sales are up 1.7% vs last year. That’s only 21% of their average 19>23 growth. Also, real sales are down monthly and Ytd vs 21 and only 36% of the 19>23 growth is real. Inflation in Total Retail has radically slowed vs 2022 but we still clearly see its cumulative impact. Avg 2019>23 Growth: +8.0%, Real: +3.1%.

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 are the best performing big group vs 22 & 21. Inflation decreased to 7.6% in June from 8.2% last month but is still +15.7% vs 21 and +21.2% vs 19. 39.6% 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: +3.8%. They just account for 13.1% 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 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 started off a little better in Jan>Feb, got worse in Mar>Apr, grew in May, then fell in June. Again, only monthly & Ytd real sales vs 21 are negative. Prices are -0.7% vs 22 and are down -1.4% Ytd. 10% of 19>23 growth is real. Avg 2019>23 Growth: +6.9%, Real: +0.7%.

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 slightly deflated in Dec & Feb then strongly dropped in Mar>Jun, -14.0% Ytd vs 22. However, prices are still +17.5% vs 21. The deflation is directly tied to the monthly & Ytd sales drops vs 22. Look at the rates. Real sales vs 22 are up slightly but still down vs 21 & 19.  Avg 2019>23 Growth: +6.5%, Real: -1.0%. 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 June, but all actual sales are up vs 22, 21 & 19. Real sales are down vs June 21 & Ytd vs 22 & 21. Monthly Real sales vs last year have been positive for 2 straight months after 7 negatives in a row. 49% of their 19>23 $ are real – #1 in performance. Avg 2019>23 Growth is: +8.4%, Real: +4.3%. This big group is where America shops. The fact that real sales have been positive for 2 consecutive months gives us hope.

Inflation is slowing but the cumulative impact is still there. Sales increases are also slowing, but the fact that 55% of all real sales numbers vs 22 & 21 are positive again is a good sign. Restaurants are still doing well, and Auto is improving. Gas Stations are now seeing the negative impact of strong deflation with a continued drop in actual sales. However, as always, our biggest concern is Relevant Retail. Their situation has definitely improved. Ytd real sales vs 22 & 21 are still negative, which clearly shows the impact of cumulative inflation. However, monthly real sales vs 22 have been positive for 2 straight months. This is not the end of the crisis, but a slow turnaround appears to be continuing.

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

  • Relevant Retail: Avg Growth Rate: +8.4%, Real: +4.3%. Only 2 channels were up from May but 7 were up vs 22 & 21. Only 4 had a “real” increase vs 22 and 5 vs 21. The negative impact of inflation appears to be slowing 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 May and for all comparisons but Ytd vs 21 & 19. Their real sales are down in all measurements, even vs 2019. Avg 2019>23 Growth: +0.3%, Real: -2.4%.
  • Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. $ales are down vs May but up in all other measurements. Their real sales are down in all measurements but vs June 21 & Ytd vs 19. Only 34% of their 27.5% 19>23 lift is real – the impact of inflation. Avg Growth: +6.3%, Real: +2.3%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. $ are down from May 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 7.6% of the growth since 2019 is real. Avg Growth: +6.3%, 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 May but up in all other measurements, both actual and real vs 22, 21 & 19. Their inflation rate has been relatively low so 74% of their 23.4% growth from 2019 is real. Avg 2019>23 Growth: +5.4%, Real: +4.0%.
  • Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. $ales are down from May but up vs 22, 21 & 19. However, Real sales are down for all but Ytd vs 21 & 19. Another positive is: 64% of their 2019>23 growth is real. Avg 2019>23 Growth: +3.8%, Real:+2.5%
  • 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. Actual sales are down from May and in all other measurements but Ytd vs 2019. Their real sales are again all down, even vs 2019. Avg 2019>23 Growth: +4.0%, Real: -0.2%.
  • 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 up from May but down in all measurements but vs Jun 22 & Ytd vs 19. However, consistent deflation has caused real sales to be up in all measurements. Avg 2019>23 Growth: +0.6%, Real: +2.5%.
  • 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. Inflation is still high at 8.8%. Sales are down -8.1% from May which caused them to be 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 22% of their sales growth since 2019 is real. Avg 2019>23 Growth is: +8.1%, Real: +2.0%.
  • 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 up from May but only positive Ytd vs 22 & 19. Real sales have the same pattern. Prices actually deflated to -0.1% vs June 22 and their inflation rate has been much lower than most groups so 64.7% of their 30.6% growth since 2019 is real. Avg 2019>23 Growth: +6.9%, 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 -1.8% vs May but positive in all other measurements. They still have the biggest increase vs 2021 and vs 2019 they are 2nd only to NonStore. 67% of their 44.8% 19>23 growth and even 53% of their 21>23 growth is real. Their Avg 19>23 Growth is: 9.7%, Real: 6.8%.
  • 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 May but all other measurements are positive. 78% of their 88.7% growth since 2019 is real. Their Avg Growth: +17.2%, Real: +14.0%.

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>Jun which should help the Retail Situation. Sales were down from May for all big groups and 9 smaller channels. Inflation continues to slow in most channels and even deflate in a few. However, some channels like Auto, 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 2 straight 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, Electronics/Appliances  and Miscellaneous (includes Pet Stores). 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?
    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.