Retail Channel Monthly $ Update – October Final & November Advance

/in /by

In November, Commodities prices actually deflated vs 2022. Although down from its peak, cumulative inflation still impacts consumer spending. The sales increase rate is lower than the inflation rate in a number of channels, which 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 October Final Report and then go to the Advance Report for November. 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 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 October Final. All but Auto were up from September and all but Gas Stations were up vs 22, 21 & 19. When you consider inflation, the # of real drops vs 22 & 21 (6) was the same as September. Gas Stations are still really down vs 2019. A significant fact to note is that Relevant Retail is again “really” up monthly vs 22. ($ are Actual, Not Seasonally Adjusted)

The October Final is $1.8B less than the Advance. Specifically, Restaurants: No Chge; Auto: -$0.2B; Gas Stations: -$0.4B; Relevant Retail: -$1.3B. $ were up vs September for all but Auto and actual sales for all but Gas Stations were positive in all measurements vs 22, 21 & 19. Gas prices fell but Gas Stations sales were down again monthly & YTD vs 22. There were 7 “real” sales drops, 5 from Gas Stations. Restaurants and now Total Retail are the only groups with all positives. Monthly real sales for Relevant Retail vs 22 are up again but have been down in 15 of the last 20 months. Their YTD real measurement vs 22 is still negative. They are the top “real” performer vs 2019 but only 48% of their growth is real.

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

Overall– 10 were up from September, but vs 22, only 5 were up vs Oct and 8 YTD. 4 were “really” up monthly & 5 Ytd. Vs 21, 9 had increases but only 4 monthly & 3 Ytd were real. Vs 2019, Office/Gift/Souvenir & Discount Department Stores were really down.

  • Building Material Stores – The pandemic focus on home has produced sales growth of 34.3% since 2019. Prices for the Bldg/Matl group have inflated 14.7% since 2021 which is having an impact. HomeCtr/Hdwe stores are down monthly & Ytd vs 22 but up vs 21 &19. Farm Stores are only down vs October 22. However, both have all negative real numbers vs 2022 & 2021. Importantly, only 20.1% 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: 11.4%, Real: 5.2%
  • 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 55% lower than Drug/Med products. Drug Stores are positive in all measurements and 73% of their growth since 2019 is real. Except vs Oct 22, the $ are all up for Supermarkets but their 23 real sales are down vs 22 & 21 and just slightly positive vs 2019. Only 7% is real growth. Avg 19>23 Growth: Supermarkets: +6.3%, Real: +0.5%; Drug Stores: +5.9%, Real: +4.3%.
  • Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are down -2.3% from September. Their only positives are YTD vs 22, monthly vs 21 and YTD vs 19. Prices are still deflating, -1.2% and YTD, -0.1%, a big change from +5.6% in 21>22 and +6.5% in 20>21. The result is that 60% of their 42.6% lift since 2019 is real. Their Avg 19>23 Growth Rate is: +9.3%; Real: +5.8%.
  • Gen Mdse Stores – All were up vs September. 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 SupCtr/Clubs were down vs 22 & 21. $/Value Stores were only down YTD vs 21. Disc Dept Stores were down in all measurements, even vs 2019, -1.2%. The other channels average 35% In real growth. Avg 19>23 Growth: SupCtr/Club: 6.3%, Real: 2.4%; $/Value Strs: +6.8%, Real: +2.8%; Disc. Dept. Strs: +2.4%, Real: -0.3%
  • Office, Gift & Souvenir Stores – Actual sales are up 20.2% from September but down in all measurements but YTD vs 21 & 19. Their real sales numbers are all negative including -6.1% Ytd vs 2019. Their recovery started late, and their slow progress stalled in Jun>Sep. However, it may have restarted in October. Avg Growth Rate: +1.1%, Real: -1.6%
  • Internet/Mail Order – Sales are up 8.2% from September and again above $100B. All measurements are positive, but their growth is only 60% of their average since 2019. However, 79% of their 94.5% growth since 2019 is real. Avg Growth: +18.1%, Real: +15.0%. 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, then rose in Sep/Oct. All measurements are positive. They remain in 2nd place in the % increase vs 2021 but 71% of their 54.5% growth since 2019 is real. Average 19>23 Growth: +11.5%, Real: +8.6%. They also moved back up to 2nd place in growth since 2019, only trailing the Internet.

Inflation remains an important factor in Retail. In actual $, 5 channels reported increases in sales vs 2022 and 9 vs 2021. When you factor in inflation, the number with “real” growth drops to 4 vs 2022 and vs 2021. Inflation’s impact may be slowing but it is still lowering sales increases. The October lift vs 2022 was less than 50% of Jan/Feb. The impact is also visible in specific retail channels. The commodities CPI deflated in November. Let’s look for any impact on Retail $ales.

In October, all but Auto & 3 small channels were up vs last month. November had  a similar pattern. Again, 3 small channels were down but in addition to Auto, sales in Gas Stations & Restaurants also fell. An Oct>Nov lift in Total Retail has happened in 75% of the years since 1992. The average increase was 2.2% so the 2.0% lift in 2023 was slightly below average. All actual $ measurements are again positive vs 22, 21 & 19 for all big groups but Gas Stations. Plus, the lifts vs 2022 are slightly larger than in October. Inflation is still a big factor. However, the national CPI slowed from 3.2% to 3.1% and the all commodities rate, which is the best pricing measure for Retail, fell from 0.4% to -0.05%. There is some significant “real” good news. The big groups have 20 “real” sales measurements vs 22 & 21. In November, only 4 were negative and 3 of those came from Gas Stations. Relevant Retail’s real monthly sales vs 22 have now been positive for 5 straight months, but the biggest news is that Relevant Retail is positive in all measurements for the 1st time in 2023.

Overall – Inflation Reality – For Total Retail, prices deflated, and all real sales are again positive. For Restaurants, inflation remains high, +5.3% but they are still really positive vs 22 & 21. Gas prices fell but that group is in true turmoil. Auto prices are down vs 22 but up 10.9% Ytd vs 21 which pushed their real sales down. Inflation is 0.7% for Relevant Retail and all of their monthly & ytd real sales are positive for the 1st time in 2023. They continue to make slow progress.

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 have been on a rollercoaster. Up in July & Aug, down in September, then up in October & November. Prices deflated -0.05% but sales growth is still low. Sales are up 4.3% vs last year. That’s only 54% of their average 19>23 growth. All real sales measurements are positive again but only 35% of the 19>23 growth is real. Inflation in Total Retail has radically slowed vs 2022 but we still see its cumulative impact. Avg 2019>23 Growth: +7.9%, Real: +2.9%.

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 have the biggest increases vs 22, 21 & 19 and all real sales are positive. Inflation slowed to 5.3% from 5.4% last month but is still +14.1% vs 21 and +22.4% vs 19. 36.7% of their 40.6% 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: +3.5%. They just account for 13.1% 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 real 22 sales numbers were much worse, down -8.2% vs 2021 and -8.9% vs 2019. 2023 is a true rollercoaster. $ grew in Jan>Feb, fell Mar>Apr, grew in May, fell Jun>Jul, grew in Aug, fell in Sep, grew in Oct, then fell in Nov. Only Ytd real $ vs 21 are down. Prices vs 22 are -0.9% monthly & -1.5% Ytd. Only 5% of 19>23 growth is real. Avg 2019>23 Growth: +6.6%, Real: +0.4%.

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, strongly dropped in Mar>Jul to -20.2%. In August they turned up to -3.7%. In Sep they were +2.7% but then fell to -9.2% in Oct/Nov. Pricing is a big factor in the actual sales drops vs 22 and only real sales vs Nov 21 are positive.  Avg 2019>23 Growth: +6.6%, Real: -1.2%. 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 Jun>Jul, turned up in Aug, fell in Sep, then grew in Oct/Nov. Actual sales are again up vs 22, 21 & 19. However, the big news is that all sales comparisons – both actual & real are positive for the 1st time in 2023. 48% of their 37.6% 19>23 growth is real – #1 in performance. Avg 2019>23 Growth is: +8.3%, Real: +4.2%. This is where America shops. A month of all positive sales vs 22, 21 & 19 is a 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. For the 1st time in 2023, all sales measurements are positive. This means that as of November, consumers not only spent more $ monthly & Ytd in 2023 vs 22, 21 & 19, they bought more product. The turnaround continues to gain ground.

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

  • Relevant Retail: Avg Growth Rate: +8.3%, Real: +4.2%. 8 of 11 were up from October and vs November 22 & 21. However, only 6 had a “real” increase vs 22 & 4 vs 21. Inflation continues to slow sales increases.
  • All Dept Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Their Actual $ are up 19% from October but down for all comparisons vs 22, 21 & even 19. Their real sales are also down in all measurements. Avg 2019>23 Growth: -0.1%, Real: -2.7%.
  • Club/SuprCtr/$ – They fueled a big part of the overall recovery because they focus on value which has broad consumer appeal. $ales are up from October and in all other measurements. Their real sales are down Ytd vs 22 & 21. Only 35% of their 27.7% 19>23 lift is real – the impact of inflation. Avg Growth: +6.3%, Real: +2.4%.
  • Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. $ are up from October and in all measurements vs 22, 21 & 19. However, inflation hit them hard. Real sales are down for all but Ytd vs 2019 and only 6% of the growth since 2019 is real. Avg Growth: +6.2%, Real: +0.4%.
  • Health/Drug Stores – Many stores in this group are essential, but consumers visit far less frequently than Grocery stores. Sales are up from October and positive in all other measurements, actual and real vs 22, 21 & 19. Inflation has been relatively low so 73% of their 26.2% growth from 2019 is real. Avg 2019>23 Growth: +6.0%, Real: +4.4%.
  • Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 21 with strong growth through 2022. Actual $ales are up from October and monthly & Ytd vs 22, 21 &19. Real sales are down monthly and Ytd vs 21 & Ytd vs 22, but 64% of their 19>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. Prices are now deflating but they were high in 2022. Sales are up from October but negative in all other measurements but actual Ytd vs 2019. Their real sales are even down -4.1% vs 2019. Avg 2019>23 Growth: +2.8%, Real: -1.0%.
  • 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 October and now only down Ytd vs 22 & 21. Consistent deflation has caused real sales to be positive in all measurements. Avg 2019>23 Growth: +0.6%, Real: +2.9%.
  • 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 has slowed to 2.8%. Sales are down from October, and they are again all negative vs 2022. They have the highest Ytd 22>23 Inflation rate of any channel so real sales are negative in all but Ytd vs 2019. Also, just 20% of their sales growth since 2019 is real. Avg 2019>23 Growth is: +7.7%, Real: +1.7%.
  • 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 October and positive for all but vs Nov 22 & 21. Real sales are only down monthly & YTD vs 21. Prices deflated again and their inflation rate has been lower than most groups so 66.8% of their 29.5% growth since 2019 is real. Avg 2019>23 Growth: +6.7%, 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 down vs October but positive in all other measurements – actual & real. They are 2nd to NonStore in increases vs 21 & 19. 65% of their 40.5% 19>23 growth and 45% of their 16.5% 21>23 growth is real. Their Avg 19>23 Growth is: 8.9%, Real: 6.0%.
  • 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. $ales are up from October and in all other measurements. 77.9% of their 86.6% growth since 2019 is real. Their Avg Growth: +16.9%, Real: +13.8%.

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. Sales were up from October for Total Retail, Relevant Retail & most channels. Inflation is slowing in many channels and even deflating in a few. 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 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 6 of the last 7 months but are still negative for 5 of 11 channels. The big news is that Relevant Retail is positive in all measurements for the 1st time in 2023. The turnaround is a little more widespread, but November was again a mixed bag of pluses and minuses. We are definitely making progress but 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 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.